Silver As An Investment: Ways Of Investing In Silver


Silver is like three other precious metals (gold, palladium, and platinum) in terms of being regarded as an investment commodity. In fact, this precious metal has been regarded as a form of currency and a store of value for over four centuries.

There are different ways by which one may invest in silver. Six are presented here:

Buying silver coins:

This is a popular way of taking hold of silver - physically. Perhaps the best example of a silver coin is the Canadian Silver Maple Leaf, which consists of 99.99% pure silver. Silver coins may either be "fine silver" or "junk silver". Junk silver coins are older coins with a lower percentage of silver. Examples of these are the dime, quarter, and fifty-cent U.S. coins minted in 1964 or earlier. These coins contain 90% silver and are 8/10 troy ounce per 1 USD of face value.

Buying silver bullion bars:

This is the most traditional way of investing in silver. Silver bullion bars can be bought or sold over the counter in most banks in Switzerland. They may be stored in safe deposit boxes in banks or placed in non-fungible (allocated) or pooled (unallocated) storage with a silver dealer.

Opening a silver account:

An investor may open a silver account with one of the major banks in Switzerland. Here, silver can be bought or sold over the counter just like any foreign currency. However, the bank client does not own the actual silver metal. Instead, he/she has a claim against the bank for a specified quantity of the metal. A silver account is backed through either allocated or unallocated storage.

Owning a silver certificate:

In lieu of storing actual silver bullion, an investor may opt for ownership of a silver certificate. A silver certificate allows an investor to buy and sell the security sans the inconveniences associated with the physical silver's transfer. The Perth Mint Certificate Programme, which is fully guaranteed by the Government of Western Australia, is the only silver certificate program in the world that is guaranteed by a national government.

Trading in Exchange-Traded Funds (ETFs):

An investor can have an easy way of gaining exposure to the price of silver through an ETF. Some of the well-known ETFs include iShares Silver Trust (with ticker symbol NYSE: SLV), Central Fund of Canada (with ticker symbols TSX: CEF.NV.A, NYSE: CEF), and ETFS Silver Trust (with ticker symbol NYSE: SIVR). Trading in ETFs means doing away with the inconveniences associated with the handling of physical silver bars.

Entering in a Contract For Difference (CFD):

Some of the noted financial services firms, especially those in the United Kingdom, provide Contract for Difference (CFD). In this silver investment vehicle, two parties (a "buyer" and a "seller") enter into a contract, in which the seller agrees to pay the buyer the difference between the current value of silver and its value at contract time. In case the difference is negative, the seller receives payment instead from the buyer. A CFD, therefore, allows an investor to take advantage of long or short positions, enabling him/her to speculate on these markets.

It must be mentioned here though that silver has lost its forced tender status in the United States since the abandonment of the silver standard, when, on August 15, 1967, then U.S. President Lyndon B. Johnson announced that the U.S. would discontinue redeeming currency for silver (or any other precious metal).

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