After
you and your financial advisor have decided that you should have a certain percent
of your investment portfolio in silver, you should choose the silver investment
vehicle that is in accord with your own preferences and investment philosophy.
As
with any investment, you should judge the merits of your silver investments as
they relate to your investment needs. To help you, we have included the following
digest of some of the advantages and disadvantages of particular silver investments.
| Exchange - Traded Funds (ETFs) |
Advantages:
For investors who seek exposure to the physical silver market, but have no desire to possess the metal or pay direct insurance, assay, and storage costs, ETFs offer an alternative. They have major exchange listings and trade like equities. Investors can buy shares in a trust that owns the silver bullion. |
Disadvantages:
Because the ETFs are created to reflect the price of the silver, the market price can be as unpredictable as the price of silver on any given trading day.
|
| Silver Bullion Bars
of Approved Refiners |
Advantages:
Usually the least expensive...Convertible into cash...Internationally
negotiable...Price is widely quoted. |
Disadvantages:
Must be stored securely...Possible need for assay at
time of sale...Yields no interest.
|
| Silver Mining Stocks |
Advantages:
Offers capital appreciation opportunities...Dependent
on the company's management and operating strength...May
yield a dividend. |
Disadvantages:
May require greater investment than small physical bullion
purchases...Requires knowledge of equity market. |
| Silver Mutual Funds |
Advantages:
Many mutual funds offer investment programs in silver
and precious metals...Diversified holdings among dozens
of companies. |
Disadvantages:
May require greater investment than small physical bullion
purchases...Requires knowledge of equity market. |
| Silver Bullion Coins |
Advantages:
Relatively inexpensive, some less than US$10.00...Small
and easy to store...Instant convertibility into cash...Easy
to transport...Internationally negotiable...Prices quoted
widely. |
Disadvantages:
Must be stored securely...Yields no interest...Premium
over bullion bar prices. |
| Silver Medallions |
Advantages:
Prices can range from least expensive to most expensive...Small
and easy to store...Easy to transport. |
Disadvantages:
Similar to coins, but not always easily convertible to
cash unless they bear the mark of a reputable refiner. |
| Silver Certificates
or Storage Accounts |
Advantages:
High liquidity...But at competitive prices...No storage
risk...No sales tax...Prices widely quoted...Invest by
dollar amount. |
Disadvantages:
Several days' delay in delivery of silver...Silver not
in physical possession of owner. |
| Silver Accumulation
Plans |
Advantages:
Invest as little as $100...Discounted commission rates...Highly
liquid...No sales tax...Offers dollar cost averaging...No
storage fees. |
Disadvantages:
Silver not in physical possession of owner. |
| Silver Futures Contracts |
Advantages:
Speculative appeal...Leverage reduces capital tie-up...Liquidity...Contracts
widely quoted...No storage risk. |
Disadvantages:
Many trading limitations...High risk factors...Unlimited
loss potential...Requires market expertise. |
| Silver Options |
Advantages:
Speculative appeal...Leverage reduces capital tie-up...No
storage risk...clearly defined risk. |
Disadvantages:
Trading limitations...Highest risk...Less negotiable and
less liquid...Investor must be willing to sustain the
loss of their entire investment in a commodity option...High
degree of knowledge required. |
