Posted March 12, 2012 21:17

The volatility of silver and the effect that it could have in the future: A few weeks ago silver had one of its biggest drops in months. The silver index fell more than 10% within a matter of days.

Think about this, if you are an investor that had held the 2x leveraged ETF of silver, otherwise know as AGQ, you could have lost over 20% of your initial investment within a few days.

Many investors state that gold and silver are quality investments. In my opinion, only half of that statement is true. Gold is a quality investment and will appreciate in value over time. On the other hand, silver is very erratic. One day it might be up 2% and the next day falls 3%. Silver is a trading tool, it should only be used by experienced investors and high-frequency traders. High-frequency traders use the AGQ (2x leveraged ETF) and the USLV (3x leveraged ETF). These two ETFs move on average 5% a day!

Over the next five or ten years the price of silver will probably be higher. But the price movement of Silver can cause any investor to lose some sleep.