COMMENTARY | The price of the precious metal platinum has gone up almost 10 percent in just the first two weeks of 2013. At the same time, in one week gold has gone up $61 an ounce to close at $1,686 as of today. Silver is at $31.68, down from a rise to $48 per ounce in early September, and is the least expensive of the precious metals to invest into if you’re a small time investor.
The United States Dollar has slowly been devalued, either from purposeful actions by the Federal Reserve like quantitative easing (QE4) or through the politicians in Congress making the world currency markets nervous. As the USD goes down in value the precious metals have the reverse trend in that they are tending to go up. This means that if Congress messes up again (like with the Fiscal Cliff) in regards to the upcoming federal debt ceiling then the USD will fall even more.
While CNBC is getting excited about the recent moves in platinum, it’s possible that silver may have the bigger payoff. Some analysts claim that recent bullish action should have silver back over $42 in 2013, which is around a 30 percent return on investment based upon current market prices. If you bought 100 shares that translates into $1,000 in your wallet, assuming you sold at that higher point, in return for risking a little over $3,000 USD.
There’s really only two ways to get into silver, either physically or virtually through stocks. The first option has investors buying the silver coins. The silver coins to look for are American Eagles, which are 99 percent pure, or pre-1965 halves, quarters and dimes (also called junk silver coins).
Secondly, the virtual option has investors buying silver through the i-Shares Trust (SLV) or through Sprott Physical Silver Trust Fund (PSLV), which both trade just like a stock. Some investors claim that, if you were to buy silver stocks online, PSLV is better than SLV. This is because PSLV has verifiable silver in it’s vaults in Canada while SLV is held by JP Morgan in England…which has not verified its holdings. Thus PSLV is considered the “safer” option.
As a side note, Silver Wheaton (SLW) is also a great way to get into silver. SLW is a silver royalty company and pays dividends, which none of the other options provide. Something to consider.
Disclosure: This writer has the bulk of his silver holdings in SLV, followed by PSLV.