Ten Rules for Investing in Silver

If you’re new to the silver market, it pays to read books like Arik Zahb’s “Rules Used By Profitable Futures Traders to Investing in Gold and Silver.” While you're at it, seek out articles and tomes authored by David Morgan. His seminal work, "The Global-Investor Book of Investing Rules," is a highly recommended guide that synthesizes advice from150 respected investment experts. After all, when your future wealth is on the line, you need all the help you can get.

Easy Does It

Starting your adventure into the world of silver requires a delicate balance of risk-taking behavior and constraint. Start slow and choose small quantities of premium-grade silver rather than large quantities of an inferior grade. Opt for pure, small bullion bars or coins of the realm. Avoid silver commemorative coins and jewelry; neither offers fast liquidation.

Strive for Stability

Silver is one of the most stable and abundant precious metals on the planet, so you can be confident it will hold its value over time. There are more silver than gold deposits on Earth, which explains why archaeologists have found it with other artifacts that have been around for thousands of years. Silver has a longer history of being traded for goods and services than other precious metals.

Diversify

Build your silver portfolio through diversification. Purchase mining company stock shares and futures, so when new deposits are found, you share in the mining company’s profits. That stated, don’t categorize collectible silver art and jewelry with your silver and silver futures. They belong on the walls of your home and on your body, not within a portfolio.

Research

In addition to devouring books on silver investing, become familiar with the stock and commodities exchanges. Follow silver markets assiduously, learn about industry movers and shakers and keep up with silver trends. Futures can offer a higher percentage of return than physical silver, but you won’t learn about such things if you don’t do your homework.

Hire a Professional

Select a broker or adviser specializing in silver investments rather than flying solo or choosing a generalist. Silver investment professionals come in all types, so check credentials like certifications and licenses. Ask about performance. Get client recommendations. Compare fees. Longevity in the profession is a good sign.

Maintain a Small Inventory

There's no need to build an underground bunker to hide your silver, but it’s not unusual to keep silver on hand in case there’s an emergency and you can’t get to the bulk of your holdings. Avoid talking about the silver stored at your home or business to keep your family safe.

Strike a Balance

Going to extremes by being risk averse or too speculative is never a good way to approach the silver market, says Morgan. He stresses achieving balance by mixing speculative silver assets with silver investments — and he makes it a practice to refer to each category by those names. Morgan writes, “Silver speculation is like cough syrup — good in small doses, but too much can make your portfolio sick.”

Keep Things in Perspective

Morgan calls silver “the world’s money of last resort” and recommends keeping only about 10 percent of one’s total assets in silver and silver futures. On the other hand, your physical silver holdings are much stronger and will sustain you long after paper currencies are devalued should the economy collapse. The original objective of amassing silver is trading it for goods and services. You can’t trade paper futures for food.

Adopt a Dollar-Cost Averaging Mind-set

Develop a system of adding to your portfolio at regular intervals. One highly recommended system is "dollar-cost averaging." You schedule silver buys throughout the year and wind up with an average gain as a result of high and low price fluctuations. Experienced silver investors find that scheduling regular silver purchases to achieve steady growth amid market fluctuations is a great way to discipline oneself.

Look to the Future

Look to the future to discover uses for raw silver that are already beginning to add to the value of this precious metal. Silver is used to manufacture myriad goods since it’s an excellent conductor. It's used to fabricate household appliances, communication devices and machinery, among other things. More uses for silver may materialize over time, adding to the value and prestige of this precious metal.