Why invest in silver? Because it has intrinsic value as a currency as well as in many industrial applications, including jewellery and electronics. It’s immune to the deleterious effects of inflation, so it’s a great way to retain your money’s value over time. It can also offer protection from market volatility because precious metals usually go up in value when the stock market goes down. Depending on what investment vehicle you choose, silver can even offer regular dividends and capital gains, like any other investment.
What’s the best way to invest in silver? That depends on what you want and what your goals are. Investing in stocks, ETFs, mutual funds, and ETNs combine the convenience of brokerage trading with the stability of precious metals. Buying physical silver coins and bullion can also be a great option, depending on your needs. Let’s take a look at five of the most popular ways to invest in silver.
What kinds of silver stocks can you buy? Many investors go for stocks in silver mining companies, but it’s getting hard to find pure-play silver mining companies, as most mining companies are diversifying into other precious metals. Silver is usually produced as a byproduct of extracting other metals, like zinc and copper, and mines don’t keep producing forever in any case, so it’s no surprise that silver mining companies would seek to diversify.
However, silver mining stocks aren’t the only way to go. You can buy stocks in silver refining companies or even in silver streaming companies. You can buy and sell these stocks just as you would any other stock, and you’ll receive dividends as long as you hold onto them, or could realize capital gains when you sell.
Silver exchange-traded funds (ETFs) are securities whose value is tied to the spot price of silver, so if the price of silver goes up, you’ll see returns. Instead of putting all your money into one stock, you can buy shares in a silver ETF that invests in a wide range of silver company stocks. Some ETS also invest in silver futures or in the physical commodity itself.
3) Physical Silver
Purchasing physical silver in the form of bullion or coins is lauded as the purest form of silver investing, and there is something immensely satisfying about owning bars of silver or stacks of silver coins. You can buy silver bullion and investment coins online from reputable dealers, and a 10 oz silver bar is comparable in price to one-tenth of an ounce of gold — so you can see how much more affordable silver is.
Buying physical silver is a good idea if you want to own silver as a way to protect your assets in uncertain times. Physical silver can also be an important part of a retirement plan since it’s protected against inflation — silver’s inherent value means that it will keep appreciating in step with inflation, so the money you put into silver today will have just as much purchasing power in 30 years’ time. If you’re worried about counterparty risk affecting the security of your investments, buying physical silver will eliminate it — once you buy the silver, it’s yours, and there’s no longer any counterparty to bring in additional risk. However, you’ll only get returns when you eventually sell the silver, and you may have to pay to have it stored and insured.
4) ETNs and ETCs
Exchange-traded notes (ETNs) and exchange-traded commodities (ETCs) are debt instruments that, like silver ETFs, follow the spot price of silver. ETCs and ETNs are like bonds in that, when you buy one, you’re buying debt, and when the note comes due, you could see returns if the price of silver is higher than when you bought. ETCs hold actual physical silver for collateral against these debts, while ETNs just track the price of silver. Both more accurately track the spot price of silver than ETFs, so you’re less likely to see tracking errors eat your returns.
5) Mutual Funds
Silver mutual funds are just like other mutual funds, but they bundle together silver-related assets to offer instant diversification. Mutual funds may invest in silver companies, or they may hold stores of physical silver, or they may invest in silver futures. You can buy mutual funds through your brokerage app, and sell them as needed. You’ll see returns if the fund’s holdings do well.
Silver is a great investment, whether you’re worried about market volatility, inflation, or political instability. Isn’t it time you added some silver to your portfolio?