Financial Dictionary -> Investing -> Silver

Silver is a precious metal that has been considered valuable throughout history. It has been used as money in the form of coins, used for basic trade, i.e. "I'll give you this amount of silver for those goods," or more recently as an investment. It is considered a store of value, meaning if silver is purchased for a given amount of money, it will hold its value and when it comes to selling it the same amount, if not more money will be made back. It is sometimes called a superficial bank. Until the 19th century there was a system known as the "Silver Standard" where money was based on a fixed weight of silver and coins were used to represent the amount of silver at hand.

During the time that silver was used as coins it was not feasible as an investment, but now that paper money has become the standard across the world people see silver and other metals like gold as an investment.

The logic behind investing in silver (which means buying silver) is that silver is a metal and will always be valuable because there is only a certain amount in the world, whereas bank notes are just paper and only as valuable as the economy they circulate in. If a monetary system collapses silver still has real value.

Over the years silver prices have declined as it is regularly used in production of things like jewelry, electronics and other products. At the same time the amount of silver on the earth has declined and can only continue to decline. This led to the belief that buying up silver will eventually lead to great returns as there will be a shortage, driving up the price and its worth.