Other than investing in yourself, silver is the lowest risk investment that I can currently think of.
(If you’ve already heard me harp about silver and/or you’re already invested in silver, skip down to the bottom to see a couple of interesting opportunities in the silver market.)
Silver, like gold, is a precious metal and is also considered an asset that every investor should hold in their portfolio.
You can physically hold silver (coins/bars/rounds) or you can hold it in paper (stocks).
The purist metals investors would argue that you should hold physical silver, with their point being you have direct control of your holdings – you are literally holding the metal. In your hand.Investors who normally trade stocks will usually argue that paper silver is better because you have more liquidity, which allows you to be much more flexible in an ever changing market.
I won’t argue for either side, but I will point out one important note.
The entire idea of owning gold and silver is that the metals are a hedge against inflation and are a last ditch effort to preserve your wealth. If everything falls apart, at least you’ll still have some gold and silver.
But if you’re holding gold and silver as stocks and the market falls apart (or shuts down), then you are left holding nothing… which defeats the purpose of having gold and silver in your portfolio in the first place.
Writing about investments is very difficult when you are making a prediction. It’s a bit like looking into a crystal ball and then spewing out some idea that you have. Sooner or later, your prediction will come true or backfire – and many people have egg on their face for making various predictions.
That said, I feel so strongly about the future of silver that I will reiterate my original statement: Other than investing in yourself, silver is the lowest risk investment that I can currently think of.
If you’d like to learn more about how invest, read here. I made a very short “no excuse guide to buy silver.” It’s just an article – no sales pitch or anything like that. “Interesting Opportunities in Silver”
If you’re already invested in silver, then great!
You can just sit back and relax.
Since the beginning of the year, the price of silver is up over 40%.
Many silver mining stocks are up way bigger than that. Some are hundreds of percent higher.
Really, I have no idea where it’s going from here in the short term.
I initially thought we’d see a pull back starting this week, and then going on for a month or so. However, the past two days really surprised me – silver surged big time.
That’s not to say that we could still see a pullback. The upward movement of the metal is just incredible… a little too incredible for my likes. But, hey, I’ll take it!
So, if you’re already invested with physical silver and silver stocks, then you can just smile and sit back.
But what if you still think we’ll see a lot more upside? (Which I believe we’ll see.)
How can we really double down on our investment?
We can trade options on solid silver stocks that have already seen a lot of upward movement and are likely to see a lot more.
I’ve talked about leverage before in terms of investing. Especially when it comes to real estate.
Now, leverage can get you into some serious trouble if you don’t know what you’re doing, so you really need to understand what it means to leverage yourself.
Our opportunity to leverage ourselves with silver is to buy call options on silver stocks. I won’t make any specific recommendations here, as you should know which silver stock options to buy on your own.
I will, however, point out that I believe many of those call options are not appropriately priced. I think they look cheap!
This gives us a great opportunity to buy some option contracts with only several hundred dollars, while exposing ourselves to big time upside potential. Could we lose all of our money? Yes, absolutely.
Silver, though, has been on a tear. And while the short term may see some cooling off, the longer term direction seems to be headed only one way – up.
Hey Cody, any reason for silver specifically? Why not gold? I don’t intimately know the factors that drive either metal except that their price appears correlated. Please shed light on this for me!
Yes. There is a historical gold to silver ratio of about 50:1. That means it would take 50 ounces of silver to buy one ounce of gold. A couple months ago, the ratio was 80:1, which means that silver was significantly cheaper in relation to gold. If gold sees a big uptrend in the coming years and silver goes back to it’s average of 50:1, then silver will see a much larger total gain. Now, lets say silver goes to 30:1 (because 50:1 is just the average), then silver will see a much MUCH larger total gain than gold. Make sense?
Here is a great link to a chart that shows what I’m talking about: http://www.macrotrends.net/2517/gold-prices-vs-silver-prices-historical-chart
Thank you! That was informative. Love your posts, I read thru most of them over the weekend.