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Silver is a precious metal which has garnered much attention over the past few months. Prone to spectacular rises, and even more spectacular crashes, there is a lot of money to be made (or lost) with the lesser metal. What is the best way to invest in silver? How can you maximize your profits, minimize your losses, and take the headache out of investing in silver with this guide for beginner and intermediate investors:
Set Yourself A Budget
It can be very tempting to throw large sums of money into precious metals investing, especially silver as the potential returns (at least percentage wise) are likely to be higher than with gold. However, you should set yourself a budget and stick to it. Don’t be tempted to blow your budget out, even if you think you could be getting a big return. Why? Because as we have seen only a week ago, silver prices crash down at a moment’s notice. Therefore, wait until you are more experienced (or have sufficient cash to burn) before going over your budget.
We have heard stories of people selling their possessions, cars, and even homes to buy silver. Any criticism of silver seems to attract huge amounts of derision from the ‘silver bull’ brigade, but seriously- selling the roof over your head to buy one of the most volatile investments out there? Not a smart move.
Balance physical and non-physical
We all know the old adage ‘don’t put all your eggs in one basket.’ This is extremely pertinent when investing in silver. You shouldn’t put all your money in physical bullion or bars- but having a proportion invested this way serves to protect you in the event of financial/fiat currency collapse. Likewise, you should not invest all your funds in electronically tradeable silver, even though it is easier to profit when the price goes the right way, and easier to get out if the price collapses.
Hold your physical silver for the long run
It can be tempting to divest of your physical silver if the price falls too much, or if it goes high enough to return a good profit. However, the whole point of holding physical currency is to provide a safe haven in the event of hyperinflation or currency collapse. That profit of a few thousand dollars may seem large now, but if hyperinflation hits that same profit won’t even buy you a roll of toilet paper tomorrow.
Do not leverage unless you are willing to take the risk
The potential for profit is huge if you take out leveraged trades, but on the flipside of the coin there is also massive potential to lose all your money. Therefore you should not engage in any leveraged trade until you have a lot of experience, and deep pockets to back yourself up in case things go awry. Which is very prone to happening with silver. If you want to practice with leveraged trading then get yourself a practice account with a company such as eToro- this is far better than playing around with real money.
Read extensively on precious metals investment
Learn from the mistakes and experiences of others. Broaden your horizons and investment strategies. Improve your skills by absorbing the knowledge of those who have been investing in gold and silver for longer than you have. The best way to invest in silver is to be prepared so you are not taken aback by sudden developments or swings.