Investing In Silver As An Alternative To the More Expensive Gold


Poor Man’s Gold – An unfair term perhaps, but the expression is used when investing in silver. The implication is that silver has investment qualities and value, but ounce for ounce costs less than gold so the less wealthy can afford to possess it.

Compared with Gold for Investment

Gold for many investors has become the alternative to the stock market. When the market turns down they switch to gold, then sell the gold when the market recovers. Gold has therefore developed a degree of volatility not shared by silver. There is more tendency to hold silver for its value, to prefer investing in silver for its intrinsic worth rather than to use it in the see-saw manner in which gold is employed.

Intrinsic Value of Silver

Undeniably, gold has some industrial purposes, but its real utility, apart from ornamental uses, lies in the value to which society attributes to it, whereas the value of silver is attributed more to its commercial utility.

Commercial Uses of Silver

In coinage, silver has been known since at least 700 BC; more recently, in early medieval England, the only coin was the silver penny, and the “pound” was the weight of 240 silver pennies. Much prized in the West of the USA, the silver dollar and other silver coins are things of the past, except as collectors’ items.

So-called sterling silver is an alloy of 92.5% silver with 7.5% copper; the copper gives it hardness, lowers the melting point and makes the metal suitable for jewelry and tableware. If germanium is added, the hardness is even further increased, and if rhodium is added, a shining effect is achieved.

Although going out of fashion, silver alloyed with mercury makes the amalgam dentists employ to fill the cavities they have drilled out.

Also going out of fashion is the photographic film, and X-ray film that was coated with silver; the use in this industry has decreased from a quarter to less than 10% of all silver employed commercially.

Taking advantage of its properties of electrical conduction, silver is widely used, in particular where resistance to arcing is required, and in many forms of batteries.

The many other uses are found in mirrors, window glass, optical devices, musical instruments, nuclear reactors, biological staining techniques, medical applications in drugs and equipment, and in cloth to inhibit bacterial growth.

Methods for Investing in Silver

The means of obtaining silver are much the same as gold, the one dealer is likely to trade in both, and the purchaser should, of course, ensure he is purchasing the silver from a reputable dealer.

Antique silver has risen markedly in value. Although the weight of the silver may be a relatively small component of the sale price, the eventual value is likely to increase because of its antiquity – the dealer must be reputed for his knowledge of antiques, though there are some extraordinary purchases made in flea markets.

Silver coins have become antiques; they have value for their silver and their age. It is not difficult to find a catalogue that will give market value.

Actual silver can be purchased in small ingots from a (reputable) dealer. The purchaser should be aware of the phenomenon of “spread” – resale price for his ingot is less than he paid unless the market value has climbed.

For investing in silver in larger quantities, the purchaser will use an exchange-traded fund (ETF) on one of the stock markets, or if he is a speculator rather than investor, he may turn to margin buying in the commodities market.