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In the wonderful world of investments, silver stands out as a unique contender and an asset that is considered by few, and overlooked by many. It possesses characteristics that make it an intriguing option, particularly as an inflation hedge. While its price may exhibit volatility, silver has the potential to provide a cushion against the steady rise in prices over the long term.
One might naturally question whether silver could serve as an inflation hedge akin to gold but at a fraction of the price. After all, as of August 23rd, silver was trading at approximately $24 per ounce, significantly more affordable than gold's price of around $1,919.
The answer lies in the fact that silver indeed shares some investing traits with gold, including its role as a safeguard against escalating consumer prices. However, it operates differently from the yellow metal, and its relatively smaller market size can contribute to greater price volatility.
For those contemplating silver as an inflationary defense within their investment strategy, several crucial factors warrant consideration.
One popular approach to silver investment involves acquiring physical silver. Investors have the option to purchase 99.9% pure silver bars, ranging from 1 ounce to 100 ounces, or bullion coins such as the 1-ounce American Eagles produced by the U.S. Mint.
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Alternatively, investors can explore the realm of "junk silver" coins. Prior to 1965, dimes, quarters, and half-dollars issued by the U.S. Mint contained significant quantities of silver. While these coins may lack collectible appeal, their value remains intrinsically tied to their silver content.
For those opting for silver bullion, it is essential to engage with reputable and well-established precious metals or coin dealers to ensure a secure transaction.
Over extended periods, silver has demonstrated its effectiveness as an inflation hedge. Nonetheless, it's important to recognize that in any given year or decade, silver may not necessarily emerge as the optimal choice for safeguarding your investment portfolio.
Nevertheless, silver boasts a relatively weak correlation with traditional assets like stocks and bonds, making it a valuable diversification tool for investment portfolios.
When it comes to allocating a portion of your portfolio to silver, expert recommendations may vary. However, a reasonable guideline is to allocate around 5% of your portfolio to commodities as a whole.
Investors can further enhance their portfolio diversification by incorporating both gold and silver holdings. This strategy helps mitigate the risks associated with the unique characteristics of each metal. Nevertheless, the efficacy of silver or any precious metal as an inflation hedge remains contingent on specific economic conditions and prevailing market dynamics.
Similar to gold, silver's price trajectory for the remainder of the year hinges significantly on the Federal Reserve's approach to interest rates.
Much like its golden counterpart, silver's allure as an investment tends to diminish as interest rates rise. This is due to the fact that silver, like gold, does not yield interest, unlike Treasury securities. Consequently, the interest rate trajectory set by the Federal Reserve will play a pivotal role in shaping silver's performance in the months ahead.
If you dont own any precious metals, then why not tell us? As a community we encourage ALL engagements and encourage everyone to take the plunge and own at lease a sinlge ounce of silver or a fraction of gold. If your struggleing to find a safe and secure place to buy, reach out to the community as there is always someone willing to offer their time and advice to help you out.
40+yr old, trying to shift a few pounds and sharing his efforsts on the blockchain. Come find me on STRAVA or actifit, and we can keep each other motivated .
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US Constitutional silver was scarce at my local coin show today, only Numismatic priced US coins if any.