In my previous article on silver, I mentioned that its unique properties and increasing growth make it a solid investment alternative to gold.
Well, if that article inspired you to enter a position in silver, you’re in luck!
Today, I’d like to discuss the various ways individuals can buy and trade silver.
Let’s get right to it…
Method #1: The Financial Markets
One way to play silver in the financial markets is through buying futures and futures options on silver.
The only problem is, this requires a futures account. So that’s not always an option for the average investor.
But here are two ways to buy silver through a regular brokerage account…
- Silver Mining Stocks. As with any stock, purchasing silver miners allows you to take advantage of both capital appreciation and any potential dividends. Of course, when investing in a company, you’re not just making a bet on the future direction of the metal, but the company as a whole. One key indicator to look for is the company’s ability to keep its mining costs low.
- Exchange-Traded Funds. Perhaps the easiest way to invest directly in silver is through the purchase of an exchange-traded fund (ETF), such as the iShares Silver Trust (SLV). With ETFs, prices rise and fall in line with silver. Investors can also purchase ETFs specifically in the mining sector, such as the Global X Silver Miners ETF (SIL), which offers a basket of silver mining companies.
Method #2: Physical Silver
Some investors prefer buying into physical silver itself. Again, there are several investment alternatives available to individuals. These include:
- Official Government Bullion Coins. These coins are issued by a government mint – such as the U.S. Mint or the Royal Canadian Mint. These coins are easy to transport and store. Such coins are also easily convertible into cash almost anywhere in the world. Silver bullion coins are generally inexpensive, but they do trade at a small premium over silver bullion prices.
- Silver Bullion. This silver usually comes in the form of bars (that are at least 99.9% pure) from approved silver refiners. Bars may be as small as one ounce, so a minimal investment is needed. Again, they can be turned into cash around the globe. However, the bars must be stored securely, and at time of sale, may need to be assayed.
- Silver Medallions or Rounds. These are round pieces of silver that closely resemble an actual coin. It may be issued by a government or a private mint. But it isn’t considered to be legal tender. These aren’t easily convertible into cash, either. That is, unless investors buy medallions from only the most reputable silver refiners. If that’s the case, these pseudo coins can still be converted to cash rather quickly because of the “assured” silver content.
- Silver Certificate or Storage Account. With these accounts, the investor purchases silver, but doesn’t hold the actual bullion. The silver is held for the investor in a segregated vault account. But the investor can, if he or she chooses, have the silver sent to them in a matter of a few days. So it’s a fairly liquid investment. Also, no sales tax is charged.
- Silver Accumulation Account. With this plan, investors can dollar cost average as little as $100 at a time into silver at a low commission cost. There’s no storage cost or sales tax. It’s fairly liquid, as some firms will send the bullion to customers, if requested.
Method #3: Directly From the Source
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Several mining companies have begun selling silver directly to the public. First Majestic Silver (AG), for instance, is unique in that it’s the only mining company offering its own mined silver to the public online, at its own website. It offers silver in the form of 0.999-fine silver rounds, ingots, bars and medallion sets.
Bottom line: Although there are several ways to invest in silver, your ultimate decision should be based on your own unique risk tolerance and preferences.
And “the chase” continues,