Leverage Silver Investments

There are many stocks that do provide leverage but additional to that there are other ways in which investors can find higher leverage than by just having mining shares. Bare in mind though that when a person decides to take on more leverage it in turn results in greater risk to the capital expenditure.

There is a probable opening at being able to gain a higher increase of profit, but this should always go according to the tolerance of risk you have and should not go above you financial ability. Doing this in most cases though for people that are just starting out is not always the most convenient. 

There are some people that believe that in many cases the usage of leverage has actually harmed the silver and gold markets more so than anything else but this is something that cannot be stated as a fact. But there are several factors that would lead analysts to believe so.

What occurs in the case of most people that are just starting out in this business is that they will become interested in the precious metals market and will obviously start out by obtaining information on the subject by doing research and reading up on the subject. This type of information often times makes a person that does not have much experience go ahead and use as much leverage as possible.

The thing that often times happens is that an enthusiastic apprentice will then go and open an account and place the minimum amount margin that is required by the broker and then buys silver or gold on margin and the result is that in a very small amount of time it all gets drained. When this occurs it is common for a beginner to not take the responsibility for the decisions made but to blame it on others or other situations.

When looking as to why these sorts of things happen in some occasions to people that are just starting out, it is important to consider the reasons as to why. In some cases the preliminary information they may have gotten might have not been the right one. The problem is that when this occurs, the new investor will on many occasions become disappointed with the silver market and also goes into what is known as the bare area.

As many people that are upset about a project not going well, many times people that do not make it in the first try will then proceed to spread the news as to why investing in silver and gold is not a good idea. One good thing to remember though is that paper silver is not the same thing as real silver is. Paper silver can be considered things like exchange traded funds, pool accounts, stocks, options, futures, leverage purchases etc and they all come from the silver asset however the actual silver backing the transaction is not there in order to settle.

Remember that it takes around five thousand dollars or so in order to open up a futures account and the minimum amount to open an IRA account is five thousand five hundred dollars and in the last few years the precious metals have been in the bull market, but silver and gold have gone through extended bear markets for quite some time.

Consider that during the bear market stage of silver, opening a futures account with five thousand dollars would have allowed a person to be able to buy around one thousand ounces of silver. It is also not always possible to know how many futures accounts are going to open and close within the timing of a year however a conventional look at silver business demonstrates the positions that are not reportable that are somewhere around fifty thousand contracts. The positions that are not reported are only the small player.

If you use around half of the amount of contracts as previously mentioned on a yearly basis for silver that in turn would stand for 125 million ounces of silver. When looking at this amount it is quite a shocker especially if you bare in mind that the whole Comex silver supply is around 124,000 starting from 2006.

If you think about all the silver futures traders that have lost capital over the past two decades it will be easier to understand how diverse the silver market price possibly would have been is silver was uniquely a cash market. In other words, there would be no future trading just hard cash and carry business where the investors and fabricators would only buy silver at the actual market price; this would probably fluctuate depending on the actual supply and demand.