Silver is a precious metal that most of us know. Silver has on several occasions throughout history acted as a means of payment and some investors seek it like gold for its value-preserving property. What not many people know is that silver has enormous uses in today’s modern society.
So, how do you invest in silver?
There are many ways to invest in silver. The easiest way is to buy a certificate that follows the silver price, or buy shares or a fund that invests in silver companies. For those who really want to own and keep silver for a long time, physical silver is an alternative.
Top 6 Ways on How to Invest In Silver
There are several ways to invest in silver. Here I go through the most common.
1. Invest in silver through certificates
Advantages of certificates:
- Easy to buy and sell
- You can speculate in both ups and downs
- You can trade with leverage
Disadvantages of certificates
- You do not own the underlying
- Brokerage is expensive if you shop for small sums
- Leverage can be high risk
There are exchange-traded products, so-called certificates, that follow the price of silver. If the spot price of silver goes up 2%, the certificate will go up as much.
This type of certificate can also be traded with leverage, for example Bull Silver X5. Then the price of the certificate moves five times as much as the silver price on the market.
This of course means higher risk, as it also goes down five times as much if the price goes down.
In addition to Bull certificates, there are so-called Bear certificates which are instead used to speculate that the silver price will go down.
Then the silver certificate goes up if the silver price goes down, and vice versa. These can also be traded both with and without leverage.
If you are going to trade in exchange traded products like these, it is important that you understand how they work.
For example, it is not recommended to hold certificates with leverage for a long time, as they have a eroding effect. To last longer, a certificate without leverage is usually better in that case.
2. Invest in silver through an ETC
Benefits of investing in silver through an ETC:
- Easy to shop
- Backed to some extent by physical silver
Disadvantages of investing in silver through an ETC:
- Often not completely backed by physical silver
- Brokerage and fees
An Exchange Traded Commodity (ETC) is a type of certificate traded on the stock exchange. These give you the opportunity to access the commodity market in a simple way and, for example, invest in silver.
In many ways, they are similar to ETFs and are traded on the stock exchange.
What makes ETCs unique is that they are backed by a certain part of the physical raw material as security.
However, this does not always mean that a silver ETC is always entirely backed by physical silver in an arch, but part of the holding is probably a form of credit with a share of silver as security.
Different ETCs have different rules for how much of the holding is backed by the raw material, which makes the product quite complicated to understand completely.
Some examples of silver ETCs are:
- WisdomTree Physical Silver
- Xtrackers Physical Silver
3. Invest in silver through ETFs
There are exchange traded funds (ETFs) that focus on silver. One of the most popular ones is the iShares Silver Trust (SLV).
4. Invest in silver stocks
Benefits of silver stocks
- Easy to shop
- Can often go up sharply if the silver price goes up
- Many companies to choose from
Disadvantages of silver stocks
- Risk both that the silver price goes down and that the company delivers poorly
- Foreign shares with currency risk
- Requires a job if you want to familiarize yourself with the company’s operations properly
Another popular way to invest in silver is by buying shares in silver companies. These are usually companies that own, operate and extract silver and other precious metals from mines.
Many of these are traded on the US or Canadian stock exchanges.
Some popular silver stocks are:
- First Majestic Silver Corp
- Pan American Silver
- Silvercorp Metals
- Fortuna Silver Mines
- Silver Standard Res Inc
In addition to the companies that own silver mines, there are so-called “metal streaming companies”, or precious metal flowing companies.
Their business model is that they have an agreement with a mining company to buy the precious metals produced in the mine at a predetermined price.
These can be, for example, mines that are not mainly looking for precious metals, but which often come up with it as a “by-product”.
These companies are often both gold and silver.
Some common companies in precious metal streaming are:
- Wheaton Precious Metals
- Metall Royalty and Streaming
5. Invest in silver through mutual funds
Benefits of investing in silver through mutual funds:
- Easy way to get wide exposure to silver
- Easy to save long-term or monthly
- Professional management
Disadvantages of investing in silver through mutual funds:
- Management fees
- Difficult to keep track of exact holdings
- Takes several trading days to buy or sell
6. Buy physical silver
Advantages of buying physical silver:
- You own the silver completely yourself and 1kg is always 1 kg, regardless of price movements
- Concrete product that gives pleasure to own
Disadvantages of buying physical silver:
- Large spread between the price of buying and selling
- Must be stored securely
- Time consuming and complicated to sell
Another obvious way to invest in silver is by buying physical silver. Usually you buy silver in the form of ingots of, for example, 100 grams, 1000 grams or 5000 grams.
Silver coins in various forms are also common.
Investment silver usually has a purity of 999.9 parts, or 99.99%. For ordinary silver jewelry that you buy at a jewelry retailer, the purity is often significantly lower.
Therefore, a distinction is usually made between investment silver and ordinary silver jewelery.
There are several gold and silver traders online where you can both buy and sell silver.
Is silver a good investment?
Historically, the silver price has been very volatile, ie it has moved up and down a lot.
Periodically, there has been an enormous amount of speculation in silver, which has caused the price to skyrocket. After sharp rises, it has since fallen.
Since silver is a sought-after and useful raw material, which is also available in limited supply, it will not be useless.
Even though there have been bubbles in the silver price throughout history, silver has still recovered every time after a fall.
Owning physical silver, for example, is therefore a security and a protection against inflation that you know lasts over time.
In the short term, silver is volatile and it can be difficult to decide whether the price should go up or down. It is at least possible to argue that silver should be valued higher the more new money is added to the economy.
In recent times, central banks, not least in the United States, have increased the money supply enormously.
Whether silver is overvalued or undervalued in relation to the situation that prevails when you read this is up to you to decide.
Throughout history, gold has been the currency of the rich. Ordinary people did not own gold, it was too expensive. Today, a large part of all gold is owned by the central banks of different countries.
Silver has always been the currency of the people. What ordinary people you and I have been able to afford and have been able to pay for our daily purchases.
And that is exactly what makes silver attractive as an investment today. Everyone can buy and save silver.
It is a perfect introduction to precious metals, even our children can save their weekly allowance and buy half an ounce of silver for about $15.
A silver coin is also a perfect gift that will increase in value over time, to the one who received it.
If you are not where to start, take a first step and buy a silver coin. It is a first step towards a long journey.