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This Investment Option May Weather an Economic Downturn

Guest Post | Feb 19, 2023

Pixabay Geizkragen69 gold bars - This Investment Option May Weather an Economic Downturn

Image: Pixabay/Geizkragen69

With many Canadians facing recession woes, some are beginning to re-evaluate their current investments and whether they can weather the storm of another economic downturn.

Most investment portfolios tend to focus on a mix of stocks, bonds, and mutual or Exchange-Traded Funds. But silver bullion is also worth serious consideration for those looking to explore different avenues.

Silver bullion can be a great way to diversify your portfolio while also creating stability in the event of an economic downturn. So, what are the typical benefits of investing in silver bullion, and how would you go about selling silver in Canada when the right time comes?

What Is Bullion?

Bullion is silver (or gold) which generally comes in the following forms:

Bars: Mints and refiners create bars by pouring molten metal into a bar-shaped mould. The manufacturer will stamp their name (or mark) with the weight and purity of the bar onto its surface.

Coins: Coins have a face value and can only be produced by a national mint. The face value stamped into a coin is a nominal amount and not a representation of the coin’s value (which is usually much higher).

The Benefits of Investing in Silver Bullion

As mentioned, silver is a great way to diversify one’s portfolio, as it offers an economic cushion in the event of inflation, recession, or another stock market crash. But silver bullion has other merits.

  • Owning bullion can provide mental reassurance since it’s a tangible/physical asset and not a digital representation of wealth.
  • Commodities (like bullion) are often cited as a good choice for keeping up with inflation and the cost of living.

The Risks of Investing in Bullion

As with all investments, it’s important to understand the risks.

  • You do have to pay a premium when you buy physical bullion. If you are considering investing in bullion, compare the premiums of different dealers (premiums are added to the spot price).
  • As with any asset, there are unpredictable factors that could negatively impact the price. There are no guarantees in investing.
  • Safely storing bullion comes with challenges, such as the concern of theft and the cost of insurance and storage.

Where Can You Buy Bullion?

In Canada, you can purchase bullion from specialized retailers called bullion dealers.

When Should You Sell Your Bullion?

In instances of a stock market downturn, the value of bullion may climb as a percentage of your portfolio. If you need to rebalance your portfolio (possibly due to a downturn), now may be the time to sell your bullion so that you can invest in undervalued assets without using your liquid assets.

To Conclude

Investing in bullion can be a solid investment for those looking to hedge their current portfolio against economic conditions — like a recession or market crash. That said, as with all areas of investment, bullion does carry risk.

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Unlike investing in bonds or stocks, where you’d consult with your financial advisor, for bullion, it’s recommended that you connect directly with a bullion dealer. They’ll be able to assist you in adding bullion to your investment portfolio in a safe and secure manner.

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