Why You Don’t Have Enough Silver In Your Portfolio

Thursday, May 12, 2016

It’s not a stretch to say that many of the gold bugs in this world are also “silver bugs.” It’s rare to find someone who prefers one precious metal over the other; an investor who hedges with gold is usually likely to hedge with silver also.

But if you routinely invest in gold while paying little attention to its less-expensive little brother, you might be missing out. Silver has performed very well in 2016—up about 20%, notes Money Morning, quoting an expert who believes it may be headed as high as $22.

Reason #1: The historic gold-silver ratio suggests that silver has plenty of daylight left.

You’ve read it in this space before. You’ve checked out charts like what you see below:

The simple fact? Silver tends to have a higher price against gold than it does right now. In fact, right now might be the perfect time to buy silver if you read that chart correctly. And if gold demand is surging—which, as news this morning suggests it is—it follows that silver may be slated to have plenty of daylight and upward pressure as well. If silver is underrepresented in your portfolio, it may be time to consider changing your strategy a little bit and making some more room for the other precious metals.

Reason #2: Gold is “sexy.”

Aside from gold’s actual physical appearance, which is both unique and attractive, gold tends to be the “sexy” investment because of its value throughout history. It was a gold rush that attracted so many people to California in the 1840s, for starters. Gold’s price tends to mean that you get more value out of gold coins than silver coins. What’s more, gold is indeed an efficient investment for people with a lot of money to store safely—because gold is so valuable, it only takes a small amount of it to store it securely.

The truth is, however, that gold is a precious metal just like most of the precious metals. Many of the reasons that gold works so well as a store of value—it’s divisible, it avoids rust, etc.—also apply to metals like silver. Silver may not have the sexy prices of gold, but that doesn’t mean silver is any less attractive as an investment.

Reason #3: Silver is a great introduction into precious metals.

Maybe the problem isn’t that you have too much gold and too little silver—maybe it’s that you’re skittish about precious metals entirely and don’t own any of either. If so, then owning a silver coin is a great “first step.” it’s not a major expense, and owning some silver will introduce you to the world of physical bullion investing. Learning how to buy, store, and keep silver could be considered great “training wheels” as you eventually work and earn your way up to gold.

The truth is, silver is a precious metal that shares many great characteristics of gold. If your own portfolio is too low in silver, maybe it’s time you reconsider its position in your investments.

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.