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					4 Reasons Why Silver Should be in Your Portfolio

It's the best electrical conductor of any metal, and may soon replace the
lithium-ion in batteries used in future Apple (NYSE: AAPL) iPhones
and laptops.
It's highly reflective, making it a perfect choice for the increasingly
popular photovoltaic solar panels.
It's strong enough to withstand thousands of pounds of pressure and
continuous abuse, making it the metal of choice for ball bearings on jet
engines.
Its antibacterial properties prevent infection and speed healing. It's
even used to purify one of the few limited resources that we would
literally
die without -- water.
This metal is already a strong investment.
Oh yeah -- and it's one of only two metals the U.S. considers legal
tender.
As you've probably realized by now, the super metal we've been talking
about is actually silver, and there's no reason it shouldn't be part of
your investment portfolio.
The case for silver-lining your portfolio
1. Because silver is used in more products and services around the world
than gold, its value will be prolonged and preserved for
decades -- even during crises or financial collapse.
2. Silver is a great complementary asset to gold. For example, if gold
prices rise to new record highs (as it has been), the expensive yellow
metal will become less attractive to industrial users, jewelry buyers and
central banks. In this event, many suppliers of these products will
substitute gold with the much less expensive but still shiny and durable
metal, silver.
This "substitution effect" would cause prices of gold to fall. In this
instance, your total returns would suffer if your portfolio happened to
be only
invested in gold. However, if your portfolio happened to also be invested
in silver (which would rise in price due to the substitution effect), the
negative returns of the gold could be offset.
3. Affordability. The metal is much less expensive per ounce than gold,
so an investor can purchase more "units" to increase their exposure
to precious metals without breaking the bank.
4. There are lots of different ways to invest in this metal, making it
super convenient.
Investing in silver ETFs and mutual funds
Want to invest in silver, but don't want to hassle of actually storing
it? Exchange-traded funds (ETFs) and mutual funds make owning silver as
easy as buying shares of Microsoft (Nasdaq: MSFT).
The iShares Silver Trust Fund (NYSE: SLV) and the ETFS Physical Silver
Shares (NYSE: SIVR) both track and reflect the price of actual
silver (minus management fees).
If you want to further diversify your silver strategy, you can even
invest in the silver mining companies themselves through the GlobalX
Silver
Miners ETF (NYSE: SIL).
Advantages: Lower premium (fund expenses only) on your investment and
easy to add to an IRA or other brokered investment account. You
don't have to store physical silver bricks or coins.
Disadvantages: ETFs and funds cannot be redeemed for actual silver, only
cash, which generally holds little value in a market collapse or
hyperinflationary environment.
Investing in silver bars, rounds and coins
Though ETFs and funds are easy to add to a portfolio, they are not the
best option if you're looking to protect your wealth from the possible
threats of a falling dollar, hyperinflation, failing government, or a
market collapse.
When you purchase physical forms of silver bullion (in the form of bars,
rounds and coins), you not only profit from silver's rising prices, but
protect yourself from these threats.
The majority of .999 fine silver bars come in 100-oz size, with the most
popular brand names being Engelhard and Johnson Matthey. Other
fine silver bars that come in a heavy, 68 pound, 1,000-oz size are
usually delivered commercially and are labeled by COMEX or LBMA
(entities that hold large amounts of gold and silver). Their cost to
produce is lower than most coins and rounds but they can be difficult to
store.
Silver rounds look like coins at first glance, but they are produced by
non-federal mints and can be customized with various designs or faces.
Silver rounds carry a lower premium price for production than silver
coins for the amount of silver content they possess, but they are not
considered legal tender as most silver coins are.
Silver coins have been federally minted by many countries, but the
American Silver Eagle is the only official silver coin minted in the
United
States. Other forms of silver coin are the 99.99% pure Canadian Silver
Maple Leaf and "junk-silver" coins. "Junk-silver" coins are those
widelycollected
U.S. coins minted before 1964 that contain 90% silver content.
Official silver coins (especially collectable editions) generally charge
a slightly higher premium than other physical forms of silver. However,
American Silver Eagles and Silver Maple Leafs are the only silver coins
with legal tender status, and carry an official guarantee of weight and
purity by their federal mints (You can verify a dealer's ASE coins here
for authenticity). An investor looking to buy one ounce of silver at a
time
may also find coins easier on the monthly budget than buying a single
silver bar that may cost several hundred dollars.
Buying physical silver is just as easy as shopping online. Kitco and the
First Federal Coin Corp. are two great places to start.
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Advantages: Physical silver may be put in a tax-deferred "Precious Metals
IRA" or Self-Directed IRA so long as it's at least .999 fine silver
(like the official American Silver Eagle coin). Physical silver will also
become more valuable as a potential medium of exchange as
governments print more paper money and devalue their currencies.
Disadvantages: Physical silver in bar form can be difficult to store due
to its heavy weight and volume. Silver rounds may not be used as legal
tender and it can be difficult to verify their purity. If you're looking
to invest in physical silver, your best bet are federally minted silver
coins.
Action to Take --> Choose silver tracking ETFs and mutual funds with low
expense ratios to easily add diversification to your investment
portfolio. But if you're an investor looking to preserve wealth and gain
from silver's future growth, choose bars, rounds or official coins.
Source: http://www.streetauthority.com/exchange-traded-funds-etfs/4-
reasons-why-silver-should-be-your-portfolio-458439

				
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posted:8/21/2011
language:English
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