It’s no secret that investors turn to precious metals as an alternative when the stock market is extremely volatile or there is a downward trend or poor economic outlook. This is the time when silver, just like gold, is usually in great demand.
Investors not only prefer precious metals to diversify their portfolio but to use as a hedging tool. However, buying silver is not as clear cut as other investments like mutual funds. It is prudent to be aware of the basics before you take the plunge and invest in silver.
For the most part, just like gold, you can invest in silver either by physically taking possession of the metal or by purchasing a financial security that either appreciates or depreciates in tandem with the price of silver. If you choose to take physical possession of your investment you have the choice of purchasing silver coins, bars, or privately minted coins or rounds.
The US Mint produces silver bullion coins in uncirculated finishes in a variety of options. It is a cost effective way to add silver to your investment portfolio. The price of the coins is subject to the market price of silver. The coins are sold by dealers and not directly by the US Mint. Silver bullion coins are ideal for those looking to specifically invest in silver.
American Eagle Silver Bullion Coins
One of the affordable investment options is American Eagle Silver Bullion Coins where the weight and purity are guaranteed by the US government. It is important to note that these coins are the only ones permitted in an IRA or individual retirement account. Each American Eagle Silver Bullion Coin is of one troy ounce and contains 99.9% pure silver.
They usually sell for a small premium on the market price of silver. The popularity of the coins is evident from the fact that over 130 million have been sold since 1986. Like the American Eagle silver coin, investors can also choose to invest in Canadian Silver Maple Leaf coins.
Silver bars can also be purchased, just like coins, from major banks and bullion dealers. However, it is critical to note that silver bars do not carry the same prestige that coins have. In addition, they cannot be broken up.
Silver Exchange Traded Funds (ETF)
If investors do not wish to have physical possession of silver, they can always open the window for silver Exchange Traded Fund (ETF). ETFs are pools of funds that allow investors to gain a passive holding on the metal and to its price movement. Investors can mimic movements in silver price without any need to enter a derivative contract or manage the physical asset.
ETFs can be purchased from trust ETfs like the iShares Silver Trust ETF (SLV) which is listed on the New York Stock Exchange Arca. Investors can profit when the price of silver continues to rise and can stand to lose money when the price falls. The fund is designed to mimic price movements minus fees and expenses.
At some point of time you may want to consider selling silver for a profit. There are several options if you have silver coins, bars, and collectibles.
Online bullion dealers are one of the most popular ways to sell silver. They actively buy from the public. A quick online research will help you find a few reputable dealers. If you have purchased bullion online you may want to check with the dealer for terms and conditions on buying back.
However, the biggest downside is shipping especially if it is a significantly high value involved. It is a convenient way to find the best prices where a simple call to an online dealer can get you a quote. Nevertheless, it is integral to understand that it is not a private transaction and shipping delays could cost more.
Local coin dealers are also an ideal alternative to sell silver coins. However, the price will depend on how honest the shop owner is. Therefore, it is prudent to look for a dealer that’s been in the business for a while. If you are a coin collector it would be wise to build a suitable relationship with a dealer who will potentially alert you on certain types of silver.
The biggest advantage is you receive cash right then and there and don’t have to wait endlessly for a check or payment by mail. Most importantly, there is every chance of receiving a fair price and most of these dealers are experts on numismatic coins as well.