The pros and cons of investing in silver

When investing in precious metals, many people immediately think of gold, but silver is also sometimes an interesting option. It sometimes offers advantages that gold does not. But what are the pros and cons of investing in silver? The experts at The Silver Mountain have listed the key points for you so that you make an informed decision.
Silver has properties that make the precious metal suitable as an investment, especially in times of economic uncertainty. Like gold, silver retains its value over the long term, but it tends to be cheaper and therefore more accessible. Having these properties makes silver attractive to investors who want to build a more varied portfolio without making a large investment. 
In addition, silver is not only an investment product, but also has many industrial applications. As the demand from industry remains constant, the price of silver stays up, adding to its appeal.

Benefits of investing in silver: value, protection and accessibility

Investing in silver offers several advantages. We list the most important of these for you. 
Retains value
Silver is a durable precious metal, which does not oxidise easily. This means it retains its aesthetic and economic value. Partly because of this property, silver remains a popular choice among investors and collectors.
Provides protection
Like gold, silver is seen as a safe haven during economic or political turmoil. Often overlooked, it offers protection against inflation and currency devaluation almost as well as gold.
Cheaper than gold
Although gold and silver are both scarce precious metals, silver is generally cheaper. As a result, the entry threshold is lower, making silver attractive for novice investors or those looking to diversify their portfolios.

Silver demand and industrial applications

Demand for silver remains high worldwide, partly due to its industrial applications. Besides its use in jewellery, silver is also widely used in the production of solar panels, electronics and medical devices. This ensures constant demand, which in turn supports the value of silver. Moreover, silver, like gold, is a natural resource whose supply is limited. With rising demand and limited availability, silver prices are expected to rise in the long term.

Disadvantages of investing in silver: VAT and price volatility

21% VAT on silver bars
You buy silver in the form of coins or bars. Are you interested in silver bars? Then keep in mind that 21% VAT is levied on silver bars. Silver coins fall under the margin scheme, where VAT is only charged on the seller's profit margin, like The Silver Mountain.
With silver bars, VAT is levied on the sale of the entire product, making bars less attractive to private investors. VAT reclaim is possible for business purchases, which does make silver bars interesting for entrepreneurs.
Price volatility
Unlike gold, silver is more susceptible to price fluctuations. This is due to its dependence on industrial demand, which fluctuates widely. This leads to fluctuations in the silver market, requiring investors to expect large gains and losses.
Future silver stocks
Silver is a scarce commodity, but there is always the possibility of new silver reserves being discovered. A big find will let supply increase and the price fall. This is something investors should take into account when choosing silver.

Buying silver: considerations and guide for beginners

So investing in silver has both advantages and disadvantages. By weighing these carefully and tailoring your actions to your personal financial situation, you will determine whether silver is a good choice for you. Want to buy silver for the first time? Then check out our silver guide, which summarises all the important information you need to know when buying silver.
Want to start investing in silver, or want to know more about the possibilities? At The Silver Mountain, you will find a wide selection of silver coins and bars, with transparent prices and expert advice. Do you need this advice? Then get in touch with us! 
 
Disclaimer: The Silver Mountain does not provide investment advice and this article is for information purposes only. Past results are no guarantee for the future.