You may choose to invest in silver as a hedge against inflation or a way to diversify your portfolio. There are many ways to invest in silver. The best way may be to gain exposure to the price of silver through mutual funds, exchange-traded funds (ETFs), or exchange-traded notes (ETNs).
Are you new to silver investing? If so, there are some pitfalls to watch out for. Before you invest, learn the strategies for buying precious metals.
Why Invest in Silver?
Some people love silver because its standing as a precious metal to invest in is second only to gold. Still, silver is much cheaper than gold. The gold-silver price ratio averages around 47 to 1.
Silver as an investment offers advantages that are similar to those of gold. There are industrial uses for silver, for instance. This metal is a good conductor of electricity. It has uses in mobile phones, computers, solar panels, and RFID chips, among other things.
The Silver Institute forecasts an 11% increase in demand for silver in 2021. This demand is driven mostly by industry. Physical ownership of silver will also fuel the increase. Jewelry is expected to rebound but might not reach pre-2020 levels.
The price of silver is driven by supply and demand. Investor speculation is also a factor. Often, precious metals such as gold and silver are in higher demand when there is much uncertainty about currencies. Low-interest rates tend to drive up the demand for precious metals, including silver. Prices rise as a result.
Note
Silver is often used as a hedge against changes in currency value or as a store of value during times of economic uncertainty.
How to Invest in Silver
There are many ways to invest in silver. You can buy metals in the form of bullion coins or bars. You can buy shares of mining stocks, or you can invest in silver mutual funds, ETFs, and ETNs.
The silver market is much smaller than the gold market, which makes for higher volatility in price. Because of this, investing in silver can be risky for most people. You may decide to invest in small portions. For instance, you may choose to put 5% of your portfolio in commodities, one of which may be silver. That could help diversify your holdings.
Silver Investing With Mutual Funds, ETFs, and ETNs
Most mutual funds do not hold silver as a physical asset. You can get indirect exposure to silver in mutual funds by holding equity precious metals funds. Two examples of these funds are Aberdeen Standard Physical Silver Shares ETF (SIVR) or Invesco DB Precious Metals Fund (DBP). ETFs like these often have more exposure to stocks of gold mining companies than to silver and silver mining companies.
If you want the most direct exposure to silver, you will need to use a silver ETF. One example of a silver ETF is iShares Silver Trust (SLV). You can also use an exchange-traded note (ETN). One example is X-Links Silver Shares Covered Call ETN (SLVO).
Note
ETNs are debt instruments, like bonds, that do not invest in any asset. Although they are linked to the performance of a market benchmark, ETNs are not equities or index funds.
The Bottom Line
Generally, the best way to invest in silver is through ETFs or ETNs, not mutual funds. Most people who invest in silver want exposure to the price of silver rather than stocks of companies that engage in silver mining and manufacturing. ETFs and ETNs often track the price of silver, but most precious metals mutual funds do not.
As always, you should use caution when investing in securities, especially those that you do not understand. Don't try to time the market. Due to the speculative nature of silver and other precious metals funds in the market, it's best to avoid short-term market-timing strategies. You can use precious metals funds as long-term diversification tools. Put only small amounts of your portfolio, such as 5% to 10%, toward such securities.
Frequently Asked Questions (FAQs)
What is the best way to invest in silver?
The best investment strategy depends on your goals. If you want to build a long-term silver investment, perhaps even one to pass on to heirs, you might prefer to buy physical silver bullion. Physical silver typically comes with higher retail fees, but it's a physical product that you can simply store. ETFs and other silver funds are cheaper to actively trade, making it easier to capitalize on short-term price fluctuations, but these products charge annual expenses.
What are the best silver coins to invest in?
If you want to purchase physical silver bullion, you have several options. The most secure option is to buy from a government mint, such as silver bullion from the U.S. Mint. Private dealers also sell physical silver, but the average silver investor may find that it's easier to trust a product that comes directly from a government mint.
FAQs
Investing in silver for beginners
Buying physical coins or bars is the recommended way to invest in silver in our opinion. Taking physical ownership of silver gives you the best control over your investment and allows you to sell it as and when you please.
What is the best investment strategy for silver? ›
ETFs. One of the more common ways to invest in silver today is to buy shares of an exchange-traded fund (ETF). ETFs often own the physical silver, and investors simply trade ownership shares of the fund that owns the silver. ETFs are a very accessible and liquid way of selling the tangible good.
What is the best ETF to track silver? ›
List of Top Silver ETFs by AUM
| Ticker | Fund | 1-Yr Return |
|---|
| SIVR | abrdn Physical Silver Shares ETF | 33.95% |
| SIL | Global X Silver Miners ETF | 13.27% |
| SILJ | ETFMG Prime Junior Silver Miners ETF | 5.89% |
| SLVP | iShares Global Silver and Metal Miners ETF | 11.97% |
1 more rowSilver ETFs offer investors an easy and cost-effective way to invest in silver. They provide exposure to the price movements of silver without requiring investors to take physical possession of the metal. Additionally, they offer benefits such as diversification, liquidity, and low expense ratios.
Does Warren Buffett invest in silver? ›
Warren Buffett does not invest in gold. He has invested almost $1 billion in silver, so the reason for his aversion is not simply a dislike for precious metals. The explanation for Buffett's dislike of gold and for his enthusiasm about silver stems from his basic value investing principles.
What is the best form of silver to buy for investment? ›
A: The best silver coins to buy for investment purposes include the Silver Eagle, American Silver Eagle, Silver Dollar, Morgan Silver Dollar, Silver Dimes, Silver Quarter, Austrian Silver Philharmonic, Silver Britannia, Silver Canadian Maple Leaf, and Silver American Eagle.
What does Dave Ramsey say about investing in silver? ›
I'd stop investing in gold and silver completely. I don't put money in precious metals at all, because they have a lousy long-term track record. — Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover.
Is it better to buy physical silver or ETFs? ›
Silver ETF is a much more cost efficient way of investing in silver as there is no risk of impurities, no maintenance and no storage costs. They can be much more convenient, cost efficient and liquid investments compared to physical silver.
How to choose a Silver ETF? ›
Compare expense ratios: Different Silver ETFs carry varying expense ratios; the higher this ratio, the lower your overall return on investment. Therefore, you must study the expense ratios of various available Silver ETFs before arriving at your investing decision.
What are the silver mutual funds in the US? ›
The three U.S. silver exchange-traded funds (ETFs), ranked according to one-year trailing total returns, are SIVR, SLV, and DBS. The holdings of SIVR and SLV are silver, and the holdings of DBS are silver futures.
Investing in ETFs that own silver
Investors who want exposure to silver futures with a fund that trades like a stock can consider an exchange-traded fund (ETF), such as the Invesco DB Precious Metals Fund (DBP). Another way to invest in silver is through ETFs backed by physical silver instead of futures contracts.
How much silver should I invest in? ›
Many analysts recommend holding an average allocation of 5-10% in gold and silver. It's important to note that this is just a general guideline. Each investor has their own risk appetite and long-term goals so your ideal allocation may be different.
What stock is best for silver? ›
13 Best Silver Mining Stocks To Invest In Now
- Seabridge Gold Inc. (NYSE:SA) ...
- Osisko Gold Royalties Ltd (NYSE:OR) Number of Hedge Fund Investors In Q4 2023: 13. ...
- Endeavour Silver Corp. (NYSE:EXK) ...
- MAG Silver Corp. (NYSE:MAG) ...
- Coeur Mining, Inc. ...
- Hecla Mining Company (NYSE:HL) ...
- Fortuna Silver Mines Inc. ...
- Pan American Silver Corp.
Silver can rise to $100 /oz, this decade, under exceptional market conditions. The silver price will eventually rise to $100 /oz, but not in 2024 nor 2025.
Is it worth buying silver as an investment? ›
While investing in silver bullion offers some potential upsides, there are also important risks to carefully consider. To start, one major drawback is that silver prices have historically exhibited higher volatility compared to gold, with more frequent price swings in the shorter term.
What is the best form of silver to invest in? ›
American Silver Eagles
The American Silver Eagle is the official investment-grade silver bullion coin of the United States Mint. It is guaranteed for weight, content, and purity by the U.S. government. The American Silver Eagle consists of 1 oz of . 999 fine silver with a face value of one dollar.
What is a good amount of silver to own? ›
Financial experts often recommend allocating a small percentage of your portfolio to precious metals like silver and gold as a hedge against inflation and currency devaluation. Consider 5-10% as a general guideline, but adjust based on personal circ*mstances.
