From jewelry and utensils to electrical switches and solar panels to chemical-producing catalysts, silver — the most versatile of all precious metals — has long served as a useful natural resource thanks to its ductility and malleability. In the investment world, silver has long served as a reliable store of value to hedge against inflation. With an increase in demand for appliances that use silver — from renewable energy to electric vehicles and technologies, combined with its relative cheapness in comparison to gold, now is the time to add a sliver of silver to your investment portfolio. Let’s take a closer look at how to invest in silver.
How to Invest in Physical Silver
Much like its counterpart gold, silver can be invested in its physical form via bullion, coins, jewelry, and more. To ensure its purity, you’ll want to ensure you purchase physical silver from a reputable dealer. You should still check the spot price before making a purchase to guarantee that you’re getting a fair deal. Also note that liquidity is limited when you invest in silver in its physical form. This means you should plan ahead or wait, instead of making a quick sale when you find yourself strapped for cash to get the full value for your physical silver. Finally, like all physical assets, silver is subject to theft, so you’ll have to safeguard it and maybe even insure it.
How to Purchase Stock in Silver Miners
The process of mining silver itself can be profitable. Companies that mine the most conductive metal on earth can benefit you in a couple of ways when you invest in their stocks. First, a rise in the price of silver should correlate with a rise in the company’s earnings. Second, miners can increase profits by raising production over time.
Note that investing in any individual stock comes with a higher risk, which is why it is imperative you do a thorough fundamental analysis of the company to ensure that you’re buying into a high-quality company that can succeed before making your investment. Lastly, because their profits depend on the volatile price of silver, mining stocks can be volatile, too.
Similarly, for those looking to invest in silver miners with less risk and less bandwidth to do an in-depth analysis, ETFs that own silver miners are a great alternative. With a silver miner ETF, the risk of investing in an individual stock decreases since exposure to miners will be diversified. These are the silver miner ETFs to look into according to ETF Database:
- Global X Silver Miners ETF (SIL)
- iShares MSCI Global Silver Miners ETF (SLVP)
- ETFMG Prime Junior Silver Miners ETF (SILJ)
Of course, like with any stock, risk cannot be eliminated in its entirety. Any market disturbance felt on a large scale, such as a falling price of silver, will likely significantly impact your overall fund. Make sure your funds are balanced in their distribution among companies as some funds offer more exposure to higher-quality companies, while others focus more on riskier junior miners.
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How to Invest in Silver ETFs and Silver Mutual Funds
ETFs and mutual funds are pooled investment securities that offer an alternative to investing in physical silver. They come with less risk compared to investing in individual stocks by virtue of their diversification, can provide long-term stability, offer more liquidity compared to physical silver, and are less vulnerable to theft. Greater diversification hedges against market volatility, and unlike coins, jewelry, or bullion, you can sell silver ETF funds quickly for the best market price any day the stock market is open.
Keep in mind that the profitability of your silver-owning ETF is based on the return of silver prices minus the ETF’s expense ratio. As a result, the value of silver mutual funds and ETFs may not entirely match up with the market price of silver, and these investments may not perform the same as physical silver.
Silver ETFs can be passively or actively managed using index funds that track the price of silver in the market. The two main ETFs owning physical silver are:
- iShares Silver Trust (SLV)
- Aberdeen Standard Physical Silver Shares ETF (SIVR)
Time to raid your grandmother’s closet or empty the jumbled contents of your jewelry box — investing in gold jewelry is both an investment in yourself and your financial future.
Authenticity is key, so make sure your dealer has the credentials to back up their prices. Obtain as much documentation as possible stating your jewelry's purity in karats. The higher the karat value, the higher the purity. The higher the purity, the higher the value of your gold jewelry.
Be aware, though, that retail markups based on which company designed and manufactured the jewelry could cost anywhere from 20% to more than three times the precious metal’s raw value.
How to Use Futures and Options to Invest in Silver
Futures and options agreements are a type of speculative investing for those with a higher risk threshold with the capacity to actively monitor their investment. Futures contracts are market derivatives that offer a high risk, high reward trading experience requiring relatively little upfront capital on your investment to secure you a relatively large share of this precious metal. By wagering on the rising or falling price of silver, you have the potential to make a substantial amount of quick money easily, although if you bet wrong, you could lose it just as easily.
Like ETFs and mutual funds, futures and options offer a great deal of liquidity. They are best suited for seasoned investors who are familiar with market trends and can monitor their investment using fundamental and technical analysis. Some online brokers offer futures and options trading.
Because of the large amount of risk involved, a large account balance to get started is usually required to act as a safeguard in case the market moves against you. If you are unable to hold your position, the broker will close out the position and you’ll be stuck with a loss.
Alternatively, investing in an ETF like ProShares Ultra Silver (AGQ) that owns futures contracts can provide a less risky option. It works better as a short-term bet rather than a long-term hold because of how the fund is set up.
Why Start Investing in Silver with the U.S. Gold Bureau?
When investing in precious metals, you’ll want to find a reputable dealer with reliable expertise and training to make the most sound investment decision possible. We are an authorized bulk purchaser of coins and bullion from the U.S. Mint, offering investment-grade coins, handled and certified by our team of Precious Metals Specialists. We can guarantee the origin, authenticity, purity, and quality of every product we offer.
The more educated you are about the process of buying precious metals, the better off you will be. The United States Gold Bureauprides itself on educating and assisting clients with their research so you can make well-informed recommendations customized to the needs and goals of each person. We can even help you with coins you have already purchased, even if the coins were not bought from us. We want to be your long-term precious metals specialists and we are committed to earning your business and your trust.
Like the purity of a Silver Eagle bullion coin, we aspire to bring trust and integrity to all aspects of the precious metals acquisition process and are directly compliant with all gold-industry standard rules and regulations of the Federal Trade Commission, as well as the top associations and governing bodies of the precious metals industry. We aim to serve our customers with an emphasis on education, personal attention, and respect.
For a free consultation with a Precious Metals Specialist, a price quote, or to place an order, call our Gold Hotline at (800) 775-3504.