How To Invest In Silver

By Alexandra Kerr. May 7th 2016

While there has been plenty of discussion on the benefits of investing in gold, many have now turned to silver bullion and stocks as an investment alternative. With the increase in popularity for industrial uses, silver has become a hot commodity, drawing attention for its rising value and high demand.

Why Invest in Silver?

The silver market is much smaller than gold, and can easily be influenced by large investors. While this can lead to a less stable investment environment, selecting the right time to invest in silver stocks or bullion can yield some serious return. Monitoring the silver market, and deciding which form of silver you would like to invest in is key to riding the wave of popularity fueling silver's value.

As with most precious metals, silver has become increasingly valued in the face of economic turmoil. Many investors have turned to silver and gold as a strategy to withstand the fall of the dollar, and have done so successfully. When combined with silver's frequent use in industrial and commercial settings like photography, electrical appliances and water purification, reserves of silver have dropped, making the metal rarer than once thought.

Types of Silver

Bullion Bars: One of the most common ways to invest in silver is by purchasing physical bars, called bullion. Purchasing actual silver, rather than stock in it, is an effective way to ensure you completely own your silver, and are able to buy and sell it as you please. Silver bars are weighed in troy ounces, and typically come in 10 troy ounces, one kilogram, 100 troy ounces or the 68 pound 1000 troy ounce size. Off sizes of silver bars can be a hassle to own, as they require extra work to verify their weight and subsequent value.

Bullion Coins: Like bars, silver bullion coins allow the investor to physically own their silver. Silver coins are minted in a variety of forms and purities, from fine silver to junk silver. Junk silver coins are not pure silver, and are often older coins. Fine silver coins are made of 99.9% silver. Types of silver coins include:

  • The American silver eagle
  • The Canadian silver maple leaf
  • Silver Austrian philharmonic
  • Liberty silver round

Fine Silver Rounds: Though they are shaped like coins, silver rounds cannot be used as legal tender. They are made at many mints, and can actually have custom stampings placed on them. Rounds typically weigh one troy ounce.

Where to Buy and Invest in Silver

Bars, coins and rounds can be purchased from private dealers or banks. If you have decided that purchasing silver bullion is right for you, selecting where you buy it from becomes incredibly important. Before investing in or purchasing silver, follow this checklist for selecting a dealer:

  • The company has positive reviews with the better business bureau
  • They have been in business for 10 to 15 years or more, with a proven track record
  • They openly disclose their price for purchasing silver over the most current silver rate
  • They offer customer support and services to monitor and adjust your portfolio over time, rather than simply selling the silver as a one time transaction.

If you decide to invest in silver, you may not want to purchase bullion. Several options exist for investing in silver stocks or companies.

Certificates: Holding a silver certificate allows investors to own silver without actually having the physical bullion. This reduces the hassle of transferring large amounts of the metal during transactions. The only government guaranteed certificate program for silver is the Perth Mint Certificate Program, where the silver is actually stored and insured by the company Lloyd's of London.

Accounts: Silver accounts allow investors to buy silver like any other form of currency, and easily sell it when desired. The investor does not at any point own the physical quantity of silver they have in their account, and some companies do not even allow the investor to redeem their account in physical silver if they wished to do so.

Silver Mines: It is possible to purchase shares of silver mines, which technically are not investments in actual silver, but rather, just a company. Mines rarely, if ever, solely mine silver, as it is frequently found inside or near other metals, which would then be included in the shares of the company. The price of mining company shares is influenced by several factors, and is therefore not tied to the base price of silver like bullion costs are.

Investing in silver can provide a stabilizing effect on your portfolio despite a failing dollar and turbulent economy. Whether you choose to own physical silver in the form of bullion bars, coins or rounds or to purchase shares of mining companies, accounts or certificates, silver can be an effective and beneficial addition to your investment portfolio.

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