How Do Silver Coins and Bullion Fit Within Your Diversified Portfolio?


One of the biggest questions we field from beginning investors in precious metals is where silver fits in – gold has long been the standard for precious metals investment, leaving many wondering why they would look into silver and platinum as opposed to gold.  The answer is multi-tiered, but there are a couple different reasons why silver deserves just as much attention as the other precious metals.

Primary among these is simple ease in terms of getting into the market: when gold was $300 and below, it didn’t take nearly as much of a monetary investment in order to get a decent foothold within the market for themselves.  Now that gold is trading at 4 or 5 times that or more, it’s not nearly as easy, especially as weak as the economy is.  By comparison, silver is trading extremely cheaply per troy ounce and allows even the most cash strapped to begin accumulating a collection without stress.  One could purchase a roll of Silver American Eagles for approximately a third of the price of a single Gold American Eagle!

Similarly, another factor is the potential profitability: historically, silver has traded at approximately a 13-to-1 ratio, but is traded currently at almost a 60-to-1 ratio.  This means that silver is incredibly undervalued given the history of the metal and that if the metal moved to where it should be, silver would have a massive upside and produce an incredible profit very rapidly.  On that same note, if this were to occur, investors who were jumping on the silver train as it went up could easily cause silver to become very scarce within the investor market, driving prices even higher.

Another factor to take into account is the ability to trade: in the event of an economic crisis, fractional silver would be incredibly useful in the interrim period for barter and trade.  Even without an economic emergency, fractional silver is easier to liquidate more accurately than gold.  As an example: if you had a roll of Silver American Eaglesand suddenly needed a couple hundred dollars to cover a small emergency (such as a doctor’s appointment or a minor automotive cost), it would be significantly more efficient to simply take a profit on enough fractional Silver American Eagles to cover the cost over attempting to liquidate a Gold American Eagle, cover the cost, and then attempt to reconvert the remaining money into a smaller fractional gold piece.

Finally, one of the most important reasons to have silver as well as gold is because of diversification: in a period where gold may gain or lose a couple of percentage points, silver may not lose anything or even gain points as people switch to wherever they see more potential for gains or less potential for loss.  Having all of your eggs in one basket is never a good idea – and with the ratio of gold to silver, it is incredibly easy to accumulate some physical silver.  As ever, if you have any questions or you’d like some more personalized recommendations on silver products that would be right for you, give Global Monetary Reserve’s personal account advisors a call at877.795.9585!