The economy’s instability and the uncertainty brought about by the COVID-19 pandemic have renewed many people’s interest in gold and silver. Specifically, silver has been on the rise since March of 2020, and they serve as excellent alternatives when the stocks and bonds begin to decline and become unstable.
Know that investing in precious metals means that you’re not essentially getting returns every year unless you decide to sell them. It does not generate any products or services as a company would. The value lies in the metal itself as it’s considered precious and used in various industries, including aerospace, medicine, electronics, etc. Otherwise, this is inert as it does not provide steady income, generate cash flow, or produce anything valuable.
Many companies would suggest that you park about 5% of your portfolio in precious metals. This is especially helpful if you’re going to put this into a ROTH IRA account. Check out how to open an IRA account on metal-res.com and know more tips on how you can open and start your investments with silver and gold. Know that this should be approached with the mindset of a speculative investor. This is not especially easy to discern as the price today seems to go on to infinity. As with any other investments in the market today, silver can also go flat, where trades sometimes go at tight prices.
Are Precious Metals a Good Investment?
If you know what you’re getting into, then yes, silver and other precious metals are excellent investments. You need to look at the historical facts and figures. Many people have considered silver not as a form of investment but as actual money throughout the centuries.
Know that they were used to mint coins and people use this in their everyday transactions. In the meantime, there’s gold withheld by banks and governments, and they are only used by the rich. Some people even refer to silver as “poor man’s gold.” Since this metal is used to make money, the value has remained the same over time, and it’s still stable even today.
However, in the 1960s, know that the price of silver did not even reach a dollar per ounce. This is why the US government decided to mint coins using this metal. However, when it increased its prices, the government agreed to remove silver from the coinage, effective in 1965 through the Coinage Act. You can read more about this Act on this page.
After its demonetization, its price increased. The value became even more intense, and it has begun its journey in the realm of investments. At the beginning of 1970, silver was $1.70. The price peaked in 1980 at $49.45 per ounce. The incredibility of the price increase means that it has risen by more than 2,700% in just a span of ten years. However, the incredible highs come with also the lowest of dips. In the space of five months, the price began to plummet at around $11 when their adjustments were made.
Ironically, the prices regained their highs almost 39 years later. However, it was not able to sustain long as there were dramatic increases and periodic lows. This helps the metal to maintain its reputation as an investment. In the eyes of others, this commodity may perform spectacularly, or there comes a time when it just simply does nothing.
About the Prices from 1995 until Today
From 1995 until 2003, the price of silver went above or below $5 per ounce. At the start of December 2004, the price charts show that it almost reached $10. If you have held on to this investment for about eight years, you might be surprised that you don’t get significant returns. But things changed in 2004 when the trend turned upwards where it rose close to $16, especially during the 2007 financial crisis. At the end of 2008, it went down to about $9.09.
However, a second significant upturn was coming. This was when investors determined that silver was a legitimate investment when there were crises. There was a return of nearly 500% or $50 in just a space of three years. The decline happened in 2014 when it fell to the range of $16 and even got a dip of $12. However, it’s possible for another price hike as many people are retiring and including the precious metals in their IRA accounts.
Investing in Gold vs. Silver
Some investors may interchange between silver and gold because they generally have the same price performance and history. They fall in tandem because they are essentially in the same asset classes and considering this; it might not matter which of the two you’re holding in times of a sudden market downturn. More about asset classes in this link here: https://www.proactiveinvestors.co.uk/companies/news/218586/understanding-gold-a-step-by-step-guide-to-gold-as-an-asset-class-218586.html.
Generally, gold has been considered a typical investment since it’s still connected to monetary assets. The world’s central banks all hold a substantial amount of gold. Silver has been used in many industries in the past decades, and its applications are seen in the medical and technological fields.
Know that there are various ways that you can do to start investing in precious metals. This includes an IRA so you can diversify your portfolio. The price of silver has remained stable, and this is now more visible during the coronavirus pandemic. This is a highly speculative investment that can go up when the popular stocks start to go down. For this reason, this is often used to offset any losses in times of war, great depression, and bearish markets.