Silver is a pretty common metal in the world – it has many industrial uses due to its highly conductive and reflective properties. In fact, silver is the most thermally conductive element!
Silver also has a lustrous quality, until of course it oxidizes – this phenomenon is called tarnishing.
Silver has been used in coinage since at least 700 BC, when the Lydians used a naturally occurring silver-gold alloy to mint these coins. Concurrently, the Chinese also used silver in their coinage.
Today, silver can be invested in directly through the purchase of silver coins or bars which can be classified into bullion, collectibles, and antiques. Bullion is silver stored in a very simple form like a plain bar with a simple seal of the minting company on top. Collectible silver coins can include nationally minted coinage such as the US American Eagle, the Canadian Maple Leaf, or the Chinese Panda. These nationally minted coins are more valuable than bullion because they are easier to recognize and differentiate between genuine and fake products. That being said, the only true way to test silver is to perform an acid test, as today there are very skilled copycats which use lead and other inferior materials to create realistic looking fakes.
If you are going to invest in silver, make sure you are buying from reputable sources – I would not encourage buying from an online store that does not sell large quantities. I would also stay away from vendors on the street anywhere in the world – ensure that your seller has a brick and mortar business if you are going to buy face to face. Also, make sure not to buy silver that is overpriced – Bullion should not be selling for more than 5 percent more than the “strike price”. Strike price means the current world market price. In some countries, however, it’s hard to get around paying a large premium if the government imposes high import taxes on such goods. India, for example, has a huge import tax on gold and silver.
Silver bullion is usually sold in 1, 5, and 10 ounce pieces. This makes future transactions much easier.
If you are interested in buying collectibles, then you are effectively buying an insured piece of history. This is similar to buying collectible coins but for the vast majority of historical coins the silver/gold ones carry a much higher premium. For example, a simple old Roman coin might cost you $50-$100. A silver Roman coin will run you more like $250-$1000. I can’t claim to be an expert on the value of historical coins, but these types of investments can be a lot more risky than investing in simple bullion.
Historically, silver is not a good investment as compared to stocks or bonds. Silver will not pay you interest, it does not work to create earnings, and requires the cost of storage. However, under certain circumstances most recently the stock market crash of 2009 investing in silver or gold until the stocks dipped by 50 percent was a damn good deal.