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When to buy silver?

Silver - when to buy?

The main purpose of investing in silver is its insurance function. Looking at silver as a kind of insurance policy and considering it in the long term, short-term price fluctuations are no longer relevant, and corrections are not a cause for concern, but rather an opportunity to buy some metal.

As silver is a relatively volatile asset, we should be aware that its price may fluctuate significantly - the volatility of the traditional market is about 30% (for gold it is about 16% on average) - and we should not make investment decisions solely on the basis of short-term price changes, which are normal in the silver market.

A valuable investment advice in terms of time to buy (or sell) can be to point out that, historically speaking, the price of silver follows gold. In order to be more precise, the price of silver reacts with some delay to the gold market, while later price changes are deeper than on the royal bullion, and compensate for the resulting delay.

Similarly, according to some analyses, most of the increase in silver occurs only at the end of the boom on these two precious metals. This is because investors in the silver market are following the gold market closely. And it is only when they are sure of the strength of gold that they invest in silver.

In other words, only significant increases in the gold market attract investors into the shallow silver market, which leads to rapid fluctuations occurring late into the royal bullion. In other words, only professionals (so called smart money) invest in the silver market.

When the broad public sees the boom, they also want to participate in it. However, as gold is not affordable for many investors, their attention is attracted by cheaper silver. When entering this market, they charge a significant price.

Taking this into account, people investing in silver should follow the gold market closely, and the time of entering the silver market should depend on the behaviour of the royal bullion, as well as the gold/silver ratio, which historically reaches its bottom at the end of the bullion boom on the precious metal market, and peaks at the end of the bear market.

Given that this ratio now seems to be close to peak, the boom on the precious metals market and the increase in silver prices are still ahead of us.

Where to buy silver?

Silver is purchased exclusively from well-known and recognized sellers.  Their long-standing and extensive range of activities practically excludes the possibility of fraud and makes it possible to obtain a better price because the higher the turnover of the seller, the lower the price he can offer to the customer.

For this reason, we should be sceptical about the unusual pricing opportunities of small players.

It is best to choose only those sellers who conduct their business in the form of a capital company (with the highest possible share capital) and, if possible, a public limited company operating on the stock exchange (increased transparency of operations and transaction security).

Let's also choose retailers who deliver goods at hand.  Investors should avoid timely delivery, which entails the risk of the dealer's bankruptcy risk - a reliable vendor always has a certain amount of bullion, cash and carry is a basic rule in this business.

The last important last thing to be considered when choosing a seller is whether or not it offers a guarantee of repurchase, which is common practice in the West and testifies to the professionalism of the seller.

In addition, purchases by auction portals should be avoided, which entails significant risks. After all, it is worthwhile to pay some extra money, but have guaranteed safety. After all, the aim of investing in silver bullion is to protect capital, so it would be extremely reckless to risk losing it as a result of Internet fraud or the purchase of silver-plated counterfeit products in order to save a few dollars.

After all, silver is a monetary asset and should also mean the highest level of security.  Apart from that, when buying on auction portals, it is not at all certain whether we are saving, it is true, because the volume of silver is bigger than gold and the price of ounces is much lower.

For this reason, silver with the same market value will weigh about 65 times more (we only compare spot price, excluding tax issues and margins) and take up 119 times more space (the density of silver is 83% lower than gold).

However, the high value silver still remains relatively comfortable. For example, a bar weighing 100 ounces and worth 1900 USD struck by the Royal Canadian Mint has dimensions of 18.3 cm x 8.1 cm x 2 cm, while a set of 500 single coins (specifically Clone leaves) with a value of 9,500 USD is placed in a box with dimensions as small as 25 cm x 20 cm x 13 cm, so we can fit a quite substantial investment in white metal.

It should also be remembered that silver, unlike gold, is blackened, therefore they should be stored under appropriate conditions (mintage caps).

How to resell silver?

An equally important issue, and perhaps even more important one, is also the choice of vendor to decide how to sell our silver.  Also in this case it is best to go to a reputable dealer - preferably the same dealer from whom we bought bullion beforehand.

Professional sellers guarantee the possibility of repurchase, while the bullion purchased from them is bought at slightly better rates.

We should avoid pawnshops, jewellers and all kinds of silver cash - we will not get so satisfactory prices. The exchange offices offer slightly better courses, but they will also be below the rates of professional dealers.

A separate issue is when to sell bullion.  If we are interested only in price movements, it is, of course, as expensive as possible. However, if we treat silver - along with gold - as an insurance for our investment portfolio, we should rather not dispose of it unless we are in an emergency situation.

However, we should first of all use the cash reserve at this point in time, which should be a minimum of three months' expenditure.


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