How to Buy Silver: A Guide for Investors (2024)

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• You can buy silver in two basic ways: as physical bullion or silver-backed securities.
• Bullion is a more direct way to own silver; securities are easier to hold.
• Silver offers a long-term hedge against inflation and stocks.

Savvy investors often step outside the comfort zone of conventional paper investments — stocks, bonds, and funds — and into more exotic, hard assets like silver.

How do you invest in silver, anyway? Here's what interested investors should know.

Why invest in silver?

Hedge against inflation

Silver can serve as a good hedge against inflation. As a physical commodity, it has an intrinsic value. Past that, the metal is used in many different consumer goods, and the demand for these goods can increase as the economy expands, a development that could place upward pressure on prices and therefore create inflation.

Portfolio diversification

Like other alternative investments, silver often performs in an opposite way to traditional securities: its price rising when they fall, and vice versa. So it can be an invaluable way to diversify a portfolio.

Industrial demand

Industrial demand for silver has been on the rise in recent years, reaching record levels in 2022 and then 2023, according to figures provided by the Silver Institute. The creation of power grids and the growing use of green-related technologies, including solar panels, contributed to this rising demand.

In addition, 2023 was the third year in a row where global demand outstripped worldwide supply, according to the Silver Institute.

Safe-haven asset

Given its inherent worth, some investors believe silver will retain its value during times of crisis. As a result, they perceive it as a safe haven against political and economic turmoil, similar to its more glamorous cousin, gold.

Silver clearly offers many perks as a potential investment.

All these factors have precious metal experts like Giancarlo Camerana, a strategic advisor at QORE Switzerland, feeling optimistic about the performance of silver in the coming decade. What it comes down to, he says, is "a combination of bullish factors: increased demand from both the industrial sector and financial investors as they worry of the ongoing currency debasem*nt and the possible dollar devaluation."

Different ways to buy silver

Physical silver

Bullion: The physical metal is known as bullion. Investment-grade bullion typically refers to silver that's 99.9% pure. It comes in a few different forms, including bars, which consist of solid silver weighed by the troy ounce that's been poured or pressed into stamped blocks. They're available for purchase from reputable metals dealers. If you're starting here, aim for smaller ounce-counts, as they'll be easier to sell off if need be.

One way that investors can obtain silver bullion is by purchasing silver rounds, which are round objects similar to coins but are not legal tender. Private mints create these rounds.

Precious metals dealers generally offer bullion in its various forms. Be sure to look for a well-established one: JM Bullion, APMEX, and SD Bullion are among the most reputable. Many banks also sell silver bullion.

Coins: Investors who want to gain the benefits offered by silver can purchase coins. The United States Mint, for example, offers American Eagle coins. Interested parties can purchase an American Eagle 2024 One Ounce Silver Proof Coin for $80 at the time of this writing.

Alternatively, investors can buy Maple Leaf bullion coins from the Royal Canadian Mint, which offers to store these coins for investors in its vaults.

These coins can be sold at a significant premium, which is the cost over and above the spot (market) price. These premiums are the result of business expenses such as distribution and fabrication. Investors who are interested in these collectibles should perform thorough due diligence on all the steps involved so they know how to buy silver coins in a well-informed manner.

Silver ETFs

One good way that investors can gain exposure to silver is by purchasing exchange-traded funds (ETFs). Investing in silver ETFs can grant you quick exposure to the precious metal, and there are many different options available.

There are ETFs that are based on physical silver, for example, and those that invest in silver mining companies, and also funds that are tied to futures contracts.

ETFs give investors an easy way to gain exposure to the raw material, and they can be purchased through brokers and held in brokerage accounts or retirement accounts.

Physically backed silver ETFs may be the most straightforward option, as these funds purchase silver bullion and investors can obtain these funds through different places like brokers and retirement accounts.

Leading silver ETFs and what they invest in

Here is a list of some popular silver ETFs, as well as how they give investors exposure to the metal.

• iShares Silver Trust (SLV): physical silver
• Global X Silver Miners (SIL): silver stocks
• Aberdeen Standard Physical Silver Shares ETF (SIVR): physical silver
• iShares MSCI Global Silver Miners ETF (SLVP): silver stocks
• Invesco DB Precious Metals Fund (DBP): silver and gold futures

Silver mining stocks

Silver mining stocks offer indirect exposure to the metal by offering ownership in companies responsible for its extraction. If these mining companies turn a profit, they can take these funds and use them to expand production.

Silver futures and options

Futures and options are derivatives contracts that investors can use to gain exposure to many different assets, including commodities like silver. A futures contract obligates two parties to make an exchange at a specific point in time, for example a certain amount of silver for a predetermined amount of money.

An options contract gives the contract holder the right, but not the obligation, to buy or sell an underlying asset (like silver) for a predetermined price during a specified time frame.

How to buy silver the right way

Investment goals

The first step in formulating a well-prepared investment plan is determining your goals. Are you looking to plan for retirement? Do you want to hedge risk? Alternatively, are you hoping to generate some quick returns through speculation?

Risk tolerance

The next step is to evaluate your willingness to incur risk. There are many different ways to invest in silver, and they come with varying levels of risk. The riskiest route would likely involve options and futures, as these can generate sharp losses.

Investing in silver bullion or ETFs that are based on physical silver would be a less risky option, as this is a more direct investment.

Storage and security

If you have silver bullion, you should store it in a place that is both cool and dry so it can maintain its quality. Alternatively, if you purchase silver ETFs or shares of silver stocks, you won't have to worry about storage at all, as that is handled by third parties.

Another option is purchasing collectible coins. If you buy these from the Royal Canadian Mint, for example, the organization can store them for you.

Cost and fees

Any kind of silver investment is going to come with fees and expenses. For example, if you buy an ETF or a stock, you will pay a commission to do so. If you buy collectible coins, you may very well pay a premium over and above the spot price of silver. There are also costs associated with storing silver.

Where to buy silver

Local dealers and pawn shops

Pawn shops might present opportunities as they give you the ability to potentially negotiate for lower prices when buying. However, it is important to keep in mind that purchasing silver in this way will not have the same transparency as obtaining the metal from more reputable sources.

Online dealers

Online dealers can offer a wide selection, presenting you with many different possible choices. It is important to work with an established organization. APMEX and JM Bullion, for example, have built up solid reputations.

Brokerage accounts

You can buy silver stocks and ETFs through brokerage accounts the same way you would buy other securities. There are many different options out there, ranging from full-service brokerages to discount brokerages that will allow you to make trades with lower expenses.

To do this, you need to choose a brokerage, set up an account, fund it, and then make purchases.

Investing in silver FAQs