How to buy silver
What you need to know to buy silver with confidence
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Silver is a long-held standard of currency around the globe and, more recently, a popular investment choice for investors looking to preserve their purchasing power. But there are several ways to buy silver, with pros and cons.
You may be an investor looking to diversify into precious metals or simply want to own some physical silver as a collectible or investment asset. It’s important to understand the different ways you can purchase silver. Here are a few of the more common ways to buy silver today.
- Silver is a relatively low-cost precious metal investment.
- You can buy physical silver or silver-related investments (e.g., stocks, ETFs).
- Silver is a speculative investment that can be volatile.
- Silver has real-world utility and is used in the electronic, medical, dental and aerospace fields.
Physical silver is known as “bullion” and comes in coins, bars, or ingots (large bars). You can purchase physical silver through the U.S. Mint or at a precious metals dealer; both allow you to buy silver online.
Investing in physical silver is best for investors who want to take custody of their assets and don’t mind storing and insuring their silver holdings. If you’re partial to hard assets you can hold, buying silver bullion may be a good option.
But investing in physical silver might be more costly, as you usually pay dealer markups, transfer fees and other transaction fees. And if you don’t store the silver yourself, you’ll also pay storage and insurance fees.
Mel Mattison, a certified financial planner and entrepreneur, mentions that holding physical silver can be a good idea, but he recommends being wary of some online dealers when purchasing. “Make sure that you purchase these from a highly reputable dealer. Encasing pure silver around a core of lead to create a counterfeit bar with solid weight is a real risk when purchasing bullion from untrusted sources,” he said.
You don’t have to buy actual silver to gain exposure to the silver market. Instead, You can invest in silver-related stocks, such as silver mining or production stocks. These stocks can be purchased at most major brokers, which offer stock trading with little to no trading commissions.
Since silver is typically mined as a byproduct of mining for other metals (such as iron ore or aluminum), some mining stocks don’t have much exposure to silver. Here are a few stocks that are focused on silver for their returns:
Pan American Silver (PAAS)
Pan American Silver has the largest silver reserves in the world and focuses on precious metals mining and production. It produces metals such as silver, gold, copper, lead and zinc. It’s listed on the New York Stock Exchange and can be traded under the ticker symbol “PAAS.”
First Majestic Silver (AG)
First Majestic Silver is a precious metals mining company that focuses exclusively on silver and gold mining. While most of its revenue comes from gold mining, it’s heavily invested in silver mining and production. It’s listed on the New York Stock Exchange and can be traded under the ticker symbol “AG.”
If you want direct exposure to the spot price of silver without physically owning it, you can invest in a silver exchange-traded fund (EFT). These funds own silver directly, and each share is backed by physical silver that is professionally stored and insured with a trusted custodian.
Investing in a silver ETF may be preferred due to its ease of trading and relatively high liquidity compared to buying and selling physical silver. There are annual fees associated with a silver ETF to pay for administrative costs, but these fees are typically under 1% per year.
The most popular silver ETF is iShares Silver Trust (SLV). As of May 2023, it has nearly 470 million ounces of silver in storage, backing all outstanding shares.
» MORE: Gold vs. silver
Silver futures and options
If you don’t care much about owning silver itself but want to trade silver markets, you can do this with silver futures and options contracts. Silver futures are exchange-traded contracts that purchase silver at a future, predetermined price. Silver options allow you to invest in contracts and collect profit based on the price movement of silver.
The CME group settles these contracts, and you can buy or sell silver futures contracts through a broker like Schwab. Silver options are also cleared through the CME group and can be traded through a supported broker such as Schwab or TD Ameritrade.
Another derivative trading product, silver exchange-traded notes (ETNs), are debt securities you can trade on public exchanges. They track the spot price of silver and pay out a profit based on the price movement of silver, less any fees. ETNs are somewhat like ETFs, but an ETN doesn’t hold the asset it tracks. Instead, it's an unsecured debt security another organization underwrites.
ETNs are very risky short-term investments that can siphon your money in a hurry if there’s a massive price shift in the price of silver in the wrong direction.
Silver IRAs are self-directed IRA accounts that allow you to purchase alternative assets such as gold and silver within a tax-advantaged retirement account. These accounts allow you to own physical silver, but it must be kept with a custodian while it’s in your account.
Silver IRAs can avoid the 28% capital gains tax when you’re buying or selling silver within your account. And when you turn retirement age (currently 59 ½ ), you can take custody of the silver in your account (as a withdrawal).
» MORE: Best gold IRA companies
Pros and cons of investing in silver
Is silver right for you? Take a look at the pros and cons of investing in silver to determine if it’s the right type of investment for your particular needs.
The pros of investing in silver include:
- Silver bullion may be a good option for hedging against inflation.
- Silver’s volatility creates frequent opportunities for new buyers.
- Demand for silver may increase with industrial needs.
There are several downsides to investing in silver:
- Physical silver is expensive to store and transport.
- Silver’s volatility can make investing riskier than with gold.
- Economic downturns may lessen industrial demand.
Is silver a good investment?
While silver hasn’t provided strong returns over the long run, it can be a good hedge against inflation and a good way to diversify your portfolio. As with any precious metal investment, silver shouldn’t be a majority of your portfolio, but can supplement your alternative investments as part of your overall investment strategy.
Should you invest in silver or gold?
Choosing between silver and gold investing depends on your investment goals, timelines, risk tolerance and overall strategy. While gold has provided stronger returns historically, silver can be a good short-term investment. Adding precious metals to your portfolio is a great way to hold uncorrelated assets with the stock market, but you need to understand how it fits into your financial goals.
Can you buy silver at the bank?
In general, no. Local and national banks may have gold or silver as part of their reserves, but they’re not required to make precious metals publicly available for purchase. Your best bet is to buy directly from the U.S. Mint, which sells silver coins.
Is it safe to buy silver online?
Yes, it’s safe to buy silver online directly from the U.S. Mint. You can purchase silver coins minted by the U.S. government and have them securely shipped to you. You can also purchase from reputable online precious metals dealers, but you should be aware that there are many scams online.
Silver coins and bars can be counterfeited or not be the quality and grade reflected online. You should only work with accredited businesses when purchasing from a private online precious metals dealer.
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
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