Investing in Silver Just Got Easier

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In 2016, The Standard and Poor’s 500 Index has returned a yield of 4.7% thus far, while gold has outperformed it with a whopping 17.8%. Silver bullion, in the meantime, has offered a skyrocketing 26.2% return.

So why aren’t more people buying it?

Part of the reason, is that silver doesn’t get all the flashy press that gold does. So it tends to fly under the radar for most people. But another major reason is that it’s been impossible to find a way of investing only in silver, besides having it delivered to your door or keeping huge batches of silver coins.

Closed mutual funds and ETFs are about the only way of investing in silver and both of those methods always just include it in a basket with other precious metals. But that’s about to change.

Bullion Management Group Inc. (BMG) is reportedly the first precious metals bullion management company in Canada to have become the Associate Member of the London Bullion Market Association (LBMA), which is loosely overseen by the Bank of England. And it’s just added a new fund which is strictly limited to investments in physical silver bullion.

The company decided there was a hole in the marketplace that a bullion-only silver fund could fill, because it wouldn’t have the counterparty risks presented by an ETF or the liquidity constraints inherent in a closed-end fund. Instead, such a fund would allow silver to always be priced at Net Asset Value and retain the same liquidity as gold bullion.

There are two main reasons why silver is thought to be such an excellent investment:

  • As demand has been increasing, mine production has been decreasing. Such supply and demand imbalance is expected to mean long term appreciation for the price of silver bullion.
  • There is plenty of evidence showing that silver rises when stock and bonds drop. During the three year period from the beginning of 2008 through the end of 2010, silver almost doubled, beating even gold’s impressive 65.5% rise.

Now there is a way to buy silver, and only silver. It will be interesting to see if other funds follow BMG’s lead.

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