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Silver Investing 101: A Quick Guide for Beginners

Silver Investing
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Silver Investing: Understand Silver Basics

The first step to silver investing is to understand the difference between basic silver vocabulary. Check out a few important terms you should know before you begin your silver investing journey.

Silver Coins: Silver coins are considered legal tender because they are minted by governments. Only silver minted by governments can be called silver coins. Coins are usually more expensive than a comparable silver round.

Silver Rounds: Silver rounds are similar to coins, except that they are made by private companies, not governments. The price of silver rounds can vary depending on the bullion dealer. For example, a limited edition round may have a higher value than a round of similar weight. Generally, when first starting out, it’s best to stick with rounds that don’t have high premiums.

Silver Bars: Bars are only made by private companies. They usually come in larger amounts. The benefit from buying bars over coins or rounds is that you save on production costs and can store a greater amount of silver in the same amount of space.

Silver Shot: Also referred to as silver grain, silver shot are granules of silver before it’s been melted into bars and rounds.

.999 Silver: Also referred to as fine silver, .999 silver is investment grade silver. The .999 means that the silver is 99.9% pure.

.925 Silver: Also referred to as sterling silver, .925 silver is 92.5% pure. It’s best used to for art sculptures, jewelry and household objects.

Silver Investing: Determine Your Goals

Now that you know the silver basics, it’s important that you think about what you want out of your silver investment. Is it an investment? A collector’s item? Do you want it for barter potential? Silver is generally meant for a long-term investment. Investors create precious metals portfolios for a variety of reasons. Consider these goals and see if your reasons are similar.

  • Appreciation Over Time: How long are you planning on holding your silver? Silver is typically a long-term investment that requires time to appreciate. It thrives during times of economic crisis and generally moves opposite to the stock market. 
  • Barter and Trade Potential: Depending on your outlook on the economy and fiat currency, you may choose to buy smaller pieces of silver or larger. Smaller pieces, like silver shot, allow you to trade and barter more easily, while larger pieces are more convenient to store.
  • Speculation: Some investors may buy silver only to speculate on the precious metal rather than a long-term hold. While silver is generally not a short term trade, buying and selling silver relative to the price of gold can offer winning traders.
  • Depreciation Over Time: Silver serves as a store of value, whereas cash typically depreciates and loses purchasing power. Many investors allocate a portion of their portfolio to silver as a way to diversify out of cash. This is especially advantageous when other hard assets, like real-estate, are in a bubble or highly priced. Silver provides a store of value similar to real estate, but does not require as much capital.

Silver Investing: Keep It Simple with .999 Silver bars

When you begin your silver investing journey, you’ll quickly realize there are thousands of silver products to choose from. This may confuse you and trick you into paying more money than needed. If you want to find the best way to invest in silver, focus on silver bars and silver rounds that do not charge a high premium. 

Silver coins are usually more expensive than silver rounds, even though they both serve the function. For example, you will pay a little more to buy certain coins, such as Silver Eagles (from U.S. Mint) versus other forms of silver bullion. You may get a little more money for them when it is time to sell back as well, but the premiums on these coins are unlikely to rise as much as the metal itself, compared to a similar coin or round of the same quality.

When it comes to determining the best form of investing in silver, know your goals to know what is the best product for you to buy.

Put simply, for the purpose of investment, you do not need specific coins.

If it is purely for investment purposes, to ensure you are investing in the highest quality silver, look to invest in .999 fine silver shot, rounds, and bars.

This type of silver is worth more because it contains 99.9% silver, with trace quantities of impurities making up the rest. This silver grade is used to make bullion bars for global commodities, trading, and silver investments.

It’s also important to realize that there are production costs with every piece of silver you buy. For that reason, silver bars offer you more silver value for your dollar, because it costs the same amount to produce a silver bar as it does a silver round.

Additionally, when comparing fine silver to sterling silver, it is better to pay for .999 (fine) silver over .925 (sterling) silver. This is because while both .999 silver and .925 silver are projected to rise in value in the coming years, .999 silver will be worth more in any investment.

Silver Investing: Don't Trade In and Out of Silver

When it comes to short-term trading, we suggest to stay away from trading in and out of your physical metal reserves. We are in the middle of a metals bull market, and we are living in uncertain times. Markets can be influenced by global events without warning, so you can’t afford to lose your core investment position in this environment. Smart investors who know they can store their wealth in precious metals, specifically silver, have a great opportunity in front of them.

Additionally, we believe current long-term conditions favor investing in silver rather than gold. Ultimately, if silver prices rise sharply in comparison to gold, it might be worthwhile to trade silver for gold. Metals investors who have mastered this strategy have gained much higher returns without ever risking their place in this bull market for precious metals.

Silver Investing: Keep Costs Low. Know Where to Sell.

When you do go to sell your silver and realize profits, it’s important you research which bullion dealers in your area will give you the best price for your silver. usually larger bullion dealers will offer better buy-back prices, but will generally require you to ship your silver to them. Smaller bullion dealers in your home town may be more convenient, but may offer you a lower buy-back price. Consider these three factors when determining where you will sell your silver.

  • Bid-Ask Spread: Consider the current spot price for silver (the market price or ask price) and the price bullion dealers are willing to by it back (bid price).
  • Consider the cost of delivery when purchasing your silver. One option to consider is to accumulate your silver in a vault and ship all of it at once when you have accumulated enough.
  • Sales Tax: Sales tax varies by state and region. Knowing where to sell your silver, depending on where you live is very important for maximum profit.

Silver Investing: Earn Interest On Your Silver When Possible

If you had to choose between two identical silver products, but one offered you some type of interest while you hold your silver, which would you pick? 

At Silver Stonks, we offer interest on each piece of silver you buy. This is something that has never been done before! We are able to do this through our crypto token, SSTX, because each silver product comes with a certificate of authenticity in the form of an NFT (a digital smart contract on the blockchain), which you can claim to earn interest on the physical silver you buy, in SSTX tokens.

SSTX tokens can be used in our e-commerce store to purchase more silver or throughout our developing metaverse. This new dynamic with silver investing gives you the best of both worlds- a traditional, secure store of value with the potential the crypto market brings.

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Teresa D.

Teresa D.

Teresa is the co-founder and CFO to Silver Stonks. Her background is in wealth management and scaling startups.

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