High-profile assets like stocks and cryptocurrency often steal the limelight in the world of professional trading. Although commodity trading is a popular diversification method, this asset class also has plenty to offer in its own right.
In particular, silver is an often-overlooked commodity that offers significant advantages over other more “popular” options. Understanding the potential benefits of trading silver will help you decide whether it could benefit your portfolio.
With this in mind, we’ll share five advantages of silver for professional traders in this article.
It’s real money
Silver has maintained its status as a store of money for thousands of years, and this isn’t likely to change any time soon. Other assets like cash and stocks are vulnerable to depreciation, due to factors like inflation or money printing on the one hand, and investor sentiment or financial performance on the other. But not silver. It’s a tangible asset that’s in limited supply, so it will never lose its value. History backs us up on this one.
It has diverse applications
Silver is mainly known for its attractive appearance, yet it’s also highly conductive and rust resistant. As a result, it’s used in a wide range of industries including, electronics, automotive, aerospace, and healthcare. We can expect the value of silver to continue growing as the economy expands and technology continues to develop, making it a good investment for savvy traders.
It’s a safe haven
The value of silver tends to increase during times of economic uncertainty. This is why many investors turn to silver as a ‘safe haven’, using it to hedge against high inflation and other economic challenges. In general, silver prices tend to remain stable compared to other instruments, making it an appealing choice for traders looking to add less volatile investments to their portfolio.
It’s highly liquid
Silver is one of the most liquid markets in the world. It’s incredibly quick and easy to trade silver at any given time, especially compared to some other instruments such as small-cap stocks. Not only does high liquidity make trading silver more convenient, but it can also give you access to tighter spreads and lower transaction costs, helping you to make the most out of each trade.
It’s more secure
Many of the assets involved in modern trading such as company shares and cryptocurrency are intangible, meaning that they come with a degree of cyber risk that many traders neglect. Yet trading silver doesn’t necessitate a huge digital presence as it’s a physical resource, reducing your exposure to cybercrimes such as phishing or identity theft.
There are many advantages of trading silver. Yet you should bear in mind that, like all assets, it has its downsides. Balance the potential opportunities against the risks. This way, you’ll be sure to use effectively in your portfolio and better achieve your trading goals.
