You may have considered investing in silver, or you may already own silver, like many other investors. Silver, like gold, is regarded as a long-term investment and a great portfolio diversifier. Theis precious metal is used as a hedge against market volatility and as a safe haven against currency depreciation and economic uncertainty in investment portfolios.

As evidence of this, the silver chart that can be readily accessed from Kitco.com shows that silver had climbed by over 220 percent during the last 20 years at the time of writing this article.

Simply put, silver and other precious metals like gold are essential components of a well-diversified investment portfolio.

This is due to the fact that precious metals perform well in unpredictable markets and do not correspond with standard asset classes, making them a good choice for wealth preservation.

Silver Investing Options

There are several ways to invest in silver and by doing so, acquire access to its many benefits. Silver ETFs, mining company shares, silver derivatives, silver futures, unallocated or pooled accounts, and mutual funds are common examples of silver investment strategies.

These are, however, all alternatives for purchasing paper silver. The true benefits of investing in silver come from buying and holding physical silver, which is unaffected by stock market changes and decisions.

Silver is often more affordable than other precious metals such as gold, making it a more accessible method to enter the precious metals market. Physical silver can be purchased in the form of silver bullion, coins, ingots, or even by the gram. But, when it comes to purchasing and selling silver, how can you make informed decisions?

The Gold-Silver Ratio

The gold to silver ratio is a common investment tool. "The gold/silver ratio represents the number of ounces of silver necessary to purchase one ounce of gold," according to Investopedia.com. The fluctuating ratio is used by investors to determine the relative value of silver vs gold. The trader can use this comparison to decide the best moment to buy one metal over the other. It also aids in the diversification of investors' precious-metal holdings."

The gold/silver ratio is worth mentioning because it has recently been the subject of much debate. The Economic Times recently asked commodities specialist Jim Rogers which commodity he would invest in if he had to pick just one.

Mr Rogers stated that he would prefer silver. "If you look at the ratio of silver to gold, it is the highest it has ever been in recorded history," he explained. Never before has silver been so inexpensive in comparison to gold... If I had the choice, I would buy silver simply because it is less expensive."

Furthermore, many people believe trading based on the gold/silver ratio to be a safe way to accumulate these precious metals. If you look at the graph below, you can see that the gold/silver ratio has lately surged to 101.3:1. This indicates that to buy one ounce of gold, you'll need 101.30 ounces of silver.

However, how can you use the gold/silver ratio to help you plan your investment strategy? When compared to previous data, the current ratio in the example above is relatively high. While these numbers will continue to vary, a window of opportunity has opened up.

You can predict whether the present ratio will increase or decrease over time by comparing it to past statistics. If you think the ratio will fall, you can exchange an ounce of gold for 101.3 ounces of silver.

If the ratio fell to, say, the 35-year low of 31.06 ounces of silver to an ounce of gold, you'd be able to buy slightly over three ounces of gold with your silver, boosting your total gold holdings – and vice versa if you wanted to boost your silver holdings.

Purchasing silver is simple and straightforward

In essence, silver is a more cost-effective way to enter the precious metals market than gold, and the precious metal has become widely available through a variety of inventive goods.

Silver is a highly liquid asset that can be purchased and sold anywhere in the globe, and unlike currency, it cannot be easily duplicated. It is simple to invest in gold and silver today, and to add to or sell your silver. On the spot price, you can buy and sell to merchants and internet traders immediately.

If you’re contemplating investing in silver in 2022, speak with someone who specialises in silver bullion sales such as Private Vaults Australia.