Silver, like other precious metals, may be used as an investment. For more than four thousand years, silver has been regarded as a form of money and store of value. However, since the end of the silver standard, silver has lost its role as a legal tender in all developed countries, although some countries mint bullion and collector coins like the American Silver Eagle with nominal face values. In 2009, the main demand for silver was for industrial applications (40%), jewellery, bullion coins and exchange-traded products. In 2011, the global silver reserves amounted to 530,000 tonnes.
Millions of Canadian Silver Maple Leaf coins and American Silver Eagle are purchased as investments each year. The Silver Maple Leaf is legal tender at $5 per ounce and there are many other silver coins with higher legal tender values, including $20 Canadian silver coins. Silver is legal tender in the U.S. state of Utah, and can be used to pay all debts.
Small investors are pouring money into silver, which has seen prices plunge to a four-year low.
Financial innovation has broadened the number of avenues investors can take to enter the silver market, but each option has its own pros and cons. Among other issues, investors looking to add silver to their portfolio must weigh paper versus metal. Here’s what to consider.