Precious metal investing has become an increasingly popular alternative investment. Trading silver is a way to generate returns at a time when market volatility has turned the stock market into a tough place to put your wealth.
Bullion investing is increasingly finding a place in balanced portfolios as precious metals like gold and silver do not correlate much to stock markets. If you’re interested in trading silver and turning a profit, these four strategies can help.
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Work with a Professional Silver Buyer
Trading silver means you need both a great source for bullion and a reliable way to sell it for fair market prices. Working with professional silver buyers is, without a doubt, the easiest way to go. These are bullion dealers who buy in-person or online and regularly work with bullion coins and bars, in addition to buying silver jewellery and other precious metal products.
When you work with a great partner in bullion, you can sell silver quickly and easily at a fair market price. It streamlines the process and makes your job that much easier.
Know Your Bullion Products
A working knowledge of the various bullion products available will help you identify the best forms of bullion for your purposes. Gold and silver come in the form of coins, bars, and rounds, in a variety of different sizes.
The name of the game with silver is usually volume. That can change if you’re a collector looking for rare or interesting pieces, but if your primary motivation is trading, you want to save as much as you can. That means going for widely-known and traded products like bullion coins issued by mints like the Royal Canadian Mint and bars produced by private refiners.
Buying in higher volumes often means securing a discount, reducing your price and giving you a wider margin for profit.
Buy Ahead of Time, Sell During Downturns
Assets like gold and silver gain much of their usefulness to investors as hedges. They’re a hedge against inflation, economic downturns, recessions, global uncertainty, currency devaluation, and all kinds of crises. The fact is, investors believe in bullion when their faith in other global institutions and the economy is at its lowest.
If you want to enjoy the biggest price gains, that means switching some of your investments to gold and silver when economic growth is ticking along rapidly. This is often (though not always) when silver prices are at their lowest, though it can be complicated by industrial silver demand and the metal’s application in solar projects and consumer electronics.
That often means the best time to sell is during downturns. When everyone else is scrambling to find an asset where they can park their money safely away from stock market volatility and inflation, the price of tangible assets like silver often pushes higher.
Trading the Silver-Gold Ratio
Buying low and selling high is simple enough, but some silver traders look to the silver-gold ratio to tell them what to do. This is the ratio of how many ounces of silver it would take to purchase one ounce of gold.
Many investors consider the ratio to be historically high. Before the end of the gold standard, the silver-gold ratio tended to be around 15. Today, it tends to fall in the range of 70 to 100.
If you want to outperform the gains you could have made investing in gold, some choose to pay more attention to the silver-gold ratio.