History

• Silver saw a 400 percent appreciation throughout the five-year period between 2001 and 2006, especially during the fall in value of the U.S. dollar. This appreciation was, in part, due to a shift in supply and demand of the precious metal as consumers' love of electronics helped deplete the amount of above-ground silver. The decreased supply meant an increase in the value of silver, but as mining for silver becomes more economical, its price will level out. The appreciation of any precious metal, including silver, is also due to people's fear during times of economic uncertainty. As they witness the decrease in value of paper money, they turn to precious metals as investment options.
  
  

Significance

• Although collecting silver coins, jewelry and antiques is fine if you have no intention of selling them, an idle collection does nothing to help your investments grow. Likewise, converting your hard silver into cash is more difficult than simply going to the local pawn shop, and it requires the assistance of a precious metals dealer. You're also likely to lose money to these dealers in the form of payments for services. A silver mutual fund, on the other hand, is an easy way to invest in silver without actually having to handle it.
  
  

Types

• Many mutual funds already offer investments in silver. Buyers have the choice of investing in actual silver or buying stock in silver mining companies. Your responsibility is to select a mutual fund that best represents your investment goals, and then turn over your money to the person in charge of managing that mutual fund. Ideally, the manager has pre-selected the funds he believes will yield the greatest return.
  
  

Considerations

• Investing in precious metals, including silver mutual funds, can be volatile. Because of potentially large market swings that can last for years, consider diversifying your portfolio to include other precious metal mutual funds. Should the value of one fund plummet, you will then have your other investments to buffer the loss. Experts also recommend that you not invest more than 5 percent of your total portfolio in precious metals.
  
  

Theories/Speculation

• Experts believe the price of silver will wane only when consumer fear declines. As long as people feel the pinch of a credit crunch and experience a lull in the housing market, however, they will continue to turn to precious metal mutual funds as a safe and reliable return on their investments.