One way to reduce the risk in investing in silver is to use a strategy known as cost averaging. This strategy breaks up a large lump sum investment of silver into smaller purchases made at regular intervals. This strategy reduces the risk of a substantial loss should silver experience a dramatic fall in price.
This strategy also helps reduce the average cost of an ounce of silver by purchasing more silver when prices are down and less when prices are up. When the entire amount to be invested is finally in silver, the average cost per ounce will be less.
Consider the following example:
Let’s assume that you want to purchase 7000 oz of silver and you start buying when silver is around $20 an ounce. But, the price of silver starts falling over the next few years to a low of $8.00 an oz. Fortunately, you decided to buy under a cost […]