Silver is classified as a commodity, a tangible asset that is publicly traded. The prices of tangible assets generally move in the opposite direction to that of stocks and bonds. Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We've maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in the steps they need to take next.
Holding physical silver, whether in the form of coins or ingots, is a psychologically and emotionally satisfying way to invest in silver. You have it in your possession and can use it if necessary. And in some cases, it's relatively easy to access. Coins manufactured before 1964 contain approximately 90 percent silver and can be purchased for the value of their silver content.
Silver futures are an easy way to bet up or down the price of silver without the hassle of having physical silver. You could even accept the physical delivery of silver, although that is not the typical motivation of those who speculate in the futures markets. Silver futures are an attractive way to play in the silver market due to the large amount of leverage available in futures contracts. In other words, you have to invest relatively little capital to have a relatively large position in metal.
If silver futures move in the right direction, you'll make a lot of money very quickly, although you can lose it just as quickly if you're wrong. Investors who want to add silver to their portfolio have a wide range of options. Exposure to silver can be achieved through the possession of physical ingots or currencies, the possession of shares of silver mining companies, the possession of ETFs or mutual funds that have physical silver or silver futures contracts, or the direct possession of futures contracts. Investors should carefully consider their needs and evaluate the advantages and disadvantages of different types of silver investments as part of their due diligence process before investing.
If you decide to invest in silver, the best way is probably through a silver ETF. This allows you to participate in the metal itself with low fees and the ability to buy and sell quickly, and it can be easily managed by brokers with low fees such as E*TRADE. But you won't have to worry about taking possession of the metal or dealing with the uncertainties of silver mining stocks. It is also possible to have a precious metals IRA (although not all brokerage firms offer one), and to do so, investors must hire and pay for the services of a depositary and a custodian; under IRS regulations, ingots held in a precious metals IRA must be stored in an approved warehouse.
Brokers that do not manage physical silver transactions will continue to allow investors to buy silver ETFs, as well as shares of silver mining companies and ETFs of mining companies.