Investing in Silver
Most investors know that silver has precious value, and most likely, always will. The fifty-dollar question is . . . What is the outlook for silver prices?
Though widely sought as a monetary metal like gold, silver is perhaps better recognized as a critical industrial commodity with truly unparalleled utility. Its chemical attributes as an electrical and thermal conductor, sensitivity to and reflectance of light, ability to endure extreme temperature ranges and as a natural antibacterial agent, make silver the "indispensable metal” as defined by The Silver Institute. It is difficult to imagine another commodity with greater prospects for strong growth in demand in the future than silver.
According to the silver industry analysts at the CPM Group, investors purchase silver because, along with gold, silver traditionally has helped protect individuals' wealth from the volatile ups and downs of the stock, bond and currency markets. In addition, silver has helped investors to stabilize wealth over the long term, and given them exposure to periodic (and sometimes dramatic) periods of rising silver prices. Silver investors can combine the capital preservation practice of buying and holding silver long-term with the shorter-term practice of trading a portion of their silver holdings in a more opportunistic fashion.
In 2017 and even beyond, two uncertainties are of foremost importance: How Mr. Trump's administration will deliver on his campaign promises, and the Fed’s interest rate policies and how they will affect the equity markets, the value of the Dollar, and the silver market. Is it safe to assume that Mr. Trump will deliver on tax cuts, infrastructure spending and deregulation? And will the Fed raise rates three times this year as predicted? If so, that would likely put negative pressure on silver prices. However, the unrealistic expectation that Mr. Trump and the Fed will be successful in all their lofty goals may already be priced into the silver market. If that is true, and Mr. Trump and the Fed do not achieve these goals as is widely anticipated, then that situation is likely to put upward pressure on silver prices, and potentially, significantly so.
Though growing demand for silver used in industrial applications is a positive for higher silver prices, prices can also be influenced greatly by the increasing demand for silver as a preferred investment vehicle, especially during times of uncertainty or crisis. Because it is unlikely that Mr. Trump will deliver on all his promises related to tax cuts, infrastructure spending and deregulation – and it is unlikely that the Fed will succeed in raising interest rates to the expected – it spells a positive case for investing in silver. In regard to interest rates, investors and fund managers alike are also becoming well aware of real net interest rates, by taking into account the steady and ongoing devaluation of currencies.
When investor sentiment begins to turn, silver prices may benefit more than gold prices, given the extent to which silver has been beaten down in recent years relative to gold. The gold/silver price ratio at the end of 2016 stood at 71. This ratio is relatively high, with the longer-term average gold/silver ratio standing at 55. This suggests the extent to which silver is a relatively better value than gold based on the two metals’ historical price levels. And, based purely on this metric, silver may be better positioned for stronger gains than gold going forward. The current gold/silver ratio can be found in real time using the the Monex Bullion Investor smartphone app available for both Apple and Android smartphones.
It is estimated that most all the gold mined throughout history still exists in some form or other. Silver, however, is different. According to The Silver Institute, more than 95% of the silver mined throughout history is gone forever, consumed by industrial use, and unrecoverable at any price. New supplies of silver for both industrial and investment use come from primary silver mines, as a byproduct of lead, zinc and other mining activities, and from silver recycling operations.
Monex offers pure .999 fine silver bullion in two convenient forms: The 1,000-ounce silver bar which is the standard industry unit and generally used by investors for trading and storage. Each bar is stamped with the manufacturer's hallmark and the exact bar weight which can range from 10% over to 10% under 1,000 ounces. Also available from Monex is the more convenient 100-ounce pure silver bar which will weigh exactly 100 troy ounces and are produced by an extrusion process, machine fabrication or a free-pour method. These bars are manufactured by a number of trusted refiners, and each bar is stamped with the refiner's hallmark, exact weight and fineness, and serial number.More Information
Silver coins represent a popular and convenient way to own silver. At Monex, investors can choose from pure one-ounce silver bullion coins produced by the US Mint, the Royal Canadian Mint and the Austrian Mint. These silver bullion coins are available in units of 100 coins. Also available from Monex are $1,000 face value bags of 90% silver U.S. silver dimes or quarters minted prior to 1965, and $1,000 face value bags of 40% silver U.S. Kennedy half-dollars minted between 1965 and 1970. There are features, advantages and benefits of each of these silver coin investment alternatives and a Monex Account Representative will be happy to help you determine which form will fit your personal needs.More Information
INVESTING IN SILVER WITH MONEX
Why should I invest in silver?
While gold is the most popular form of precious metal to own, many investors prefer silver or own silver in addition to their gold holdings because it offers them several attractive advantages. Silver is far less costly per ounce than the other precious metals and as such larger quantities can be purchased with the same investment dollars. In addition to silver’s value as a monetary metal, it is a highly essential industrial metal. Silver is the best conductor of heat and electricity and has unique reflective properties, making it indispensable for the growing demand of solar power at any price.
What are the differences between a silver and gold investment?
Over time, gold and silver prices tend to move in concert in terms of ever-depreciating fiat currencies. Recently, gold has been about 60 times the price of silver, while historically it was closer to 20 times. Silver prices are more volatile in movement than gold and have higher highs and lower lows with short-term silver-to-gold ratios going over 80:1 and under 40:1. Many investors prefer to invest in silver because of this higher price volatility which presents greater short term opportunities to profit, albeit with higher risk. Also, investors choose silver because of its relative low price per ounce compared to other precious metals, permitting a more divisible investment asset.
What silver products does Monex offer to investors?
Monex offers silver in investment quality forms as coins and in highly refined bulk form as bullion bars/ingots. Coins are government-issued with a face value in its currency, though its intrinsic metal value is generally much higher. Bullion coins fluctuate in price based on their metal value and are not scarce collector coins with numismatic value. Purchase prices on coins are generally higher than bullion bars due to minting costs and the advantages of being in coin form. However, the investment outcome is much the same as with bars because selling prices of coins are generally higher than for bars. For a list of the most popular investment grade silver coins.
Should I own silver bars or silver coins?
Large one thousand ounce silver bars, being the common commercial delivery form, are the most cost efficient form to hold silver. However, because they weigh about seventy pounds, they are typically chosen for depository storage rather than keeping at one's home. One hundred ounce ingots cost slightly more per ounce than the commercial lot size, but offer advantages for handling. For the most convenient and divisible form of silver, coins are preferred, especially for small lot investments. Investors who prefer having silver at home tend to choose silver coins, while those using bank/depository storage facilities choose bullion bars as well as silver coins. While coin investment results are nearly the same as bars, the advantage with coins in one’s personal possession is the ability to sell your coins without the cost and delay of an assay. When selling bullion bars that you have had in your possession back to a dealer, an assay is required to verify its weight and fineness. However when your bullion bars are stored at Brinks or Farmers and Merchants Bank, there are no assay fees required or delivery charges.
What is the process when purchasing silver from Monex?
Once you have decided on the type and quantity of silver to purchase, your Monex Account Representative will assist you in executing your order over the phone, and your purchase and price will be confirmed on a tape recorded line after your acknowledgment. A written confirmation will be sent to you with the details of your order. Payment may be made after you order, but must be initiated on the day of purchase, which means you must mail or wire funds on the day of your purchase. You can have your metal (a) shipped to your home; (b) made available for pick-up at over 30 facilities across the U.S. and Canada; or (c) have your metal delivered to a bank/depository for storage.
What forms of payment does Monex accept?
For bank wires from domestic banks, the funds are good (reliable) upon receipt. For bank wires of U.S. funds from foreign banks, the funds are good upon bank verification. Cashier’s checks and personal checks are also accepted; however, a hold-funds period of from five to ten days and bank verification are required. Cash, credit cards, convenience checks, payment in foreign currency or checks drawn on foreign banks are not acceptable.
What are ten top reasons customers choose Monex?
- America's Longstanding Reliable Bullion Marketplace
For 50 years, Monex companies have been recognized as an industry benchmark for the retail bullion marketplace. Monex offers very attractive round-turn competitive prices, which are quoted live online, with a single spot price per metal that correlates to COMEX/NYMEX prices almost perfectly. (20 year correlation record available upon request.)
- Sizable and Liquid Bullion Marketplace
Monex makes a very active 12-hour two-way daily market with up-to-the-second prices. Disciplined investors recognize that exiting an investment is as important as entering. The Monex two-way market offers investors the ability to both purchase and sell their metal quickly at very competitive prices. An attractive price to purchase or sell bullion, which is not available in volume, is not attractive. Monex Deposit Company has executed over $55 billion in customer transactions.
- Select Investment Grade Precious Metals
Monex offers a large array of the most popular and liquid investment grade precious metals products in bullion and coin form. The popular investment bullion products are those likely to be in greatest demand in the future, if and when investors decide to sell any of their precious metals holdings.
- A Personal Assistant and Personal Service
Each customer is assigned to an individual Monex representative, along with a designated back-up person, who can be called directly to execute purchase and sale transactions on an individual and personalized basis. More importantly, customers and prospective customers may inquire about their particular questions quickly and efficiently, along with discussing current trends and market information. Monex representatives are part of an experienced staff in Newport Beach, California offering exceptional full service, which is more than just a cut above internet service.
- Reliable Depository Storage
Monex can arrange storage of an investor’s metal at a bank/depository, such as Brinks.
- Easy Access to Borrowing Funds
Monex Atlas customers have the ability to borrow funds at any time from Monex Credit Company using their stored silver as collateral. The borrowed funds can be used for any reason, including the payment of a purchase.
- Market Price Transparency
Investors have the ability to access active live Monex prices on the internet that change many times during the day while keeping pace with world and exchange prices. Both bid and ask prices are quoted in bid/ask tandem whether one is buying or selling. Prevailing prices are not negotiable. Monex does not have a different spot price depending on whether you are buying or selling to somehow disguise a spread. The prices seen by the customer on the internet is the same price his or her account representative sees, so business can be conducted easily and rapidly due to this price transparency.
- Pick Your Price
Monex offers the ability to place limit-orders and stop-orders to purchase or sell if and when a selected target price is reached.
- Monex Thanks You
Many customers have been referred to Monex by friends and associates who are Monex customers. Over the years, about 25 percent of Monex customers are referred by other customers.
- We Appreciate Your Confidence
Because Monex companies have been in business for 50 years, investors feel comfortable and confident that when the time comes to sell back their silver, Monex will be there with an active two-way market.
How long has Monex been in business?
From a small coin shop in 1967, Monex companies remain family-owned and reside in the same four-story Monex-Building in Newport Beach, California where they moved in 1974. Now at 50 years, transactions exceed $55 billion, and Monex has become one of the oldest and largest precious metals dealers in the U.S., primarily due to repeat and referral business.
How long does it take to receive metal?
Monex carries substantial inventories at several independent and highly secure shipping facilities across the country. For the most part, metals are earmarked for customers as soon as their purchase is made. Though uncommon, commodities may be acquired or on order to meet extraordinary demand or unique delivery requests. Secure packaging and release of commodities to an insured carrier is not done until satisfactory reliable good funds are confirmed. Bank wires are reliable and confirmed as good funds upon receipt. Although cashier and personal checks may clear an issuing bank account, it does not preclude the canceling of payments at some financial institutions. Absent a letter of guarantee from the issuing bank, normal cashier and personal checks are considered reliable “good funds” after 5 business days. Note, for example, that Wells Fargo Bank has a hold funds policy of 5 to 7 days or more. Because of the high value packages, the shipping facilities use multiple verification means and individual monitoring and recording cameras to assure the integrity of every shipment. On average your metal will leave the shipping facility about two to five days following confirmed reliable good funds. You will be given a tracking number by e-mail or by your Account Representative. During times when the shipping volume is extremely high, as it was in 2008, you will be notified if any delays are expected. For deliveries to a bank/depository you will receive notification directly from the facility upon delivery, which by law is required within 28 days.
Is my metal insured in transit?
All shipments of silver products to you are insured against loss or damage in transit. If you decide to have your silver delivered to and stored by a bank/depository, the metal is fully insured in transit and also while in storage.
Can I track my shipment online?
Once Monex has received payment and the funds are confirmed and considered reliable good funds, Monex will direct one of its independent shipping facilities to package and assign it to either USPS or UPS for delivery to you. Once Monex has received a tracking number for your shipment, you will be notified by email or telephone. If you prefer to pick-up your silver at one of over 30 many locations you will be notified when it arrives and you can take possession at your convenience, anytime within a couple of weeks without storage costs. [Call for current pick up locations]
Can I pick-up my silver at Monex?
Though there is no facility in Newport Beach for pickup, Monex can arrange to have your precious metals delivered to any of the 30 pick-up vault facilities located in 20 different states. Also you can pick-up your silver at Brink's locations in Toronto, Canada, San Juan, Puerto Rico and Singapore.
What is the minimum amount of silver I can buy from Monex?
For silver bullion bars, the minimum purchase is one 100-ounce .999 fine silver bullion ingot produced by one of the world’s leading refiners. For pure one-ounce legal tender silver bullion coins, such as the Silver American Eagle, Silver Canadian Maple Leaf or Silver Austrian Vienna Philharmonic, the minimum purchase is one unit, containing 100 coins. For the .9999 fine 1-1/2-ounce Silver Canadian Maple Leaf, now widely known as the SuperLeafTM, the minimum purchase is 60 coins, or a total of 90 ounces of pure silver. For both the 90% and 40% U.S. silver coin bags, the minimum purchase is one $1,000 face value bag of coins. The 90% bags of pre-1965 dimes or quarters contain approximately 715 ounces of pure silver, while the 40% bags of 1965-70 Kennedy half-dollars contain approximately 295 ounces of pure silver.
How do I know the products I get from Monex are authentic?
Monex guarantees the authenticity and fineness of all of its bullion bars and coins. All silver bullion bars are imprinted with the refiner’s name, exact weight and fineness. Monex only sells silver bars produced by refineries approved by the COMEX. All silver coins are produced by government mints. The Royal Canadian Mint has authorized Monex as one of its Bullion DNA dealers to verify the authenticity of gold and silver Maple Leaf coins in just seconds using a laser-marking and precision radial line technology verification system.
Should I consider having my silver stored?
Since silver is far less costly per ounce than gold, the volume of silver for a given investment may present a storage issue. For example, it would take both hands to hold 60 silver one-ounce coins when the same value in a gold coin can be held between two fingers. For this reason, an investor of a large quantity of silver should take into consideration where they will store their purchase. For example, a $50,000 silver purchase would weigh about 175 pounds with a volume equal to about three large loaves of bread. That is why many investors purchasing larger quantities of silver use a bank/depository storage facility. Monex will deliver your silver with full title and ownership in your name to one of the independent bank/depository facilities that provide storage for Monex customers. These bank/depositories include Brink's in New York. When your metal is received by the bank/depository, the custodian of the facility will send you a document acknowledging the receipt and your ownership of the silver being stored in your name.
What is the cost for storing my silver?
If you decide to have your silver stored at Brinks, the storage cost including insurance is charged monthly, which on an annual basis amounts to about seven cents per ounce. Using the example of a $50,000 silver purchase, the monthly cost is about $15 for the storage of the 175 pounds of silver. There are no storage time limits and you can take personal possession at any time by having your silver shipped to you. You can also sell your silver at any time to Monex without delivery or assay charges. Additionally, you can also sell your silver to anyone else and Monex will arrange delivery to your selected buyer.
Does Monex sell collector or rare coins?
Monex only offers silver coins that fluctuate in price based almost exclusively on their silver content value and not on their rarity. Monex does have an affiliate company, Monaco Rare Coins, specializing in rare coins and other numismatic products for those interested in collecting and investing in rare coins and bars.
How do I sell silver back to Monex?
Selling your silver back to Monex is a relatively easy process. When you are ready to sell your precious metals back to Monex, please contact your Monex Account Representative for shipping instructions. Shipments must then be sent by USPS registered and insured mail with a return receipt. Customers are responsible for fully insuring their shipments, until it is received by Monex. Once the shipment is received and verified you will be notified and able to sell your silver. Proceeds of your sale will be sent to you in the form of a check or bank wire, or if you prefer, credited to your account. If your silver is in storage through Monex Credit Company at one of the bank/depositories, you can sell your metal over the phone at any time without delay. The transfer of title to the silver from you to Monex will follow your sale, and the bank/depository will notify you by mail that the transfer of title has occurred. There are no delivery charges when your silver stored through a Monex Atlas Account is delivered to or from a bank/depository storage facility.
Can I borrow cash against my silver?
With storage of silver through Monex at Brinks, you can use your metal as collateral to borrow cash against it whenever you want, which you can use for any purpose. Monex Credit Company, a California Finance Lender, offers cash loans of up to 75% of the value of your metal while you retain full title and ownership of the metal. Interest rates vary but have been 5.9% per annum since 2006. There are no loan set-up fees or penalties for repayment at any time. You can call your Account Representative and have the cash proceeds of the loan immediately sent to you, or you can use the loan to pay for a purchase.
What percentage of my investment portfolio should I invest in metals?
Many financial professionals believe that investors should diversify their holdings, having between 5% and 20% of their net worth in silver and other precious metals. The CPM Group has done research that suggests an optimally constructed investment portfolio in consideration of risk versus reward, which is available for discussion with a Monex Account Representative. Deciding how much of your wealth to invest in precious metals is a purely personal choice, and you should discuss your unique financial situation with your wealth, legal and tax advisors.
Does the face value of a silver coin affect its market price?
Generally, the face value of a silver bullion coin does not affect its price. While the face or currency value establishes the coin’s floor price below which its price can’t fall, the prevailing intrinsic metal value exceeds the face value by too great a margin to give the coin’s monetary value any significant extra market value.
Is there sales tax on my silver purchase?
Monex only collects sales tax on purchases for home delivery which are under $1,500 for California residents and under $1,000 for New York residents.
How are my investment profits in silver taxed?
As a general rule, profits are only taxable when you sell silver, no matter how long you own it. However, you should rely on your tax advisor for such advice. For general information on applicable federal tax you may want to check out Investopedia.com.
Does Monex report my silver purchase to the IRS?
Monex is not required to report customer silver purchases to the IRS. However, the IRS does require Monex to report silver sales by customers to Monex if the sale is silver bullion bars of 1,000 total ounces or more or if the sale to Monex is five bags or more of $1,000 face value bags of pre-1965 90% silver coins.