"All that glitters is not gold," William Shakespeare wrote. That lustrous glow can come from silver, too. Many investors diversify their holdings by keeping some of their assets in precious metals such as copper, silver and gold. If you're going to invest in silver, it's important to know the difference between sterling silver and investment silver.
Metallurgists mix pure silver with other metals to make sterling silver. Like pure gold, pure silver is too soft to hold its shape under the stress of daily use. That's why many products you think of as "silver," such as eating utensils and jewelry, are actually made of a combination of silver and copper or other alloys. Products marked "sterling silver" must be made of a specific formulation of 92.5 percent silver and 7.5 percent copper. Sterling silver has some investment value, but its value is less than that of fine silver.
Fine silver is the purest form of silver you can buy. Fine silver is too flexible for use in jewelry or industry, but you can buy it in the form of bullion bars and coin-shaped rounds. You'll find the mark ".999 fine silver" or "999" stamped on these products. Fine silver has a higher investment value than sterling silver because it contains more pure silver by weight than sterling silver.
You can save both sterling silver and fine silver for investment purposes. To redeem sterling silver, your sterling silver jewelry or silverware will have to be melted and separated from the copper it was mixed with. Both sterling silver and fine silver are more valuable than the silver used to make coins, which is called "coin silver" and is composed of 90 percent pure silver and 10 percent copper.
Sterling silver and pure investment silver may be similar, but they are marketed very differently. Sterling silver is usually marketed as an ornamental piece and sold wherever jewelry and fashion accessories are sold. Sterling silver is rarely touted as a financial investment. In contrast, pure silver is marketed as a hedge against inflation. Investors can even hold silver bullion in their individual retirement accounts. Instead of buying silver jewelry at the mall, investors shop for pure silver in bars and rounds from coin shops or precious metal dealers.
- Jack Hollingsworth/Photodisc/Getty Images