Follow the silver price live and learn more about investing in silver.
Why Invest in Silver?
Much like gold, silver is often considered a store of value and protects against economic uncertainty. Its unique properties and broad industrial applications make it an appealing asset for portfolio diversification. Learn more about investing in silver below.
Silver is seen as a hedge against inflation, similar to gold, preserving its purchasing power over time.
In the face of geopolitical or fiscal turmoil, the price of silver often remains stable, cementing its status as a safe haven for investors.
Silver's diverse applications in various industries add a layer of diversification to an investor's portfolio, mitigating risk.
Silver's superior conductivity properties for heat and electricity make it an essential metal for our green and high-tech future.
How to Invest in Silver
Silver, often referred to as the "poor man's gold," stands out as a multifaceted investment opportunity. The dual demand from both investors and the industry provides a unique investment case. There are several ways to get exposure to silver in an investment portfolio.
Physical silver refers to tangible assets such as bars, coins, or jewelry. This type of investment involves owning actual silver, which can be held and stored. Physical silver requires secure storage and insurance, and selling it may necessitate verification of its authenticity and purity, which can be cumbersome and costly.
Silver Exchange Traded Funds (ETFs) are investment funds that track an index of silver-related companies, often silver mining companies, allowing investors to get exposure to the price movements of silver without owning the metal directly. ETFs offer high liquidity and ease of trading on stock exchanges with lower expense ratios than other silver-focused investments.
Daily Traded Funds
Daily traded silver funds are investment funds managed by a fund manager that invests in silver and silver-related assets. They provide professional management, making it easy for investors who don't have the time or expertise to select a silver portfolio themselves. Daily traded funds have the potential for higher returns due to active management.
Exchange Traded Commodities (ETCs) for silver provide an investment option in physical silver without the need for investors to store the silver themselves. Instead, they pay a fee for the issuer of the ETC to store the silver in a vault. ETCs are traded on the stock market and offer a direct investment in silver.
Silver derivatives are financial instruments that derive their value from the underlying silver price. This means that there is no physical silver as an underlying asset. These instruments allow for leveraged bets on silver prices and can offer high returns. However, they are complex and carry high risks, including counterparty risk, and are best suited for short-term trading opportunities rather than long-term investment.
Silver - a metal with dual demand
Silver walks the line between a prized monetary metal and an indispensable industrial commodity. Its valuation, less swayed by the whims of government monetary policy than other assets, makes it an attractive investment in times of economic turbulence. While the price of silver reacts to various factors — from market supply and demand to global politics and economic trends — its intrinsic value remains constant, similar to gold, although it is often more volatile. This volatility is a byproduct of its dual role: it's influenced not just by investors' sentiment as a 'safe-haven' but also by its industrial demand.
Silver fulfils a diverse array of functions in today's society. It's an essential material in various industries, prized for its unmatched electrical conductivity and anti-corrosive properties. Silver is vital in producing electronic devices, lends its antibacterial qualities to medical applications, and even aids in space exploration by enhancing satellite thermal systems. The enduring demand for silver in such diverse sectors highlights its dual nature as a steadfast store of value and a critical industrial resource.
Considerations Before Investing in Silver
- Risk Appetite and Investment Duration: When considering silver, you must gauge your risk appetite and investment timeframe. While silver possesses a high degree of liquidity, it may also exhibit volatility; the price of silver can fluctuate significantly in the short term but tends to rise over time.
- Portfolio Allocation: A well-diversified portfolio should allocate 15-40% towards commodities, including silver and gold. This approach is reflected in some of the most discussed portfolio strategies, such as Ray Dalio's "All Weather" portfolio and "The Dragon Portfolio". During periods of significant economic uncertainty, or when the price of silver is low compared to other assets, it can be strategic to increase holdings in silver. Silver can act as a "portfolio insurance," similar to homeowners insurance for a house.
- Investment Method: Each investment strategy in silver has its unique set of advantages and drawbacks; hence, a comprehensive assessment is necessary to ensure it corresponds with your investment objectives and risk tolerance. Possessing physical silver might not be the most convenient or liquid option, and it may pose challenges in rapid conversion to cash. Opt for an investment method that accommodates your needs, be it through physical silver, funds, or silver mining stocks.
- Sustainability: With growing interest in responsible investing, new regulations are being introduced to clarify what constitutes a sustainable investment. Funds must disclose their sustainability profile and publish documentation to substantiate this on their websites, allowing investors to gain insight into whether the fund fits into their portfolio.
Factors Influencing the Silver Price Today
The fluctuations in the price of silver result from many factors, most of them mirroring the gold market. Comprehending these elements is crucial for investors interested in the silver market or for those tracking the silver price live:
- Supply and Demand Dynamics: Silver's demand stems from industrial uses, jewellery, photographic sectors, and investment interests, whereas the supply is a mix of mining output and recycling of silver products.
- Industrial Utility: Silver has significant industrial utility, particularly in areas like electronics and solar energy, making its price sensitive to changes in industrial demand.
- Economic Indicators: Silver can also be an inflation hedge, although it's more volatile than gold. During periods of high inflation, the price of silver may increase as currencies lose value against precious metals.
- Investor Behavior: The silver market is smaller than the gold market, which means that the price of silver is subject to more significant fluctuations (higher volatility)
- Interest Rates and Currency Strength: Interest rates indirectly influence silver prices; low interest rates make holding non-yielding assets like silver less attractive. Similarly, the dollar's strength can affect the price of silver, as silver is often inversely correlated with the currency's value.
- Economic Trends: In a thriving economy, the demand for silver in industrial applications can raise the price of silver, while economic downturns may see increased investment demand for silver as a safe haven, similar to gold.
How Currencies Influence the Silver Price
The intrinsic value of silver, much like gold, sets it apart from fiat currencies, which can fluctuate in value over time. While currencies like the USD may experience depreciation with time (see the example for gold in the image below), the price of silver often exhibits stability or growth over the long term.
When considering silver as an investment, the choice of currency – whether it's USD, euros, or any other – doesn't change the underlying value of the silver. The actual value is always reflected when prices are normalized to a universal standard. For investors that, for example, live in Europe and have the euro as their base currency, the currency effects will not impact the investment result when investing in silver (or any other asset). Check out our calculation example for gold for a deeper understanding of how it works.
An often overlooked but important aspect of silver investments is the role of exchange rates. Investors in silver should consider current exchange rates to assess their investment's performance accurately. Many modern trading platforms overlook the dynamics of exchange rates and instead use a uniform daily exchange rate for purchases and daily valuations. This can create misleading representations of returns. In extreme cases, this may mean that investors see a decreased value in their investment due to currency exchange fluctuations, even if the price of silver has increased.
Why Invest in Silver with AuAg Funds?
AuAg Funds focuses on two key global trends impacting the precious metals market. The first trend is monetary inflation, where an increase in governments' and central banks' debt underscores the value of assets like gold and silver. These metals serve as a hedge against the depreciation of fiat currencies. The second trend is a drive towards a greener world. AuAg Funds significantly emphasises this area by advocating for and investing in companies leading the way in sustainable mining practices while consciously excluding those not striving for improvement.
Mining activities are known for their environmental footprint, particularly concerning greenhouse gas emissions. Yet, metals remain essential for producing sustainable technologies such as batteries, solar panels, and wind turbines. Gold, silver, platinum, palladium, copper and many more metals are integral to achieving a greener future. In recognition, AuAg Funds engages with mining companies to promote and accelerate their move to more sustainable operations.
Discover Our Funds Investing in Silver
AuAg Funds provides investors with a suite of funds designed to capture the essence of silver and its role in our monetary system and in the green transition. Our funds focus on investments in mining companies, offering an excellent addition to a traditional asset portfolio due to their low long-term correlation with stocks and bonds.
AuAg Gold Mining
Gives investors access to an equally-weighted portfolio of 25 gold mining companies. This fund follows the Solactive AuAg ESG Gold Mining Index, which includes companies with low ESG risks. The mining companies in the fund focus on gold, but investors also get exposure to other valuable metals like silver and copper.
AuAg Essential Metals
Offers investors exposure to a fund focused on metals crucial for a technologically advanced and sustainable future, including lithium, aluminium, copper, and more. The fund invests in companies focusing on industrial and technology metals, consisting of 25 equally-weighted holdings.
FAQ – Silver Price
Silver is usually priced in USD/oz. But this will vary depending on where you are. The silver price in Europe is generally priced as euro per kg or gram, while in Sweden, the silver is usually priced in SEK/g.