How To Buy Silver: 5 Ways To Invest

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Long before ETFs, derivatives and options trading, precious metals like gold and silver emerged as the oldest investment vehicles in history. 

See: 3 Things You Must Do When Your Savings Reach $50,000

And silver has stood the test of time, remaining a key ingredient in portfolios from individual investors to hedge funds.

Here’s everything you need to know about investing in silver, how to buy, what to consider and where to get started.

How To Buy Silver

If you’re looking for ways to invest in silver, here are some options to consider.

1. Physical Silver 

Direct ownership of physical silver is the most basic form of investing in the precious metal. Unlike cash, bonds, Treasury bills and other promissory notes, tangible precious metal is not vulnerable to the inflationary pressures of money printing — and investment-grade silver is easy to access. Lording over stores of silver bullion can be a satisfying and enjoyable experience that you can’t get by looking at numbers on a computer screen — but it has its drawbacks.

Silver is heavy and takes up more space than gold of the same value. Like large sums of cash kept at home, it’s vulnerable to theft or disaster and must be secured in a safe or safe deposit box. Also, the only way to make a profit is by selling it for more than you paid — physical silver cannot generate cash flow or pay dividends.

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Should You Buy Silver Bars or Coins?

Silver bullion coins — as opposed to collector coins that are old, rare or otherwise valuable beyond their melt price — are legal tender backed by the government that are easier to liquidate than bars. They’re also typically smaller than bars and can therefore be sold in smaller increments.

Because governments mint them and they have a face value, coins typically have a higher premium than bars and are therefore more expensive. The trade-off is that since governments do not mint bars, they are harder to authenticate and are more likely to contain impurities. Because they are bigger and heavier, bars are also more challenging to store in quantity.

Can You Get Silver at a Bank?

According to U.S. Money Reserve, some banks sell silver, but it’s rare — not just for silver, but for precious metals in general. Even those that do tend to charge higher premiums and have limited selections compared to what you’d find online or in your local coin shop.

2. Silver ETFs

Those who want exposure to silver without storing and securing physical metal can buy shares of ETFs that track the price of silver. They include:  

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3. Closed-End Trusts

Closed-end trusts like the Sprott Physical Silver Trust (PSLV) are commonly lumped in with ETFs, but they’re not the same.

ETFs are funds that trade on the open market in shares like stocks. On the other hand, shares of closed-end trusts are redeemable for delivery of silver bullion. When you buy shares of closed-end trusts, you reserve a secure and fully allocated quantity of physical silver, making them a worthwhile consideration for investors who want the option, but not the obligation, of holding physical silver. 

4. Stocks With Silver Interests

You can invest in silver indirectly on the stock market by purchasing shares of companies involved in silver mining and other related activities. Examples include: 

5. Silver Options Trading

Futures trading lets investors bet on the projected price of silver, but you can do the same thing with less capital through options trading

Like all options trading, silver options give the holder the right, but not the obligation, to buy on a call option or sell on a put option

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Options contracts are based on futures traded in lots of 5,000 troy ounces of silver.

Where Is the Best Place To Buy Silver?

The U.S. Mint does not sell bullion coins directly to the public but instead distributes them to a network of authorized purchasers. Among them is APMEX, an online dealer with an enormous menu of choices and a stellar reputation.

Traditionalists, however, continue to insist that the best place to get started is your local coin shop.

Is Silver a Good Investment?

Investors prize silver as a store of value and a hedge against inflation, as well as for its many industrial applications and physical beauty. 

Silver has unique investment characteristics that have proven exceptionally durable through economic turbulence. According to U.S. News & World Report, the unusual conditions of the 2022 market — a rare combination of high inflation and high interest rates — sank both equities and fixed-income assets simultaneously, pummeling even the most balanced portfolios. Thanks to its negative correlation to interest rates and low correlation to the S&P 500, silver emerged as an effective hedge and defensive investment.

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How Much Is 1 Ounce of Silver Worth Right Now?

The spot price of silver — the current marketplace price for which it can be bought and sold — changes throughout the day. As of May 24, the spot price of silver is $23.10 per ounce — but don’t expect to pay that amount for a one-ounce coin.

The spot price represents the physical metal’s current melt value. Brokers and dealers who sell silver charge a premium to make a profit. Gainesville Coins states a fair premium is 5%-8% over spot for bars and 12%-20% for coins.

What Is the Best Way To Start Investing In Silver?

Now that you know the different ways to invest, your strategy, risk tolerance and goals will determine which method is best  — are you in it for long-term wealth preservation, a hedge against inflation or short-term trading opportunities?

Before you dive in, learn as much as possible about the basic principles of investing in precious metals, including silver’s historical performance, supply and demand dynamics, and the factors that influence its price.

Another Option

You might also consider creating a self-directed precious metals IRA. Unlike traditional IRAs, they allow for a variety of unconventional assets, including silver, in retirement funds.