What Are the Ways to Invest in Silver?
Individuals who would like to invest in silver can gain entry into the market in one of several ways. One of the oldest and perhaps easiest methods is to purchase silver coinage. A second means of owning the metal outright is through the purchase of bullion bars or rounds. Interests in silver can also be purchased by investing in the stocks of silver mining and manufacturing companies, or through exchange-traded funds (ETFs) that invest in silver or mining stocks.
Other People Are Reading
-
American Eagles
-
Since they were first minted in 1986, the silver dollar labeled the American Eagle silver bullion coin has been popular among both coin collectors and silver investors. Minted from .999 fine silver, the coins are, according to the U.S. Mint, "the finest silver coins ever issued by the United States." Official documentation from the mint also states that the American Eagle is "America's only official investment-grade silver bullion coin." Not always a highly liquid investment --- meaning buyers may not be readily available should you decide to sell --- investing in silver coins requires a bit of research and at least a basic knowledge of coin values.
Bullion and Rounds
-
Bars of silver bullion are another means of investing in silver. Investors going this route will need to purchase a storage safe or arrange with a storage facility to have the bars stored securely. Investors can also purchase rounds as a direct means of owning silver. Rounds, shaped like coins but not officially legal tender, are high-grade silver. In fact, the majority of silver rounds consist of one troy ounce of .999 fine silver.
-
Mining Stocks
-
Investing in mining companies is one means of investing in silver, but silver may not be the only metal or specific product of interest to the corporation. Many large mining companies extract a number of products from one mining area.
ETFs
-
Yet another means of acquiring a position in silver is to invest in exchange-traded funds (ETFs). For example, iShares Silver Trust, which trades on the New York Stock Exchange under the symbol SLV, is a managed trust that owns silver. Investors can buy shares based on the assets of the trust. As the SLV prospectus clearly states, "Investing in the iShares involves significant risk." The basic risk is the volatility of the price of silver. Investors should keep in mind that throughout the life of the trust, assets are sold off to pay management fees. Therefore, after an extended period the value of the iShares trust will slowly dwindle away unless the price of silver consistently increases enough to offset the costs.
Clarification
-
Financial pundits may refer to futures and derivatives as a means of investing in silver. However, the novice investor should keep in mind that these types of contracts are speculative and more a means of gambling on the value of silver as opposed to actual investing in the precious metal.
-
References
Resources
- Photo Credit Jupiterimages/Photos.com/Getty Images
