Silver bars are actual lumps of purified silver formed into metal bars. These heavy physical items represent the value of silver per troy ounce, or in its raw form. Investors who want to physically hold silver, as opposed to buying into it through commercial trading, will often acquire silver bars and keep them in a secure area.
The idea of buying silver bars or other raw silver is an important part of the overall silver market. Silver pieces and bars are often referred to as “silver bullion,” which is just another word for pure physical silver. Investors should understand how silver bullion, and silver bars, contrast to other silver holdings that are not as concrete.
When it comes to investing in silver, holding actual silver bars is really just the tip of the iceberg. Beginning investors are often amazed by how many other options they have for getting involved in trades based on silver prices. In order to understand this variety, investors should look at silver as a commodity, as well as derivative products based on silver.
Silver bars represent an actual commodity. Silver, as a precious metal, is traded on commodity markets, and also traded according to potential future prices. Traders often trade commodity futures contracts, which specify a price for a future delivery date. The holders of futures contracts then profit from price rises or falls before the time of delivery.
In addition to trading silver as a commodity, investors can buy into silver in the form of various stocks, funds, or derivatives. The word derivatives has acquired a negative connotation for many investors, but it’s important to specify that silver derivatives are based on a physical product, rather than other financial paper, where items like mortgage derivatives have caused so much trouble on the financial market.
Common choices for silver investors who do not want to hold silver bars include silver mining stocks or funds based on silver. Some silver funds include exchange traded funds or ETFs. With silver ETFs, a trader can buy a collection of silver equities during a trading day. He or she can usually sell at pretty much any time, using the same strategies for volatility that are common with single stocks. Although short-term trading is generally risky, the buy and sell options associated with silver ETFs make them appeal to many investors who don’t want to have to hold onto physical precious metals in their homes or other places.
Silver investors have to assess how silver holdings fit into their portfolios. They have to also assess silver bullion or silver bars relative to other numismatic silver purchases, where the values of silver products have more to do with their crafting than the actual raw value of silver. Looking at all of the above options will help investors figure out where silver fits into their personal financial plan.