Is silver a good investment?

Silver has been used by humans for at least 8,000 years—before written records began. It was the major currency of the Roman Empire, and it fueled the rise in global trade and the founding of our modern economy. This historical background may seem academic or anecdotal, but it actually gets at the heart of why silver continues to be relevant today: it has enduring intrinsic value as a tangible asset due to its physical properties, symbolic worth, and beauty.

Silver’s longstanding status as a precious metal makes it a safe haven investment, which means it holds value during inflation or when other bearers of value, like stocks or bonds, falter. It is also valuable as a commodity due to its natural properties and industrial uses. With applications ranging from jewelry to medical equipment to semi-conductors, silver has value because of what you can physically do with it, not just for what it represents. Silver is the best conductor of electricity, and this fact coupled with the burgeoning clean energy movement means it won’t likely go out of style any time soon. Silver’s status as an alternative investment means it has potential for large gains, although with greater potential comes greater risk.

Since silver has both sentimental value for investors and society as well as value as a commodity due to its industrial applications, its value is complex and multifaceted. This makes its price moves hard to predict. An economic recession could send many flocking to silver as a safe haven, but the same recession could wreak havoc on manufacturing activity, causing its value as a raw material to plummet. Also, silver isn’t traded as frequently as gold or other asset, which is important because it means prices fluctuate more widely and the asset can be harder to unload due to a scarcity of buyers. If you invest by buying the physical metal itself (and there are other ways, see below), you then have the logistical challenge of securely storing the silver and guarding it against theft. Lastly, silver provides no income stream, so if you’re depending on your investments to provide a regular part of your cash flow, this precious metal is not a good option.

The answer to this question depends on your aims and experience. If you are looking for a simple way to hedge against bear markets, gold is a better choice than silver. Gold, like silver has its industrial uses, but its value is overwhelmingly driven by its symbolic value as a tangible asset with staying power. Silver costs less, so the threshold for investing in it is lower, but the physical metal itself is harder to maintain (it tarnishes) and store because it occupies much more volume for the same value. However, because of silver’s complexity and relative volatility compared to gold, it can present unique opportunities for veteran investors with higher risk tolerances who are willing to dig into its fundamentals and follow the industries that drive its value as a commodity.

The most direct way to invest in silver is to buy the metal itself, whether in the form of bullion coins or bars or scrap silver. Another more practical way to gain exposure to silver is to buy stocks in companies that mine or process silver, or intermediaries that resell silver. You could also invest in mutual funds or exchange-traded funds that hold silver as part of their portfolio. Another option is to buy a silver exchange-traded commodity (ETC), which behaves and trades just like a stock but tracks the underlying price of silver. A final alternative is to invest in silver futures, which is essentially a promise to sell silver for a certain price on a pre-established date. This promise can then be traded for a profit or loss based on market movements.