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The Many Different Ways to Buy Silver

The Many Different Ways to Buy Silver

Silver investments can be made in a variety of forms. Let's have a look at some popular ways to gain an exposure in the silver market.

Physical Purchase : Silver in its physical form can be purchased in various sizes and weights which determine its price. Typical one ounce silver coins include the American Silver Eagle and the Canadian Silver Maple. Their prices depend on the silver purity with the Silver Maple being the highest at 99.99% pure. Typically, you'll pay a premium of about 16% over the spot silver price due to the cost of manufacturing the coin.

A second popular option is the 100 ounce silver bar which again has a slight premium running at 5% over the spot price to cover the cost of production. Based on today's prices ($ 26 / ounce), you should expect around $ 2,800 for a bar.

These coins and bars are bought for their silver content and are not generally used as collectables. Bullion dealers can also be used if you want to build a reserve of silver – either large or small – and this may prove the easiest and most cost effective way of doing so. However, do your homework first and try to get some feedback before you part with large sums of money. Maybe try a small investment first and see how it goes.

Exchange Traded Funds (ETF's) and certificates: Another way to be invested in silver is through an Exchange Traded Fund (ETF). By simply buying units in an ETF such as those managed by ETF Securities, LSE: PHAG and LSE: SLVR, you can have direct exposure to the silver price through the purchase of shares. Expect to pay a 0.49% annual management charge but both can be held in an ISA or SIPP. The main difference between the two is that PHAG follows the spot price whereas SLVR follows the futures price on the Commercial Exchange in New York (COMEX). PHAG probably has the edge for sterling investors since ETF Securities has launched a pound-denominated version, making it the more convenient option for those buying in the UK.

You can also gain exposure to the silver market through paper investments. Perth Mint Certificates (PMC's) are vault protected, insured and government backed investments. The government of the state of Western Australia backs the scheme and the initial investment is $ 10,000 USD. Subsequent investments can be made in $ 5,000 USD allocations. Under the scheme you can take physical delivery of the silver or, for a charge, you can use their storage facilities. The Perth Mint Certificate is a reputable way to add silver to your portfolio.

Purchase shares in mining companies: A third way to invest in silver is through the purchase of shares in a silver mining company. There are many companies listed both on AIM and the FTSE that operate in the sector with most posting record gains in their share price in recent months. As with all share purchases you are strongly recommended to do your own research before investing as a company's share price is a reflection of many factors such geological risk, the management's track record and debt / cash flow obligations etc.

Silver investments can be made in a variety of forms. Let's have a look at some popular ways to gain an exposure in the silver market.

Physical Purchase : Silver in its physical form can be purchased in various sizes and weights which determine its price. Typical one ounce silver coins include the American Silver Eagle and the Canadian Silver Maple. Their prices depend on the silver purity with the Silver Maple being the highest at 99.99% pure. Typically, you'll pay a premium of about 16% over the spot silver price due to the cost of manufacturing the coin.

A second popular option is the 100 ounce silver bar which again has a slight premium running at 5% over the spot price to cover the cost of production. Based on today's prices ($ 26 / ounce), you should expect around $ 2,800 for a bar.

These coins and bars are bought for their silver content and are not generally used as collectables. Bullion dealers can also be used if you want to build a reserve of silver – either large or small – and this may prove the easiest and most cost effective way of doing so. However, do your homework first and try to get some feedback before you part with large sums of money. Maybe try a small investment first and see how it goes.

Exchange Traded Funds (ETF's) and certificates: Another way to be invested in silver is through an Exchange Traded Fund (ETF). By simply buying units in an ETF such as those managed by ETF Securities, LSE: PHAG and LSE: SLVR, you can have direct exposure to the silver price through the purchase of shares. Expect to pay a 0.49% annual management charge but both can be held in an ISA or SIPP. The main difference between the two is that PHAG follows the spot price whereas SLVR follows the futures price on the Commercial Exchange in New York (COMEX). PHAG probably has the edge for sterling investors since ETF Securities has launched a pound-denominated version, making it the more convenient option for those buying in the UK.

You can also gain exposure to the silver market through paper investments. Perth Mint Certificates (PMC's) are vault protected, insured and government backed investments. The government of the state of Western Australia backs the scheme and the initial investment is $ 10,000 USD. Subsequent investments can be made in $ 5,000 USD allocations. Under the scheme you can take physical delivery of the silver or, for a charge, you can use their storage facilities. The Perth Mint Certificate is a reputable way to add silver to your portfolio.

Purchase shares in mining companies: A third way to invest in silver is through the purchase of shares in a silver mining company. There are many companies listed both on AIM and the FTSE that operate in the sector with most posting record gains in their share price in recent months. As with all share purchases you are strongly recommended to do your own research before investing as a company's share price is a reflection of many factors such geological risk, the management's track record and debt / cash flow obligations etc.

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