| Silver As An Investment |
Article Index for Silver |
Website Links For Silver |
Information AboutSilver As An Investment |
| CATEGORIES ABOUT SILVER AS AN INVESTMENT | |
| silver | |
| investment | |
| commodities used as an investment | |
|
Silver, like other Precious Metal s, may be used as an investment. For over four thousand years Silver has been regarded as a form of Money and Store Of Value . However, since the end of the Silver Standard , silver has lost its role as legal tender in the United States. (It continued to be used in coinage until 1964, when the intrinsic value of the silver overtook the coins' face value.) SILVER PRICE The price of silver is notoriously volatile, as it fluctuates between industrial and store of value demands. At times this can cause wide ranging valuations in the Market , creating volatility. Silver often tracks the was 47.0 {Link without Title} . From September 2005 onwards, the price of silver has risen fairly steeply, being initially around $7 per troy ounce but reaching $14 per Oz . for first time by late April of 2006. The monthly average price of silver was $12.61 per oz. during April 2006, and the spot price was around $13.68 per oz. on April 6 2007 {Link without Title} . Factors influencing the silver price ;Private and institutional investors: From 1973 the launched a silver Exchange-traded Fund , called the iShares Silver Trust (), which as of April 2007 held 130 million ounces of silver as reserves. ;The large concentrated short position: The CFTC publishes a weekly Commitment Of Traders Report which shows that the 4 or fewer largest traders are holding 90% of all short contracts. This level of concentration is unprecedented in any commodity, and should arouse suspicion. Furthermore, these 4 or fewer traders are short a total of 245 million ounces (as of April 2007), which is equivalent to 140 days of production. {Link without Title} ;Industrial demand: The use of silver in items such as electrical appliances and medical products has increased since 2001. New applications for silver are being explored in batteries, superconductors and microcircuits, which may further increase non-investment demand. The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long term rise in industrial usage. {Link without Title} METHODS OF INVESTING IN SILVER Bars A traditional way of investing in silver is by buying Bullion bars. In some countries, like Switzerland and Liechtenstein , bullion bars can be bought or sold Over The Counter of the major Bank s. Physical silver, such as bars or coins, may be stored in a home Safe , a Safe Deposit Box at a bank, or placed in allocated (also known as ''non-fungible'') or unallocated (''fungible'' or ''pooled'') storage with a bank or dealer. Various sizes of silver bars:
Coins bullion coin.]] See Also: Silver coin Buying Silver Coin s is another popular method of physically holding silver. One example is the 99.99% Pure Canadian Silver Maple Leaf . Coins may be Minted as either ''fine silver'' or Junk Silver , the latter being older coins with a smaller percentage of silver. For example, U.S. pre- 1965 Half Dollar s, Dime s, and Quarters are 90% silver. ( 1965 - 1970 and 1975 - 1976 Kennedy Half Dollar s are "clad" in a silver alloy and contain about 1/3 of the pre-1965 issues.) Junk silver coins are also available as Sterling Silver coins, which were officially minted until 1919 in the United Kingdom and Canada , and 1945 in Australia . These coins are 92.5% silver, and are in the form of (in decreasing weight) Crown s, Half-crown s, Florin s, Shilling s, Sixpence s, and Threepence . The tiny threepence weighs 1.41 grams, and the Crowns are 28.27 grams (1.54 grams heavier than a US $1). Canada produced silver coins with 80% silver content from 1920 to 1967 . Rounds Some Hard Money enthusiatists use .999 fine silver rounds as a store of value. A cross between bars and coins, silver rounds are produced by a huge array of Mints , generally contain an ounce of silver in the shape of a coin but have no status as legal tender. Rounds can be ordered with a custom design stamped on the faces or in random assorted batches. Certificates .]] See Also: Silver certificate A certificate of ownership can be held by silver investors instead of storing the actual silver bullion. Silver Certificate s allow investors to buy and sell the security without the hassles associated with the transfer of actual physical silver. The Perth Mint Certificate Program (PMCP) is the only government guaranteed silver certificate program in the world. The U.S. Dollar , denominated in $5 and $1, was once a silver certificate. Accounts Most Swiss Bank s offer silver accounts where silver can be instantly bought or sold just like any foreign currency. Unlike physical silver, the customer does not own the actual metal, but rather has a claim against the bank for a certain quantity of metal. Many Digital Gold Currency providers, such as E-gold and GoldMoney , offer silver as an alternative to gold and work on a similar principle. Other electronic silver accounts include the ELibertyDollar and Phoenix Silver . Silver accounts are backed through unallocated or allocated silver storage. Exchange-traded funds Exchange-traded Fund s (or ETFs) represent a quick and easy way for an investor to gain exposure to the silver price, without the inconvenience of storing physical bars. The silver ETFs are:
Spread betting Firms such as Cantor Index and IG Index , both from the UK offer the ability to take a bet on the price of silver through what is known as a Spread Bet . Derivatives Derivative s, such as silver Futures and Options , currently trade on various exchanges around the world. In the U.S., silver futures are primarily traded on COMEX (Commodity Exchange) which is a subsidiary of the New York Mercantile Exchange . In November 2006, the National Commodity And Derivatives Exchange (NCDEX) in India introduced 5 kg silver futures {Link without Title} . Mining companies See Also: Category:Silver mining companies These do not represent silver at all, but rather are Shares in companies that mine silver. Companies rarely mine silver alone, as normally silver is found within, or alongside, ore containing other metals, such as Tin , Lead , Zinc or Copper . Therefore shares are also a Base Metal investment, rather than solely a silver investment. As with all Mining shares, there are many other factors to take into account when evaluating the share price, other than simply the Commodity price. Instead of personally selecting individual companies, some investors prefer spreading their risk by investing in precious metal mining Mutual Fund s. INVESTING STRATEGIES There are three important reasons cited by enthusiasts for holding precious metals, especially suggest you maintain no more than a 1% precious metal allocation in your portfolio. Whatever your financial position, always do your own research before committing significant sums of money to any investment. TAXATION In many tax regimes, silver does not hold the special position that is often afforded to Gold . For example, in the European Union the trading of recognised gold coins and bullion products is VAT exempt, but no such allowance is given to silver. This makes investment in silver coins or bullion less attractive for the private investor, due to the extra premium on purchases represented by the irrecoverable VAT (charged at 17.5% in the United Kingdom, and 19% in Germany, for example). Other taxes such as Capital Gains Tax may apply for individuals depending on Citizenship and if the Asset is sold at increased value. SEE ALSO
EXTERNAL LINKS
|
|
|