Silver prices today (Friday) fell 0.6% despite the European Central Bank's (ECB) potential plans to expand its $68 billion bond-buying program.
At 9:45 a.m., silver prices today were trading at $15.75 per 5,000 troy ounces - the amount traded on each futures contract. Silver futures are on track for a weekly loss of 2.2%. However, silver futures are now up 0.1% for the year.
The decline in silver prices today came against bullish news that the ECB is considering new economic stimulus measures. ECB President Mario Draghi said yesterday he might expand the bank's $68 billion bond-buying program known as quantitative easing (QE).
Quantitative easing is the ECB's primary stimulus method. Through QE, the ECB transfers a government bond from a commercial bank's balance sheet to its own. The bond then shows up as an asset on the ECB's balance sheet. Once the transfer completes, the ECB credits the commercial bank with the value of that bond. These deals alleviate debt loads and stimulate economic activity.
Silver and gold prices typically benefit from QE. That's because investors usually buy metals as "safe haven" investments due to concerns the extra money supply will fuel inflation. Precious metal demand increases because money becomes less valuable when more of it is printed out.
Here's how investing in a safe haven like physical silver can save your portfolio from potential ECB woes...
How to Safely Benefit from Silver Prices Today
A safe haven is an investment expected to retain or increase its value during market volatility. Investors use safe havens to insulate themselves from losses in case the market dramatically declines.
That's why physical silver is a healthy investment no matter where prices move. The commodity is meant to be treated like insurance rather than a huge profit opportunity.
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The value of physical silver can withstand a weakening dollar or plunge in the Dow Jones Industrial Average. These hedging qualities make it a great long-term addition to your portfolio.
"I have physical silver," Money Morning Defense & Tech Specialist Michael A. Robinson said earlier this year. "I might have bought some at the top, but I don't care what the price goes to; I will not sell that physical silver. It's there for a reason - just like I have insurance on my car, I have insurance in case of a disaster."
And insurance against stock market volatility is only one reason why you should buy physical silver.
Alex McGuire is an associate editor for Money Morning who writes about commodities. Follow him on Twitter for all of the biggest oil, gas, and silver updates.