Long-term Value Preservation of Silver Bars

Investing in precious metals like silver can be a great way to preserve and grow your wealth over time. Silver, in particular, has proven to maintain its value well and even increase in value during periods of economic uncertainty and inflation.

In this article, we’ll explain why silver bars can be an excellent investment for long-term value preservation.

Characteristics of Silver That Allow for Long-Term Value Preservation

Silver has intrinsic qualities that make it uniquely well-suited for holding its value over long periods. Here are the characteristics of silver that enable it to preserve value:

Silver Has Been Money for Millennia: Unlike paper currencies, silver has been recognised as a reliable store of value for thousands of years across many cultures. This history gives it credibility as a long-term holding.

Multiple Industrial Uses: Silver is sought for industrial applications like electronics manufacturing and photovoltaics. This means there are diverse sources of demand that support its market value.

Finite Supply: The amount of economically recoverable silver in the earth’s crust is limited. Supply constraints tend to underpin long-term price floors.

These enduring advantages make silver reliable for long-term value preservation, even across generations. It tends to hold its inflation-adjusted value over very long horizons.

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Supply and Demand Dynamics Support Silver’s Value

Current supply and demand trends support its ongoing role as a stable asset. Here are the reasons why it is considered a long-term value preservation asset:

Declining Supplies: Silver is often mined as a secondary metal from lead and zinc mines, but this is becoming less economically viable. Pure silver mines are less abundant. Total mine supply peaked in 2015 and has contracted since.

Increasing Industrial Demand: Uses for silver in technology, solar panels, medical applications, and more continue to grow steadily. This industrial demand makes up over 50% of total silver demand.

Rising Investment Demand: More investors add silver exposure to hedge inflation and geopolitical risk. Total silver investment demand set new records in 2020 and 2021.

Low Risk of a Supply Glut: Since most new silver is produced as a by-product, miners can’t rapidly increase pure silver supply in response to higher prices. This reduces price volatility.

Inelastic Demand: Silver has few substitutes for many industrial and medical uses. Consumers won’t sharply cut back demand even if prices rise moderately.

Barring a major technological shift, these dynamics indicate robust long-term demand against limited new supply. This balance favours silver maintaining its value.

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Benefits of Owning Physical Silver Bars

Owning physical silver bars has distinct advantages for investors interested in the precious metal. Unlike paper forms of silver or digital silver holdings, bars in your possession provide a tangible asset outside the banking and financial system.

Silver bars carry no counterparty risk - they don’t rely on a promise to pay from any institution whose solvency could be doubted. They are not a liability for any party that could fail to make good on obligations. This contrasts with something like a silver ETF or mutual fund, which represents claims on stocks of bullion held by financial entities.

Holding silver bars yourself also means avoiding management fees and other costs charged by funds and ETFs for trading and storing silver on your behalf. You have complete control over your holdings and can be as private as you like, with no reporting requirements to third parties. This level of independence is not possible in paper silver investments.

Finally, physical bars cannot suffer from accounting risks, fraud, or distortions in pricing that some paper instruments tied to silver are susceptible to due to opaque accounting methods.

At the same time, less liquid silver bars’ outright ownership provides the ultimate security for those interested in long-term value preservation.

Common Questions About Investing in Silver Bars

Below are some frequently asked questions about investing in silver, particularly by newcomers:

How is the purity of silver bars assured? Major mints stamp bars with their exact silver purity content in ounces or grams. Standard bars are .999 or 99.9% pure silver. Assay certificates confirm this purity.

What affects silver bar premiums? Supply and demand determine premiums. When demand rises faster than immediate supply, premiums tend to increase to balance the market. A more abundant supply can lower premiums.

How are liquid silver bars? The prominent bar sizes can quickly be sold at many coin shops nationwide or online. Less common bar weights may have lower liquidity.

Are silver bars subject to sales tax? In most U.S. states, purchases of silver bullion bars over a specific dollar size are exempt from state sales tax. But rules differ in some jurisdictions.

Does silver tarnish? Silver bars don’t “rust” or oxidize like base metals. But they can develop a patina or toning. This doesn’t affect their purity or value but may reduce their aesthetic appeal to some collectors.

Do silver bars require any special care? They require no special handling. But like any investment asset, it makes sense to handle and store them with reasonable care.

How can silver bars be sold? Bars can be sold back to precious metals dealers. Many local coin shops buy silver as well. Online dealers also purchase bars through the mail.

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Conclusion

Silver bars represent a time-tested and reliable means for long-term value preservation. With industrial demand consistently robust and new supply increasingly constrained, silver’s fundamentals support maintaining its real value over extended periods, even generations.

Physical silver bars are an excellent choice for traders and investors interested in a tangible asset with low volatility that offers independence from the banking and financial system.

But you can also trade it through a contract for differences (CFDs). In this type of trading, you will be speculating the price of silver without owning it, making it a fast and efficient way to trade silver.

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“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”