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Updated: Mar 14, 2024

How to Invest in Silver

Learn about all the different ways that you can invest in silver, a physical commodity that people use to diversify their investment portfolios.
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Have you ever seen TV commercials where you can buy silver coins as a way to invest in silver? 

While buying coins from TV advertisements may not be the ideal way to invest in silver for you, investing in silver could be a justified part of your investment plan.

When the stock market sinks, many people consider certain physical assets, such as gold and silver, to be safe-haven investments. The same thing goes for recessionary periods.

Even though these beliefs are widely held, stock market bear markets don’t always correlate to a silver bull market.

Either way, you may be considering adding silver to diversify your investment portfolio.

Why Consider Investing in Silver

Silver is often made into jewelry and coins.

But did you know that silver has many industrial applications, as well?

Silver is commonly used in solar panels, electronics, real silverware and in many more ways.

When you combine these uses with jewelry, coins and investments, you can see silver derives its value from multiple sources

It has a physical form

Another reason people invest in silver is that you can hold it in physical form.

Unlike stocks which represent a partial stake in a company, silver is a tangible asset. 

You can buy coins or silver bars and store them in your home or a safe deposit box just in case you need it.


Physical silver in the form of coins is usually considered a collectible unlike silver stocks or mutual funds.

That means:

Your gains on the sale of silver may result in higher tax rates.

The long-term capital gains tax rate on silver maxes out at 28%. Unfortunately, that’s higher than the capital gains rates on traditional investments like stocks and mutual funds. 

Thankfully, you can get around this by investing in silver in ways other than its tangible form.

Diversify your portfolio

For some people, having all of their investments in stocks and bonds may seem risky. One way to diversify your portfolio is to hold physical assets such as silver.

The biggest selling point:

If stocks and bonds lose value, there is a chance that silver may hold its value or even increase in price. Of course, it could decrease in value, as well. 

The chances of all assets decreasing at the same time are relatively small, though.

That’s why diversifying your investments to include tangible assets such as silver may be a smart move in the right situations.

The gold-silver ratio

One way people evaluate whether to invest in gold and silver is the gold-silver ratio.

This ratio calculates the number of ounces of silver you would need to use to buy an ounce of gold. The ratio can change whenever the price of either silver or gold changes.

Based on the result of this ratio, some traders decide whether buying silver is a good investment or not.

When silver is expensive in the silver market compared to gold, people may decide to sell their silver and buy gold. When silver is cheap compared to gold, people may do the opposite.

Ultimately, basing a buying decision on a ratio isn’t always a good idea.

You should also look at the fundamentals of any investment to determine where you think its price is headed in the future.  

Ways to Invest in Silver

If you think investing in silver is a smart move, consider the following ways to do it.

As always, check with your financial advisor to see if it is a good idea for your situation.

1. Buy silver in physical form

One way to buy silver is physical bullion which is essentially silver bars, coins or ingots. You can also buy silver jewelry.

When buying silver in tangible form, don’t expect to pay the market price. There are costs to holding silver for sale, including safeguarding it.

For this reason, you usually have to pay a premium to buy any type of physical silver.

Silver jewelry may have an even higher premium. Jewelry is a form of art that takes skill and time to turn silver into something someone would want to wear.

Expect to pay this additional cost over the market price of silver.

Pros of physical silver

The benefit of buying physical silver is you have direct access to it when you need it. If the world has a major problem and people can’t access their money electronically, you can still access your tangible silver as long as you keep it somewhere safe.

Cons of physical silver

There are downsides to physical silver, too.

First is the premium you pay when you buy it. 

To make matters worse, you usually can’t sell silver at market prices to a dealer, either. They’ll want to buy your silver at a discount to make it worth their time.

You’ll have to protect your silver, too. You may decide to lock your silver in a safe deposit box or a safe in your home, but these aren’t free. 

If you don’t, someone that knows you have a silver stash may try to break in and steal your silver. 

Insurance policies usually limit physical metal coverage unless you pay for additional coverage.

That means you may not even be covered for your full loss unless you pay for additional insurance.

2. Physical silver ETFs

If you want to invest in physical silver bullion without having to manage the process of storing, buying and selling it directly, you may want to consider a physical silver exchange-traded fund (ETF).

These investments purchase and hold silver on your behalf. You just don’t have tangible access to it. The ETFs generally track the price of physical silver, although it isn’t always perfect.

Managing a large amount of tangible silver has costs, though.

For that reason, you’ll have to pay an expense ratio on the ETF which eats into your returns.

If you find a good silver ETF with a low expense ratio, investing this way may make sense if you’re only interested in silver as an investment. 

3. Buy stock in companies that mine silver

Another way you can invest in silver is by buying stock in companies that are responsible for silver production.

Silver mining companies pull the precious metal out of the ground and then sell it. 

You’d think the people that produce silver would be a slam dunk investing move, but that isn’t always the case.

Like owning any other company, owning stock in a silver mining company has risks.

Silver mines may not produce as much silver as anticipated. Silver prices may decline, resulting in lower profits. Costs to mine the silver may be more than expected.

Most mining companies mine more than just one precious metal. This is another way to diversify risk, but it may result in returns not matching silver’s returns as close as you may like.

4. Buy mutual funds or ETFs focused on silver mining

Certain mutual funds and ETFs exist that allow you to invest in silver mining companies.

By investing in a mutual fund or ETF, you invest in several companies instead of just one. This gives you more diversity in your investments.

If one of the companies has bad results from a mine that produced less than expected, they may be offset by another company that had better results than expected.

Owning multiple companies through a mutual fund or ETF doesn’t let you be as discerning, though. Instead, you get the whole basket of companies with each purchase.

5. Silver futures contracts

You may have heard of futures contracts as a way to invest in commodities. Essentially, you purchase a contract that allows you to buy a certain commodity in the future at a set price.

You can use futures contracts to invest in silver, too. Unfortunately, these contracts are more complex than the other ways to invest in silver.

Investing in futures usually involves leverage.

That means:

You borrow money to invest. It can result in bigger gains, but it can also result in larger losses.

Futures contracts also have a set date when they expire. If the silver market crashes right before your futures contract expires, you can’t wait for prices to rebound. 

You can buy and sell futures contracts, but their value depends on the current price of silver and the contract price of silver. If your contract price is higher than the current market price, you’ll likely lose money.

If you hold a contract to maturity, you have to complete your end of the contract. Contracts may settle in cash or may actually trade the commodity for money.

In some cases, you have to buy the physical silver based on the contract price.

Whether you settle in cash or silver, you could end up with massive losses if the market price is significantly below the contract price.

Choose the Best Silver Investment Option for You

Ultimately, it is up to you to determine if silver is a good investment for you and your investment portfolio.

If you decide investing in silver is for you, make sure you pick the investment option that works best for your goals.

If you want access to trade silver quickly, consider mutual funds, ETFs and stock in silver mining companies. If you’d rather invest in silver for the long-term and keep it in physical form, consider physical silver such as silver coins and bars.

Making investment decisions isn’t easy. If you can’t decide if investing in silver is the right move for you, consider consulting a fee-only financial advisor. 

They can look at your entire investment strategy as well as your personal situation. Then, they can help you figure out if investing in silver would be a good addition.