How to Buy Silver in 2024

Silver is a valuable precious metal that has been a medium of exchange for thousands of years, offering both an investment opportunity and a hedge against inflation. The allure of silver extends beyond its industrial utility to its rarity, malleability, and its historical role as money.

As an investor, understanding how to buy silver can provide you with a solid tangible asset and a potential wealth generation strategy.

silver coins

Key Takeaways

  • Investing in silver can be done through various methods, including physical silver bullion (bars and coins), silver ETFs, mining stocks, certificates, and futures contracts, each with unique advantages and risks.
  • Silver offers benefits like portfolio diversification and a hedge against inflation but has potential drawbacks, including storage costs, price volatility, and dealer premiums.
  • Understanding the tax implications of silver investments, such as capital gains taxes and Silver IRAs, is important for maximizing returns and reducing tax liability.

5 Ways to Buy and Sell Silver

Here’s a brief guide on five popular methods to buy and sell silver, each with their own advantages and considerations.

1. Silver Bullion: Bars and Coins

Silver bullion refers to physical silver, which can take the form of bars or coins. Bars offer versatility with various sizes, while coins, often minted by national institutions, hold potential collectible value along with their silver content.

Silver Bars

Bars can range from small 1-ounce bars suitable for individual investors, to large 1000-ounce bars typically used for institutional investment. They offer a straightforward, easily quantifiable way to invest in this precious metal.

Silver Coins

When it comes to silver bullion coins, there are several types to choose from, each offering its own unique advantages:

  • American Silver Eagles: These coins are produced by the United States Mint and are well known for their beautiful design and high purity. They contain one troy ounce of .999 fine silver. American Silver Eagles are legal tender in the United States, with a face value of $1. But they are generally bought and sold based on the market price of silver plus a small premium.
  • Canadian Silver Maple Leafs: The Royal Canadian Mint produces these coins, which are similarly admired for their design and purity (.9999 fine silver). They also contain one troy ounce of silver, and their face value is 5 Canadian dollars.
  • British Silver Britannias: Minted by the Royal Mint, these coins are .999 fine silver and have a face value of 2 pounds. They feature an iconic image of Britannia, the female personification of Britain.
  • Australian Silver Kangaroos: These are minted by the Perth Mint in Australia and also contain one troy ounce of .9999 fine silver. They carry a face value of 1 Australian dollar.
  • Silver Rounds: These are similar to coins but are not considered legal tender. Rounds can be produced by a wide variety of mints and usually contain one troy ounce of .999 fine silver. They often come with unique designs and can be a cost-effective way to invest in physical silver.

2. Silver ETFs

Exchange-traded funds (ETFs) offer a convenient method for investors looking to gain exposure to the silver market without the need to physically own the metal. Here are a few popular silver ETFs:

  • iShares Silver Trust (SLV): The largest silver ETF by far, iShares Silver Trust is designed to track the spot price of silver. Each share of this ETF represents a certain amount of physical silver held by the fund.
  • Aberdeen Standard Physical Silver Shares ETF (SIVR): This fund aims to replicate the performance of the price of silver, minus the Trust’s expenses. It offers a slightly lower expense ratio than SLV.
  • Invesco DB Silver Fund (DBS): Unlike SLV and SIVR, DBS invests in silver futures contracts, which can result in greater potential for returns but also higher volatility and risk.
  • ProShares Ultra Silver (AGQ): This fund seeks to provide 2x the daily performance of silver bullion as measured by the U.S. dollar fixing price for delivery in London. This makes it a more aggressive investment, as it leverages your potential gains (and losses).
  • Aberdeen Standard Physical Silver Shares ETF (SIVR): This fund is designed to track the price of silver, and each share is backed by physical silver bullion held by the fund.
  • Global X Silver Miners ETF (SIL): This ETF tracks the Solactive Global Silver Miners Total Return Index, giving investors exposure to a broad range of silver mining companies.

Investing in these silver ETFs is akin to buying shares on the stock market. Rather than owning physical silver, shareholders in a silver ETF own shares in a fund that owns silver. This introduces managerial risk and ongoing fees for the management and storage of the fund’s silver.

3. Silver Mining Stocks

Investing in silver mining stocks or a Silver Miners ETF offers an indirect approach to gaining exposure to the silver market. By purchasing shares of companies involved in the extraction and production of silver, you are essentially betting on their operational and financial success.

These stocks often move in correlation with silver prices, but they also hinge on factors like mining efficiency, management proficiency, geopolitical issues, and the overall health of the economy. For example, a company may suffer from operational issues that reduce its profitability, even if the price of silver rises.

Popular silver mining companies include Majestic Silver Corp, Wheaton Precious Metals Corp, and Pan-American Silver Corp. In addition, a Silver Miners ETF, like the Global X Silver Miners ETF, offers diversified exposure to a variety of silver mining companies in one package.

4. Silver Certificates

Silver certificates serve as a hassle-free alternative to physical silver ownership. Essentially, these are documents issued by a financial institution that grant the holder claim over a specified amount of silver.

The silver itself is stored and managed by the issuing institution, eliminating storage and security concerns for the investor. This can be a convenient option for those who wish to avoid the logistics involved with storing physical silver, while still having a stake in the precious metal’s value.

5. Silver Futures and Options

For more sophisticated investors, silver futures contracts provide a way to speculate on the future price of silver. A futures contract is an agreement to buy or sell a certain amount of silver at a future date for a set price.

Options work similarly, giving investors the right but not the obligation to buy or sell silver at a set price within a specific time frame. These types of investments are more complex and typically involve higher risk and potential reward than simply buying and holding silver.

Where and How to Buy Silver

Buying Silver Online

Purchasing coins, bars, or even silver stocks online is an increasingly popular method. Online retailers such as Money Metals Exchange, Gainesville Coins, and JM Bullion offer a wide range of silver bars, coins, and rounds with various designs, sizes, and prices. Buying silver online can often be cheaper than buying locally due to lower overheads, but it’s important to ensure the dealer is reputable.

Before buying, compare prices, check reviews, and ensure the site has secure payment methods. Be aware that when you buy silver this way, you’ll usually need to arrange for secure delivery or storage.

Buying Silver Locally

Local coin shops, some banks, and bullion dealers offer investors the chance to buy silver in person. This can be advantageous, as you can inspect the silver content and quality directly. Be sure to research the dealer’s reputation and expertise, as well as comparing prices to the spot market price and other local dealers.

Buying Silver on the Stock Market

If you want to invest in silver ETFs, silver mining stocks, or silver futures contracts, you’ll need to use a stock trading platform. These can be accessed through online brokerages. The buying process is similar to buying shares in any public company. As with any investment, it’s important to do your research or consult a financial advisor before buying.

Pros and Cons of Buying Silver

Like all investments, buying silver comes with its own unique set of benefits and potential drawbacks. Let’s explore both sides of the coin to give you a more balanced perspective.

Pros of Buying Silver

  • Diversification: Silver can offer a good way to diversify an investment portfolio. It tends to move independently of stocks and bonds, meaning it can provide balance and reduce overall risk.
  • Hedge against inflation and economic uncertainty: Historically, precious metals like silver have held their value over time. As a hard asset, silver can act as a hedge against inflation and economic uncertainty, as its value often rises when the real value of fiat currencies declines.
  • Industrial demand: Unlike gold, which is primarily used for investment and jewelry, silver has numerous industrial applications. This demand can support the price of silver in a way that may not be applicable to other precious metals.
  • Affordability: Compared to other precious metals like gold and platinum, silver is more affordable. This lower price point allows more investors to buy physical silver bullion, such as bars and coins.
  • Tangible asset: When you invest in physical silver, you own a real, tangible asset that you can hold in your hand. This differs from digital or paper assets that only represent the ownership of an asset.

Cons of Buying Silver

  • Storage and insurance: Owning physical silver means dealing with storage and insurance costs. Whether it’s in a home safe or a safe deposit box, the costs and logistics of storage are factors to consider.
  • Price volatility: Silver prices can be quite volatile. While this can lead to significant gains, it can also lead to big losses.
  • Lower liquidity: Although silver is generally liquid, it can be harder to sell quickly compared to stocks and bonds. If you need to convert your silver into cash immediately, you might have to sell it for less than its market value.
  • No passive income: Unlike stocks and bonds, silver doesn’t produce dividends or interest. Your potential profit lies in the appreciation of the metal’s price.
  • Dealer premiums and selling costs: When you buy physical silver, you often pay a dealer premium over the spot price. Similarly, when you sell, you might receive less than the spot price.

Storing Your Silver

There are a number of things to consider when deciding where to store your silver. Here are some of your options:

  • Home storage: A personal safe at home can be sufficient for smaller quantities of silver. It’s convenient but comes with risks like theft or damage.
  • Bank safe deposit boxes: These offer high security and are good for medium quantities of silver. However, access is only during bank hours, and the contents are usually not insured by the bank.
  • Professional bullion storage: Ideal for larger investments, these facilities offer 24/7 security and typically include insurance coverage. Companies like the Royal Mint offer such services.
  • Silver IRA storage: If you have a Silver IRA, your silver will be stored by a qualified custodian in an approved facility, offering a hands-off and worry-free storage option.

Tax Implications of Buying Silver

The tax implications of owning silver depend on your country’s tax laws. In general, any profit from selling silver is subject to capital gains tax. Some silver investments, like silver mining stocks, silver ETFs, and silver futures contracts, might be held in a tax-advantaged account, like an IRA, but this is subject to specific rules and regulations.

Silver IRAs are a particular type of investment retirement account that allows you to hold physical bullion coins or bars in a tax-advantaged manner. They can be a valuable part of an investment portfolio, but they must be administered by a custodian and stored in an approved facility.

Conclusion

Investing in silver can provide diversification, a hedge against inflation, and potential for significant returns. There are many ways to buy silver, from physical bullion to silver ETFs, mining stocks, and more. Whatever path you choose, remember that like any investment, silver comes with risks. It’s important to do your research or consult a financial advisor before diving in.

Frequently Asked Questions

What’s the difference between spot price and market price in the context of silver?

The spot price of silver is the current price per ounce being traded on global commodity markets. The market price of silver, particularly when buying physical bullion, often refers to the spot price plus any dealer premiums, which can include costs for fabrication, distribution, and a minimal dealer fee.

Are silver coins or bars a better investment?

This often depends on the individual investor’s goals and circumstances. Coins can be more collectible and easier to sell in smaller quantities, but may carry higher premiums. Bars, particularly in larger sizes, often have smaller premiums and may be more cost-effective for larger investments.

Is investing in silver better than investing in gold?

Silver and gold are different assets with their own strengths and weaknesses. Silver is more affordable and has more industrial uses, which can drive demand. Gold, on the other hand, is more widely accepted as a store of wealth and is less volatile. Both can play a role in a diversified portfolio.

Are there any tax benefits to investing in silver?

Depending on your country’s laws, there may be tax advantages to investing in certain types of silver investments. For example, in the United States, silver held in a Silver IRA can grow tax-free. However, profits from selling silver are usually subject to capital gains tax. It’s important to consult a tax professional or financial advisor for personalized advice.

What is junk silver?

Junk silver” is a term used to describe old coins that have no collector or numismatic value but are made of silver. These coins, like pre-1965 U.S. dimes, quarters, and half dollars, can be a cost-effective way to invest in silver, as they are often sold close to their actual melt value.

Dawn Allcot
Meet the author

Dawn Allot is a personal finance writer and content marketing expert specializing in finance, travel, real estate, and technology. In addition to her work at Crediful, Dawn regularly writes for Bankrate, GoBankingRates, and The Balance.