How to invest in silver
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This helpful guide explores silver investment in a variety of ways. We provide the best places to invest in silver online, explore the fundamentals of the silver market and explore whether now is a good time to speculate on silver. Read on to get started.
Where can I invest in silver online?
If you want to invest in silver securities – which are tradable financial assets related to the silver market – the easiest way to do this is through a stockbroker. Below, we have listed some of the best platforms on the market, and you can click on one to sign up.
Why invest in silver?
There are numerous reasons why investors are attracted to the silver market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.
- Robust industrial demand. While silver is similar to gold in a variety of ways, its practical uses are far more diverse. Silver has a huge amount of industrial demand, with nearly 500 million ounces going towards things like silver steel, solar panels, water filtration and automobiles. This is reinforced by significant demand in other sectors including physical investment, jewelry, silverware and photography.
- Hedge against inflation. As the cost of living increases, each unit of fiat currency you own becomes worth less than before; this is called inflation, and economic measures like quantitative easing can magnify this process. However, the price of silver tends to increase proportionately to inflation, meaning owning silver investments can protect your capital from the impact of inflation.
- Store of value. Owning silver allows you to keep some of your capital outside of the traditional banking system and away from centralised control. This is appealing to investors with a distrust of the government and clearing houses, and it means your own real limitation when investing in physical silver is how much space you have to store it.
How to invest in silver
Investing in silver is a simple process, and we have broken it down into easy-to-follow steps below. Read on to find out how you can get involved.
- Decide on an investment strategy. You can’t invest effectively unless you have a clear strategy from the outset. Decide whether you want to be an active investor or a passive investor, what kind of silver assets appeal to you, and whether you want to go long or short. This will lay a solid base for you investing journey to thrive upon.
- Do your research. It is unlikely that your silver investment will be profitable without effective research to back it up. Make sure you take your time to gain a thorough insight into the silver market, analysing all of the supply-demand drivers and reviewing the precious metal’s common price behaviours.
- Set a budget. A clear budget can help you avoid things spiraling out of control. By setting boundaries, you can be assured that your silver investment will only risk money that you can afford to lose, which is crucial step in this process.
- Choose between the long term and short term. If you are an investor who wants to put their capital to one side and wait for it to grow over several years, long-term investing is likely for you. However, if you want to be more hands-on and accelerate your returns, short-term trading might be the right option for you.
- Find an investment platform. You can’t invest in silver assets on every online platform, so make sure you find one that offers exposure to the material. Handily, we have listed some of the best platforms available to you, and you can click on the button below to check them out.
Ways to invest in silver
There are a wide variety of ways that you can gain exposure to the price performance of silver. Each route has its own perks, and you should consider your personal needs and objectives as an investor before choosing any of them. Check out the section below for our selection of the different silver investing methods.
Invest in silver stocks
Perhaps the simplest way of gaining exposure to the material is investing in public companies that are involved in the silver industry. Typically, the share price of these companies will correlate somewhat with the price of silver. You will mainly be looking at silver mining companies, including explorers, developers, and established producers.
Invest in silver ETFs
Silver stocks ETFs are funds that trade on the stock exchange like any ordinary stock; however, they contain a selection of different silver stocks, providing a diversified blend for investors. You can also invest in silver commodity ETFs, which are funds that have their value pegged to physical silver reserves stored in a vault somewhere.
Invest in silver mutual funds
Mutual funds are created when capital from many different investors is pooled together and a fund manager takes control, using their expertise to decide what silver assets to invest in and when to sell them. This can be a great way of investing in silver without the strain on your own knowledge and experience.
Invest in silver futures
Futures are a popular way of speculating on short-term price changes. However, silver futures should only be considered by investors with a vast knowledge of the market and plenty of experience.
Invest in physical silver
You can invest in silver by purchasing bullion, bars or coins from a wide variety of places. Make sure you read our guide on this practice to find out more.
How does the silver market work?
The silver market functions similarly to other precious metals markets. However, it is a much more useful material and has a wide variety of applications, meaning it is a commodity with one of the most robust macro stories available. Below are some of the key factors at play.
- Investment. A huge amount of the silver market (around 200 million ounces) is driven by speculation, much like any other precious metal.
- Retail investor hedging. Many retail investors view silver as a safe haven asset to hedge their capital against inflation. However, it is important to note that most central banks eliminated their silver holdings prior to 2014, and very few continue to hold the material in their reserves, preferring to purchase and hold gold.
- Industrial uses. Silver is one of the most useful of all the precious metals and it is not easily replaceable in industrial practices. This means it has the demand necessary to always remain valuable, though its price will closely follow the global economy.
- Volatility. Because of these industrial uses, silver is much more volatile than gold since its demand is affected by geopolitics, economics and other unpredictable factors. While silver does have some demand in the jewelry and luxury goods markets, this is not enough to offset the volatility, though it is a positive for traders.
When should you invest in silver?
The best time to invest in silver is when investment in infrastructure and industry is on the rise, leading to a rise in silver demand. However, you can also generate returns by investing in silver when economic conditions are bearish given the material’s status as a safe haven asset.
It can be helpful to think of the silver market as a diluted and more volatile version of the gold market, meaning that the gold cycle can be a good reference to work out what stage we are currently at in the silver cycle.
Is silver a good investment in 2022?
This really depends on the key supply-demand drivers, the status of the global economy and your own needs and desires as an investor. As national governments around the world attempt to stimulate their economy into growth as the COVID-19 pandemic draws to a close, industrial expenditure will likely increase, meaning this year could be a solid one for silver.
Generally speaking, silver is one of the best precious metals to invest in and has performed well throughout history.
What should I do now?
For more information on silver and the market it inhabits, read our silver trading guide or check out the latest silver price analysis and news below.
Latest silver news
Try some of our commodities trading courses for beginners
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