Investing in Silver: Silver Has Enduring Value

Mankind’s timeless fascination with silver stretches back 6,000 years. As early as 700 B.C., the Mesopotamian merchants used silver as a form of exchange. Later, many other civilizations also came to recognize the inherent value of silver as a trading metal.

The ancient Greeks minted the drachma, which contained 1/8th ounce of silver; and in Rome, the basic coin was the denarius, weighing 1/7th ounce. And let’s not forget the English shilling "sterling," originally denoting a specific weight of silver, which has come to mean excellence.

Today, millions of people throughout the world recognize silver’s intrinsic value and have made it popular as an affordable investment. In the United States, Individual Retirement Account (IRA) participants can invest a portion of their investment portfolio in silver bullion coins and silver bullion bars provided that they are of a fineness equal to or exceeding 99.9 percent silver. Contact your IRA plan administrator for further information.

Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals.

Precious metals are valued for their beauty and relative scarcity in the Earth’s crust, and their superior properties. They are very malleable, highly resistant to corrosion, superior reflectors of light and are unsurpassed as conductors of heat and electricity.

Besides signifying status and wealth, silver has been one of the most romantic and sought after of all the precious metals. Mystified by its beauty from the beginning of time, people have been drawn to remote areas of the world in search of this white, reflective metal.

Silver has often been surrounded by mystery. The Incas of Peru called it "the tears of the moon" because they were awed by silver’s strange gleam, and the Chinese believed that a silver locket hung around a child’s neck would ward off evil spirits.

For the average investor, silver can be an effective means of diversifying investment assets and preserving wealth against the ravages of inflation.

Although the value of silver may vary, it has an intrinsic value that is immutable and permanent. Accordingly, many experts suggest that investors should include it among their investment assets.

Why? Because silver can be an important store of value. For example, between 1971 and 1981, the U.S. dollar lost more than half of its value, while silver prices rose nearly five times.

But what about the future? Nobody knows; but many financial planners still suggest including silver among the investments of their clients.

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.

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.

For more information about how to invest in silver, you should consult with well known, reputable brokers, bankers, financial advisors or dealers.

Prior to making any investment, you should make sure the seller is capable of delivering exactly what it is selling, and is providing you with the conditions under which it stands ready to buy back your silver.

The Silver Institute does not provide advice as to the buying and selling of silver or the advisability of trading in commodities, nor the tax consequences of any investment or trade in silver. Afgen.com Silver Report recommends that any prospective investors first check with their finance or tax advisor to determine which investment, if any, is the right option for their portfolio.


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