How to invest in silver ?

Why should you invest in silver? What opportunities can be seized with this currently undervalued metal? Silver is affordable and offers great investment prospects, making it increasingly popular with investors and savers alike, who see it as a safe investment, on equal footing with gold.

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A brief history of silver

Silver has always been a monetary metal, and its increasing scarcity is likely to make that all the more true. The metal has been a part of the history of money since the beginning: the monetary system established by Croesus in 561 BC laid the foundations for bimetallism, under which silver is a complementary payment method to gold.

Many investors still consider silver to be the “poor man’s gold” because of its low price in comparison to gold. The explanation for its current low rate is simple! Some years back, the silver market had a surplus supply as a result of the USA’s recovery of silver coins which had once served as money. This decreased the price of silver to $2 per ounce, and it was subsequently traded at around $5 per ounce for years. During that time, the price of silver was largely uncoupled from that of gold. It began to be seen as “just” another industrial metal, rather than as a precious metal in its own right.

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Why should you buy silver?

Since the 2008 crisis, silver coins and ingots have witnessed the strongest growth in demand compared to other sectors. Below is a recap of the 9 main reasons for investing in silver :

1.

An affordable precious metal

Silver is an affordable investment, within reach of any wallet. Silver currently costs 70 times less than gold. And yet, it provides equal protection to the yellow metal in the event of a crisis.

2.

Real value

The fact that silver is less expensive than gold makes it extremely liquid, meaning it is very readily circulated and traded. It is easier to buy consumer goods using silver coins than gold.

3.

Rising demand

The industrial sector is the primary consumer of silver (56%), particularly as concerns “green industry”, a sector enjoying both very high demand and very high growth.

4.

Devalued pricing

According to most experts, the price of silver is significantly undervalued. This is primarily due to its role as a raw material for manufacturers who push to maintain its low pricing.

5.

Complicated mining and recycling processes

At the current rate of use, it is estimated that silver reserves could be exhausted somewhere between 2021 and 2037. Very little silver is recycled today due to the complexity and high cost of that process.

6.

Scarce supplies

Silver is a precious metal which is becomingly increasingly rare. All the silver that currently exists (777,275 tonnes) plus all the silver lost throughout history (634,199 tonnes) could be contained within a 52 m3 cube.

7.

A non-confiscable asset

It is difficult for authorities to confiscate silver. The same cannot be said of gold, for example. As a result, it offers a degree of “political security".

8.

A sound investment for the short or long term

Given its scarcity and the continuous industrial need for silver, demand will always be sustained, and its price is likely to increase over the next few decades.

9.

Complementarity with gold

While gold is more of a long-term asset, the same is also true of silver, which also offers the advantage of better liquidity.

What form of silver should you buy?

There are two options for investment silver: ingots or investment tokens/coins. VeraCash has deciphered the main advantages and disadvantages of each type for you.

Ingots

Silver can be found in many different forms, including ingots (both standard size and small). 100 g and 1 oz ingots are often the most popular amongst new investors. Like gold ingots, silver ingots must be accompanied by a certificate stating their weight, silver content, manufacturer and serial number. When buying a silver ingot, it is best to make that purchase from a known foundry like Northwest Territory, Silver Maple, Pan American Silver, and so on. The first disadvantage of silver ingots is that they are subject to VAT (19.6% in France). The second is that they are also hard to divide up and complicated to store. So, in the case of an urgent need for liquidity, the entire ingot will need to be sold. Of course, this is all dependent on the amount of your investment in silver and your need for liquidity in the short to medium term.

Investment coins and tokens

Investment tokens and coins are a great alternative to ingots which allow investors to build up their savings, little by little. However, it is important to verify the purity of each coin: for example, Vera Silver offers a fineness of 999.5‰, while the Vienna Philharmonic coin is at 999.00‰, making it another star investment product. As with gold coins, certain silver coins offer a major investment argument: their premium! That premium, which is dependent on the condition, the rarity and the characteristics of the coin, can endow it with substantial added value. Not to mention fluctuations stemming from the price of silver. In short, investment coins and tokens should be the preferred option for the following reasons:

Where to buy silver bullion?

At VeraCash, the silver purchases you make via your account are backed by coins which are valid legal tender and by investment tokens. The primary investment token to which your silver purchases are backed is Vera Silver.

The VeraSilver coins benefits from a premium and from the non-application of VAT on purchases or of taxes on individual sales for under €5,000 for French tax residents (contrary to “classic” silver products).

Where to store your silver?

Because gold/silver ratio is currently 1:55, meaning one kilo of gold is worth 55 kg of silver, it would take up too much space to securely store your silver at home. Storing silver reserves at home also means running the risk of being burgled or of forgetting about them. When you buy silver through VeraCash, you enjoy free storage in high-security vaults at the Free Ports of Geneva.