There are multiple ways you can invest in silver. This includes purchasing the metal itself and taking possession of it. Or investing in paper assets connected to silver, such as stocks, funds, and even silver streaming companies.
- Buy Silver Mutual Funds, ETFs and ETNs
- Buy Silver Bullion
- Buy Silver Mining Stocks
- Buy Silver Streaming Companies
- The Basics of Silver Investing
Buy Silver Mutual Funds, ETFs and ETNs
If you’re not keen to own silver bullion itself, you can own the metal through paper assets tied to it.
Silver mutual funds invest primarily in the stock of companies that mine silver. It’s not the equivalent of owning the metal itself, but rather participating in the industry that produces it. A silver mutual fund holds a portfolio of stocks in such companies. Those stocks generally parallel silver price levels. You can buy silver mutual funds through most stock brokers, like Merrill Edge.
A silver exchange-traded fund (ETF) is a way to hold silver bullion itself, except you do it through a fund. An example is the iShares Silver Trust (SLV). This fund generally traces the price of silver, largely because it holds the metal in the trust. You won’t have direct ownership of the metal itself. Instead, you own shares of the ETF that owns the silver. You can purchase ETFs through most online brokers, including Ally Invest.
Exchange-traded notes (ETNs) are unsecured debt securities that track an underlying silver index. Unlike bonds, they don’t pay interest. Instead, the price of the ETN fluctuates with the value of silver. ETNs trade on major exchanges, much like stocks. Since ETNs don’t hold silver or even stock in silver mining companies, investing in securities is best for those more experienced in silver investing.
Buy Silver Bullion
This is the most direct way to invest in silver. By buying silver bullion, you actually take possession of the metal, even holding it “old school” in coin form.
- Coins are probably the most convenient way to hold silver bullion. For example, you can buy a one-ounce pure silver coin, such as the American Silver Eagle or Canadian Maple Leaf.
- If you prefer to invest in larger quantities of silver, you may want to consider silver bullion bars. They can be purchased in quantities ranging from one ounce to 100 ounces. But you should be aware that silver bullion bars aren’t traded as easily with private parties or coin shops as coins are.
- You can buy silver bullion coins and bars at local coin dealers or from national precious metals dealers. Goldline, McAlvany ICA, and JM Bullion are some of the largest.
Be careful when buying silver coins! Many coin dealers will attempt to persuade you to buy numismatic silver coins, which are a different commodity entirely. While silver bullion coins are playing on the price of silver itself, numismatic coins get their value primarily from the rarity.
For example, many U.S. silver coins from the 1800s command prices in excess of $1,000, which is nearly 40 times its silver content value. That’s something closer to investing in the artwork than it is in silver itself.
Complicating numismatics is the fact that there is significant disagreement over the grading and value of each coin. One dealer values a coin at $1,000 while another determines it to be worth only $750. Numismatic coins are suited only to those who are experts in that field.
Buy Silver Mining Stocks
Another way to invest in silver is to purchase stock in the companies that mine it. Instead of purchasing a portfolio of stocks through a mutual fund, you are buying them individually.
- Silver mining stocks are probably the most speculative way to participate in the silver market. Though they generally parallel the price performance of silver and often exceed it, they also involve risks that are inherent in any company.
- Many things impact the prices of stocks. These include international disturbances, environmental catastrophes, foreign government regulation or nationalization, labor unrest, and international currency fluctuations.
- But as mining companies, they also have risks specific to mining activity. That includes high capital cost, the risks of mine exhaustion, an oversupply of the metal, and even the possibility of developing a mine only to find minimal or no silver.
Some of the best silver mining stocks include First Majestic Silver Corp (AG), Pan American Silver Corp (PAAS), and MAG Silver Corp. (MAG).
Buy Silver Streaming Companies
Silver streaming companies are like buying royalties in silver mining companies. These companies are not actually involved in silver mining directly. Instead, they provide financing to the companies that do. They’ll be paid back, often by being able to buy silver from their mining partners at well below the going rate. That allows them to sell the discounted silver at a full market price and collect the difference as a profit.
Like silver mining company stocks, silver streaming company stocks usually track the price of silver. However, they underperform silver if their financing arrangements go sour or there are other difficulties with the mining companies they’re connected with.