Thursday, May 7, 2009

Investing in Silver

There are a number of ways of investing in silver.

One can invest in silver bullion, Silver coins, Silver stocks, such as mining companies, silver ETFs (exchange traded funds) to name but a few. The question is, which silver investment vehicle is the best? Taking them in reverse order.

Silver etfs (exchange traded funds)

This is probably the most precarious way of investing in silver. Indeed, it is considered by some experts that one is not investing in silver at all but merely investing in the price of silver when one invests in silver exchange traded funds.

A silver exchange traded fund is simply a fund that uses silver to some degree, as a collateral for the shares one buys. These shares are called exchange traded funds as one can simply buy and sell them, much as one can with stocks and shares. The silver represented cannot be redeemed but one simply buys in or sells out according to how one considers the price of silver is going to move.

So investing in silver exchange traded funds is as far removed from investing in silver as it is possible to get and still retain the word silver in the same sentence.

Silver Stocks
Silver stocks are another way of not investing in silver. Here one is investing in the company that, usually, mines silver. The problem is that mining companies diversify and will mine other minerals so you are not only dependent upon the company’s ability to get silver out of the earth but other minerals also. Not only that but the management of the company resulting in the profit and loss ratio as well as other non silver activities all affect the price of the stock one is investing in. So investing in companies mining in silver or even companies that invest or hold a stake in silver mining companies is still removed from an actual silver investment.

Silver Coins
Investing in silver coins is much closer to an investing in silver. There are many different types of silver coins one can invest in. American Eagles, Canadian Maples, junk silver coins, rounds. Each are different. But the most notable difference is in the price to value ratio.

The premium on silver eagles and maples leafs is higher than say that of junk silver. Junk silver is another name for bags of US silver coins struck prior to 1964. These silver coins had a silver purity of 90 percent. The balance of metal used being copper and other metals included to assist in the durability of the coin. One can buy bags of silver coins consisting of dimes, quarters or half dollars.

Silver rounds are another good buy. Silver rounds are silver coins manufactured by private mints. Such as, Northwest Territorial Mint, Sunshine Silver, and monex for example. Silver rounds are still silver coins but have no status as legal tender. They are simply pieces of silver in coin form. Hence the premium on them is a lot less than say American Silver Eagles, or the Canadian Silver Maple leaf.

They are an excellent way of investing in silver.

Silver Bullion
Here we have the crème de la crème of silver investment. This is how most silver investors invest their funds. Here we have silver in the form of ingots and bars. These can be in ounces or kilograms. The premium or mark up is less and the silver content is usually .999 percent fine with no additional minerals or impurities.

However, compared to gold and platinum the value of silver is low and to amass large quantities of silver means that one can have a transport and storage issue for the larger amounts. One way around this is to buy silver from GoldMoney. Here one can open a account free and buy silver (or gold for that matter, which one cal also take delivery of in 1000 gram gold bullion bars) as a reasonable fee and have it stored for you in Switzerland or London in a bank vault. The precious metal is fully insured and audited on a regular basis and the big advantage here is that you can buy and even sell any amount with no minimum or maximum. Ideal for a regular savings plan.

With silver in chronic short supply and being more heavily used in industry than ever before, investing in silver is a wise move.

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