How to invest in silver - paper silver and physical silver

How to invest in silver - worthless paper silver

There are currently significant differences between the silver paper market (silver certificates, futures and options, ETFs, investment and unit trusts, structured products) and the physical silver market. Understanding this is crucial for any serious investor.
The growth of investment options on the silver paper market brought new dynamics both in trading and in the investment area, and investment derivatives provided financial institutions with a wide range of additional opportunities to potential short-term harassment and price manipulation.     

Today, for the most part, the silver paper market is based on trading in exchange-traded futures contracts and the equally popular ETF funds (shares of an ETF fund that compiles silver in physical form with an independent depositary).  What is important, these "paper investments" are in no way protected against economic threats such as currency collapse or liquidity crisis. Furthermore, it is doubtful that ETFs reflect the real value of silver, as fund prospectuses are burdened with exhaustive and unclear legal terminology, and gaps.

Investing in silver

Investing in silver through traditional forms on the paper market poses an additional problem. While the initial deposit seems safe, incidents such as the recent failure of one of the most important players in the derivatives market prove the weakness of this way of raising capital. This institution has made a bad bet on European positions and, in order to save itself, has used the funds of the clients to whom it resells these derivatives.  As a result, he lost it this time too, going bankrupt.  The crash of such a big player meant that many customers would not see their capital again. Moreover, the failure had a destabilising effect on the financial system.

Experts Mike Maloney and Warren Buffett argue that financial derivatives (calling them "financial voodoo" and "financial weapons of mass destruction"), initially designed to reduce the risk of economic crisis, simply "spread" the risk all over the world!

Many creators of the silver paper market have only a fraction of the basic metal reserves they can trade, and yet they still issue "empty papers" for potentially non-existent amounts of gold. Meanwhile, successive market participants are slowly increasing the "artificial leverage" on the above mentioned fraction of silver reserves, similarly as banks in today's fractional reserve lending system do.

Large orders to sell silver slow down the increase of its price. This is, of course, a market manipulation which deepens the disproportions between the price of physical silver and the value of its paper derivatives. Fraud of market players leads to disturbance of the theoretical stability of "paper investments" and it is certain that the capital of clients is being squandered.

Investing in physical silver

However, one should look optimistically into the future and believe that thanks to the compromise of the intentions of the biggest players, the illusory valuation of paper trading will be overcome by the real market forces of supply and demand. The only sure investment is physical silver.