One of the main principles I like to drive home when speaking about investing well is that real estate, unlike stocks and cryptocurrencies, is a tangible asset that appreciates in value over time with an added practical use; everyone needs somewhere to live. However, as the company name Reformation Asset Management would lead you to believe, we do a bit more than help people buy properties. As with any investment portfolio, it’s important to diversify where you allocate your funds and that whatever you decide to do with your portfolio, that your money is invested wisely. Now, I’d like to introduce you to your new favorite hard asset I always encourage friends and clients alike to invest in: silver.
It’s a common trope and unfortunate reality for those this happens to, but when you hear about a home burglary either on screen or in the newspaper, you’ll often hear of the thieves taking the silverware. “What would they want with a basic set of forks and knives from IKEA?” you may wonder. Well, the key difference here is the word silver. The most common way silver is traded and established as an asset is as a frequently gifted item to a newlywed couple or someone buying their first home. Authentic silver is an asset worth a lot more money than the more common cutlery most people use day to day.
In short, silver is commonly traded with a direct correlation to money in shorter sums. It’s a precious metal, like gold. If you’ve seen signs saying “we buy gold” outside of a pawn shop or jeweler, you’re already familiar with the concept of trading precious metals for cash. Silver has an intrinsic value as a commodity that has a numeric value assigned to currency. The more money that’s printed the more it costs to buy silver. 70% of silver is a by-product of mining other metals like copper and aluminum, as a result there’s not a huge supply of silver easily accessible.
Silver, while aesthetically pleasing, also comes in bars like its cousin gold, and can be traded and translated into currency more quickly than buying or selling a home, for example. If you don’t have enough savings for a down payment on a house just yet, investing in silver is a good way to direct smaller amounts of money into a hard asset as opposed to an intangible one.
You may wonder why not just invest in gold, and that’s a fair point. It’s still more valuable than silver, but what people frequently forget is that silver is more volatile than gold. What that means, for people who are familiar with betting, is that the price of silver swings with a larger severity than gold. Gold is consistent, and silver is more inconsistent. It’s the equivalent of betting on a crowd-favorite underdog. With any other swing, the dips are inevitable, but that also means that silver will outperform gold in a bull market. Furthermore, it’s being used more often in different industries, like solar energy.
Solar companies transform silver into a paste that is used in solar panels to convert electrons into energy. It’s an essential element of alternative energy that power companies are pivoting towards more frequently as a means of combating climate change. It’s also used in essential goods like medical equipment and batteries. These are things we, as a society, will always deem valuable, so there will always be a need for silver. JP Morgan is estimated to be holding between 100 and 200 million ounces of silver and Warren Buffet has invested around $1 billion in it.
Your cash can go further with silver in that you can buy more of it, so it will also take up more space. It tarnishes and that can affect the value, so if you end up holding a few bars, be sure to take care of them, but please be one of the first individuals to take advantage of this burgeoning market for investors: buy silver as a short term investment, it will give you long term gains.