How to Buy Silver
Silver usually takes a back seat to its more glamorous and costly counterpart, gold. However, silver is so much more than a precious metal — it’s also an investment opportunity that shouldn’t be overlooked.
This commodity has many unique uses. It’s a thermal and electric conductor and has antimicrobial properties. Its applications in the solar energy, automotive and medical industries make silver appealing beyond its use as a store of value.
Moreover, silver is considered relatively low risk and can provide a safety net in times of market volatility. Though many still choose to buy gold over silver, silver’s versatility makes it an appealing investment.
How to invest in silver
Whether you are a beginner or experienced investor, buying silver is a relatively easy, flexible and affordable process to undertake.
Read on for more information about owning silver stock and silver bullion.
Holding precious metals stock such as silver, gold, palladium or platinum may be a great option if you’re looking to diversify your existing portfolio.
One popular investment choice is silver exchange-traded funds (ETFs). When you buy into ETFs, you’re buying a bundle of shares from multiple companies, and these funds can be bought, sold or traded on a stock exchange.
The benefit to holding silver ETFs is that these commodities might appreciate in the long run and provide a hedge against inflation in a volatile stock market. Additionally, ETFs usually have lower annual fees than mutual funds.
ETFs also have greater liquidity overall than physical metals and you can avoid increasing dealer premiums. (Premiums are the price you’ll pay above the spot price, or market price, for silver bullion.) However, ETFs, though traded on an exchange, may still be subject to brokerage commissions or investment management fees. With regard to taxes, silver is treated as a collectible with a maximum long-term capital gains tax of 28%.
The majority of silver ETFs are structured as a grantor trust, which means it’s backed by physical silver; however, many ETFs also invest in stock from silver mining companies.
There are, however, other ways to invest in silver. As always, consider talking with a financial advisor before making any decisions:
- Silver mining stocks: You can buy silver stocks in the form of shares of individual mining companies.
- Silver mutual funds: These funds usually include an array of precious metals in addition to silver, such as gold, palladium and platinum.
- Silver exchange traded notes (ETNs): Though not as prevalent, ETNs are similar to bonds. They are unsecured debt notes issued by a financial institution that track a specific index.
- Leveraged ETFs: This type of ETF tracks an underlying index and aims to amplify the returns on a given trading day, rather than over an extended period of time. These investments are not recommended for beginners.
- Silver futures: Silver futures contracts are agreements to buy silver at a specific price on a predetermined, future date. These investments are not recommended for beginners.
Here’s a list of some popular silver ETFs:
Issued by BlackRock Financial Management, iShares Silver Trust is a grantor trust that holds silver bullion.
Issued by ProShares, AGQ is a leveraged ETF and therefore recommended for experienced investors.
Issued by Abrdn Plc, this grantor trust holds allocated physical silver bullion bars in secured vaults in London.
This fund tracks the results of an index comprising investments in companies engaging in silver exploration or metals mining.
Issued by ETF Managers Group, SILJ calls itself the “first and only” ETF to focus on small cap silver mining companies.
SIL is a non-diversified fund issued by Mirae Asset Global Investments Co., Ltd., that invests mostly in the Solactive Global Silver Miners Total Return Index.
Other silver stocks include:
- ProShares UltraShort Silver (ZSL)
- Credit Suisse X-Links Silver Shares Covered Call ETN (SLVO)
- Invesco DB Silver Fund (DBS)
- iPath Silver ETN (SBUG)
The idea of owning silver bullion, a tangible asset, might be very appealing to many investors and collectors. For investment purposes, you should buy fine silver which has a purity standard of 99.9%, as the price of silver bullion is based on the precious metal content rather than a fluctuating spot price, or current market price, determined by a third party.
The process of buying silver bullion is different from buying silver ETFs, and you’ll also need to consider factors such as dealer premiums, storage and sales tax in your country.
Physical bullion comes in the form of silver bars, silver coins and silver rounds. Experts recommend comparing premiums offered by multiple dealers and buy silver bullion from reputable marketplaces such as SD Bullion and JM Bullion. However, there’s also a strong second-hand market, where collectors connect to buy directly. When deciding which type of bullion to buy you should consider its silver content, design, size and shape.
Silver bars are made by pouring or casting silver into molds. The two main types of silver bars are ingots and bars, and these terms are often used interchangeably; however, bars will adhere to international standards and have weight, purity, year of manufacture and serial numbers stamped on them. You should look for these markings to determine authenticity.
Silver bullion coins are backed by governments, and some coins produced by government mints may still be used as legal tender. Rounds are produced by private mints and are not considered currency.
Coins generally carry higher premiums than bars because of their liquidity, and numismatic coins — coins bought for their design and collectibility — tend to have the highest premiums.
When you buy silver coins, you’ll always want to check the face value, the value printed on the coin, versus the intrinsic value, the value based on the collectibility of the coin.
- Silver Eagles – Originally issued in 1986 by the United States Mint, the Silver American Eagle features the “Walking Liberty” design by Adolph A. Weinman on one side and the eagle design on the other. Each coin contains one troy ounce of 99.9% pure silver. These coins must be bought from a dealer as the U.S. Mint doesn’t sell directly to the public.
- Silver Canadian Maple Leafs – These coins have been produced by the Royal Canadian Mint since 1988. Each coin contains one troy ounce of 99.9% pure silver. They feature the profile of Queen Elizabeth II and the Canadian maple leaf.
- British Silver Coins – The Royal Mint of the United Kingdom has a long history of silver coin production but their products’ precious metal content has fluctuated, so you’ll want to check the year of your coin. The most popular coins are the Britannia silver coins, which have been 99.9% pure since 2013. There are also other designs available.
- Mexican Silver Libertads – Produced by the Mexican Mint since 1982, these coins come in a wide variety of weights. These coins have been 99.9% pure since 1991. One side features the coat of arms of Mexico and the reverse features the Angel of Independence.
- Chinese Silver Pandas – The People’s Bank of China began producing these coins in 1983 and, since 1987, they’ve been making them with 99.9% purity in a variety of sizes. In 2016, the Chinese Mint switched from ounces to the metric system and the coins are available in both 30 and 150 gram denominations. This coin is highly collectible due to its annually changing design featuring the beloved panda.
- Australian Kangaroo – This popular coin was first released in 1993 as a numismatic coin. Since 2015, it has been produced annually by the Perth Mint as a 99.9% pure investment coin. It features a red kangaroo on one side and a portrait of Queen Elizabeth II on the other.
- APMEX Silver Rounds – APMEX offers 99.9% pure silver rounds in a wide range of themes including holiday, historical, religious and pop culture designs, such as the Bitcoin silver coin. These coins are produced by a variety of manufacturers.
Should you buy silver?
If you’re interested in diversifying your portfolio, silver might be a good way to do it.
Silver is considered a low-risk, safe haven investment — that is, an investment that tends to keep its value even in times of market instability. However, gold is deemed the more stable investment of the two as the use of silver for industrial purposes has historically shown a vulnerability to the ebb and flow of the stock market.
Nonetheless, the growth of the silver market makes it unlikely to be severely affected in times of recession, and silver still offers many attractive incentives.
Pros and cons of buying silver
- Profitable, long-term investment - Silver will add value to and diversify your investment portfolio.
- Affordable, "safe haven" asset - In times of market instability and inflation, silver can provide a safety net.
- High liquidity - The silver market has numerous buyers and sellers, so this asset can be converted to cash without much loss.
- Precious and industrial metal - Silver is a precious metal collected by both hobbyists and investors. It also has many industrial uses, making it an appealing investment.
- Theft - Coins and other bullion products can get stolen.
- Additional costs - Physical silver involves dealer premiums, sales taxes, storage and insurance.
- Lower value than gold - Silver as a precious metal is perceived as less valuable than gold and has poorer liquidity.
- Tie to industry is a double-edged sword - When industrial growth is slow, the value of silver can also decline compared to gold.
Silver and other precious metals as part of your portfolio
Silver along with other precious metals offer a way to expand and diversify your portfolio. Silver bars can be sold in amounts as small as one gram, so it’s an inexpensive way to begin portfolio diversification.
Additionally there is no credit risk to owning silver. While precious metal dealers might recommend that you keep 5-20% of your portfolio in metals, most financial advisors would recommend around a 5% allocation to alternative investments such as this.
You can also enjoy the tax-deferment benefits of a silver investment in your IRA. The Taxpayer Relief Act of 1997 allowed for IRA investment in silver and other precious metals such as gold, platinum and palladium, as long as these metals meet strict purity and weight requirements. For example, silver must be 99.9% pure, bars and rounds must be certified authentic and must come from an accredited manufacturer or government mint.
As always, be sure to protect yourself against fraud. The Commodity Futures Trading Commision (CFTC) has brought fraud charges against some silver dealers for charging excessively high premiums, fees, and loan interests, or for selling non-existent bullion and executing scams such as ponzi schemes involving silver bullion trading.
How to buy silver FAQ
Where to buy silver
There are many places to buy investment silver. Some of the most popular include government mints, major banks, online dealers (such as JM Bullion, SD Bullion and APmex), and secondary markets and forums. The latter include The Silver Forum, Facebook Marketplace and eBay. However, be very cautious when buying directly from an individual seller as there are fewer safeguards in place.
How to buy silver stocks
You can buy silver stocks through reputable brokers and exchanges. You can also buy silver online through online platforms and trading apps. There is a wide variety of silver stocks, which allow you to own shares in mining companies.
You can buy exchange-traded products (ETPs). ETPs include exchange-traded funds (ETFs) and exchange-traded notes (ETNs), which are similar to bonds, and are unsecured debt obligations issued by financial institutions.
How to buy silver bars
You can buy silver bars from well-known and respected private dealers such as JM Bullion, SD Bullion and APmex and from government mints. You can also buy silver bars from secondary online markets and forums that connect buyers and sellers, though caution is advised when buying directly from individual sellers due to the risk of fraud or overpricing.
Silver bars generally carry a lower premium than coins or rounds, and you might hear them referred to as both silver bars and silver ingots. When the term bar is used, it usually denotes that the silver adheres to a certain standard of purity. Silver bars must meet a 99.9% purity standard and usually come in one, five, 10 and 100 ounces. You can also find silver sold in grams.
The term ingot is used in reference to the shape of the casted metal, achieved by either hand-pouring into molds or minting. Poured silver typically carries a higher premium because production is more labor intensive.
What is silver bullion?
Silver bullion refers to physical silver that comes in the form of silver bars, coins or rounds. You can buy silver bullion for investment purposes or as a hobby. As an investment choice, be sure to buy fine silver that is at least 99.9% pure. If you are into numismatic coin collecting, you will be able to buy silver bullion in a variety of design styles.
Why buy silver
Silver offers you a great way to easily diversify your investment portfolio without spending too much money doing so. Additionally, it's considered a safe haven asset, that is, an asset that tends to keep its value despite market volatility.
You can buy silver in a number of ways: ETFs, silver stocks, or physical silver bullion in the form of bars, coins or rounds. Investing in ETFs lets you avoid the high premium costs and fees associated with bullion storage. If you're an avid collector, you can buy physical silver online through a variety of exchanges, brokerages and marketplaces; however, it's important to only deal with well-established reputable sources.
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