Education Centre

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Negatives of silver investment

Coping with silver price volatility

Silver investment is not for the fainted hearted, and comes with two risks investors should understand before they buy allocated silver bullion.

Silver is volatile, and sudden and violent price drops can occur – as they did in 2008 when silver prices declined around 50% in a few months. If you might suddenly need your capital for cash flow needs or anything else, then silver bullion might not be a stable enough asset class to help you preserve your capital over the short and medium term, whatever analysts say about the long term fundamentals for silver investing.

Like physical gold, silver also pays no yield, making it less attractive to investors that look for income more than capital gains. However, in today’s zero interest rate environment, where cash deposits pay such little interest, silver’s lack of yield is less of a concern for those investing in silver bullion and looking for rises in spot silver prices.

Whilst silver bullion investments can indeed play a role in a diversified portfolio, you need to carefully assess if silver is right for you and your specific and unique needs.