Is investing in silver a good idea?

Gold is very expensive, and getting more and more expensive.

It is out of reach for most people to invest in 10 ounces of pure gold.

However, 10 ounces of silver is still within reach of most people, as long as they are willing to save money for a couple of months.

The question really is: Is investing in silver a good idea?

Before you say yes or no, it is best to do some homework.

Let us look at some factors.

1.  Silver spot rate

You must know the silver spot rate before you buy anything.

It does not matter how you want to invest in silver.  You can buy silver ETF or silver coins or silver bars.  If the bank in your area has silver investment account, you can also consider that.

However, all prices are pegged to the silver spot rate.

How do you know how much silver is traded everyday?  You can check out Kitco for the updated trading price.  That is the silver spot rate.

2.  Silver historical chart

You have to check the silver historical chart.

You can check the silver historical chart from Kitco too.

The data goes way back.  There is no need for you to know how much silver is worth thirty years ago.

You just have to know the trend of silver.

You can see from the yearly chart of silver to know how volatile it is.  The price can go very high, and crash suddenly.

Based on this information, you can formulate your strategy of investing in silver.

3.  Forum

You have to check out the forums where investors of precious metal gather.

Many of them will have different ideas about when to buy and when to sell.  Some of them are long term investors.  Some are day traders.

You can get an idea of the different strategies that people use.

The most important factor is to know the market in your own country.  It does not matter how well silver is selling in the US.  The only thing that matters is the interest in your country.

Most of us are not going to sell our physical holding to people in other countries.

If it is hard to find a buyer in your country, then you should consider only paper asset, as in silver ETF.

4.  Transaction cost

The transaction cost is a factor in buying and selling of silver.

Most people do not factor in the transaction cost before they buy physical silver.  If the sales tax in your country is very high, it may not be worthwhile buying physical silver.

The premium over spot for silver bullion usually does not factor in the sales tax.  The premium over spot for silver usually factors in the minting cost, the insurance cost and the shipping cost.

If the sales tax is more than 10% in your country, you are going to pay more than 20% premium over spot for a single silver bar.

In this case, you might as well consider silver investment account or silver ETF.

However, if the interest in silver coins and silver bullions is high in your country, and sellers are willing to pay the higher premium to account for the sales tax, then it is worthwhile to buy physical.

Is investing in silver a good idea?  That depends on your holding power.  You must have money to buy and hold for a period of time.

Even if you want to buy and sell quickly to make quick profit, you must have the power to hold.

Silver is volatile, but not so volatile as to enable you to buy and sell in a matter of hours.