Silver

How to Invest in Silver

Silver has had a rich history as one of the world’s most important metals for monetary exchange and for ornamentation purposes. Although no country today uses silver in a precious metal backed currency, demand for the product has picked up thanks to declining confidence in fiat currencies and the metal\’s relatively cheap price when compared to others in the precious metal group. Furthermore, unlike gold, silver has a variety of industrial uses that ensures that demand for the product will remain high should currencies like the dollar remain stable.

Silver has appeal as an investable asset for several reasons. First, if investors continue to lose faith in the fiat currencies and the U.S. dollar in particular, demand for silver could rise. This is especially true in emerging markets where other precious metals remain out of reach but silver is still a relatively inexpensive option on a per ounce price basis. Silver is also seen as a potential hedge against inflation allowing investors to protect at least part of their portfolio from this phenomenon. Lastly, since silver has a number of industrial uses, investors can consider silver a play on increased manufacturing or industrial activity as the product is needed in a number of applications ranging from batteries and electronics to medical and photographic materials.

Investors seeking exposure to silver have a multitude of options. In addition to buying futures contracts on silver or purchasing and holding the physical metal in the form of coins or bars, there are a number of ETF and equity options available as well. Investors can purchase stocks or ETFs of companies that mine the metal. Investors also have the option of buying silver ETFs, either ones that track the futures for the metal or those that physically hold the product in secure vaults.