Buying silver is highly recommended if you want to diversify your investment portfolio or protect some hard-earned cash. The precious metal silver, like gold, has an endless stream of qualities and characteristics that should make it the ideal subject of your next investment. However, once you’ve made the well-informed decision to buy silver, you might be wondering as to the best way to purchase the metal. From solid-silver bullion bars, to coins, to precious metal ETFs, there are a range of different avenues through which you can make smart silver investments.
Every investor has a different interest and a different space to fill when building a portfolio. That’s why the best way to invest in silver for one person may not be the same for all. Throughout this article, we’ll explain your best options for buying silver in 2020. We’ll also share some of the most compelling reasons to make an investment in this precious metal, as well as valuable advice on investing in silver in general.
Why Invest in Silver?
There are many experienced investors who turn to precious metals after years of trading in the stock market. But why are so many turning to physical gold and silver in 2020? The answer lies in the growing unreliability and general distrust of fiat currency, with many investors choosing physical metals as a safe haven to protect their wealth. Paper currency and other forms of money have been shown to depreciate over time, whereas silver cannot. Also, unlike fiat currency, there is only a limited amount of silver in the world so it can't just be printed like cold, hard cash.
Because of the many varied industrial uses for silver, its store of value is much more certain than a lump sum of cash. It’s also a hard asset, meaning you can hold it in your hand and be assured that its value belongs to you. In comparison to stocks and bonds, physical silver lacks the counter-party risk of digital investments. When buying silver and gold, there’s no middleman between you and your asset.
Between the two precious metals, silver is easier to sell than gold. Because silver is cheaper than gold in terms of price, silver is a more fluid asset, making it much easier to buy and sell. Additionally, the gold to silver ratio is rising in silver’s favor, hinting that it may be a more intelligent investment at this time. With growing global demand for electronics, jewelry, and more, silver could become the most successful investment in your portfolio.
7 Ways You Can Invest in Silver This Year
With so many different ways to buy silver, it can be difficult to decide which is best for your investment portfolio. We’ll break down all the options you have when investing in silver, explaining some of the advantages and disadvantages of each. To make sure you don't miss out on the best ways to invest in silver in 2020, we've compiled this investing guide so you can dominate the solver market like you've been doing it for years. You can also learn more about the differences in demand and metal applications so that you can benefit from this safe haven of precious metal.
1. Bullion Coins
Silver bullion coins, also referred to as silver sovereign coins, are coin rounds made entirely from the precious metal. The silver used to make bullion coins is high-grade and refined, of investment quality so you can be certain that they’re made to last. Silver bullion coins are most commonly produced by a government mint, which is why they can be referred to as sovereign coins. Manufactured in a government mint, silver sovereign bullion coins have a monetary value assigned to them.
Like a regular coin, silver sovereign coins have a numerical value printed on the metal, giving this precious metal coin a face value like fiat money. This number is backed up by the government which issued the coin, however, it doesn’t actually represent the coin’s real value. Solid silver coins issued by the government are worth much more than their backed-up value, given the price of silver used to make it. However, it’s worth noting that the issuing government must guarantee that the coin is worth at least the value printed on it. For example, the American Silver Eagle states it is worth one dollar, but silver investors know the true value of the coin is much higher.
Bullion coins are a great way to buy silver for a number of reasons. Firstly, their small size is convenient to store if you just want to stash some precious metals around your house. Secondly, bullion coins aren’t subject to too much of retail markup. You’ll pay only the cost of the silver precious metal plus a small dealer premium. This means silver bullion coins are a great investment as their cost is very close to the “spot price” of silver. Another highly popular silver bullion coin is the Canadian Maple Leaf, produced by the Royal Canadian Mint. This silver bullion coin is a favorite among investors because of the Canadian Mint’s advanced security measures.
2. Silver Bars
Silver bars are the best way to buy silver if you want a large quantity of high-purity precious metal. If you have the budget and want to invest in a large amount of silver, then bars are the ideal way to do it. Of course, buying silver bars is completely inappropriate if you have a smaller amount to invest, in which case coins or rounds would make a much better choice.
Solid silver bars commonly range in weight from one to one hundred ounces, ideal for precious metal investors. The larger the bar of silver, the smaller premium you’ll pay on top of the price of silver upon purchase. Larger bars up to 1000 ounces do exist, but these are primarily for central banks and ETFs rather than independent investors. When buying silver bars, remember that you have to sell them as a whole as well, which is why smaller bars are more popular as they’re easier to re-sell when the time comes.
There are a few advantages to buying silver bars over bullion coins or other options. To start with, silver bars cost much less. Coins must be minted and therefore their price includes labor costs for those intricate designs. In bar form, you can buy much more silver for the same dollar value. Silver bars are also much easier to store than coins, especially in large quantities. A silver bar will consume much less storage space than a collection of coins equalling the same value. This is another reason that, when investing in large amounts, silver bars are the most economical way to buy physical silver.
Silver rounds are the same in many ways to bullion coins, but with one key difference. Where silver bullion is produced by a government and has its value backed up by the said government, rounds are produced by private mints. Silver rounds are of equal metal quality, and often have lower premiums when purchasing than sovereign coins. However, they don’t offer the same guarantee as a government-backed bullion coin.
When buying silver rounds, investors have a lot of options. Many private mints all around the globe produce their own silver rounds. When buying silver rounds, make sure the metal has a purity of at least 0.999%. As silver rounds come from private companies rather than governmental organizations, you might need to be more careful regarding metal quality. Additionally, the market for silver rounds isn’t anywhere near the size as for bullion coins. This means your silver might be more difficult to sell when the time comes, so try to avoid obscure coins without a broad appeal.
4. Numismatic and Semi-Numismatic Coins
One way to invest in silver which you might not be aware of is in the world of rare and collectible coins. There are hundreds of silver coins from around the world which have huge value as collector's items, not just as a precious metal. However, there’s a huge difference between investing in silver as a precious metal, and buying silver coins as collector's items. Where silver bars, for example, get all of their value from silver content, collectible coins have additional considerations. Rarity, condition, and demand all have a huge role in the value of a rare silver coin.
Numismatic silver coins are rare and highly valuable silver coins, worth much more than their silver metal contents. Semi-numismatic coins are also collector's items, however, they lack the significance of true historical numismatic coins. Semi-numismatic silver coins are much cheaper to buy and their value could increase dramatically in the future, but there’s no guarantee.
Rare silver coins are generally more popular amongst collectors than they are investors, as they require specialized knowledge to properly understand. We wouldn’t recommend buying silver numismatic coins to the everyday investor as they would be considered riskier than bullion or rounds. However, if you’re offered the right opportunity, rare coins can be an incredibly lucrative way to invest in silver.
5. Junk Silver
In the 1960s, the United States government ended the use of the precious metal silver in its fiat currency. Coins in the US now are made from other metals such as copper and zinc, as silver became too valuable to use as money. But what happened to all the old silver coins? Quarters, dimes, Morgan dollars, and Franklin half dollars dated 1964 and earlier are all made from 90% silver, and these coins are referred to as junk silver.
Buying junk silver definitely has investment potential, especially in bartering situations. However, junk silver doesn’t have the same value as bullion as these silver coins aren’t pure, and have been previously circulated. Investing in junk silver can be highly successful, however other options are much easier. Buying and selling silver bullion is a much simpler process than bartering over junk silver.
If you want a slice of the silver market without actually having to hold physical silver, then a silver ETF could be ideal. Silver Exchange Traded Funds are traded on a stock exchange, their value comes from a bundle of third party assets related to the precious metal silver. The value of a silver ETF comes from how well these assets perform, tracking the market price of silver metal. Investing in silver through an ETF allows you to own and trade silver in a highly liquid way, as buying and selling have never been easier. An ETF doesn’t require you to physically hold or store the metal, which is convenient for many investors.
However, we wouldn’t recommend that investors buy into any form of gold or silver ETF. One of the largest reasons for and benefits of investing in silver is to physically hold the asset. If you own a precious metal bar or coin, you benefit from wealth protection. Owning an ETF simply equates to numbers on a page or a piece of paper; you cannot see or touch the metal. Without physical ownership of your silver, it’s in danger from outside elements.
Many investors choose gold or silver as an alternative to fiat currency as they become disillusioned with digital bank accounts, stocks, and shares. If you invest in a silver ETF, there’s no safe haven or wealth protection benefit. Governments can interfere, digital systems can be compromised; there’s no comparison with the benefits of holding physical silver. If you don’t have the option of storing silver in your home or at a facility, then silver ETFs will allow you to invest in this precious metals market. However, buying physical silver bars or coins is always recommended over digital options.
7. Mining Company Shares
Another avenue to invest in the silver market without buying physical silver is through stocks and shares. Rather than purchasing silver bullion, you could buy into a silver mining company and benefit from its profits. This could be an intelligent way to invest in an industry with steadily increasing demand. By buying a small portion of the companies which produce silver, you’re guaranteed a share of the profits of this lucrative industry.
However, once again this option doesn’t have the same benefits of holding the physical metal. If the mining company you invest in happens to fold, you’ll be left with nothing. On the other hand, that silver coin in your bedside table will always be there no matter what. Your mining stocks could reduce in value to nothing, an impossible eventuality with physical silver. No matter what happens in the world, physical silver is highly unlikely to decrease in value, and should only ever rise. Silver coins and bars will always hold their intrinsic value, a value that belongs to the investor only.
Tips For Investors Interested in Silver
We always recommend buying physical silver over any form of digital or paper investment. Within the realm of physical metal, there is a range of options, so there should be an ideal choice for every investor. Bullion coins and rounds are an excellent way to make small investments into this precious metal, and these assets can be stored easily around your home. If you have a larger budget, silver bars are the most economical way to purchase, offering metal at close to the spot price without much premium.
If you don’t have the option of buying physical precious metals, then ETFs and mining stocks are also potential investments in the silver market. These shares will earn the investor a cut of the profits from the silver industry, however, they’re nowhere near as reliable as holding physical silver and gold. Just like paper money and other fiat currency, ETFs and silver mining company shares are subject to all kinds of outside influence. This erases the safe haven of wealth protection than silver investors benefit from. When making investment decisions regarding the precious metal silver, remember to keep these facts in mind.
When choosing silver sovereign coins, especially if you’re new to precious metals investing, always try to buy more popular coins. The silver American Eagle produced by the US Mint, and the silver Canadian Maple Leaf from the Royal Canadian Mint, are the most prevalent and popular silver coins available today. Because these coins are so widespread, buying and then selling off is an easy process. Try to avoid lesser-known sovereign coins produced by other nations, particularly when starting out. The market for these silver coins is much smaller so without the right connections you could struggle to make your investment pay off.
Buying Silver in 2020
There has never been a better time to invest in precious metals than now. The global demand for silver is rising through its numerous industrial uses, so much so that the world’s supply is expected to run dry within 50 years. Meanwhile, national governments and central banks are becoming steadily less reliable, and many investors no longer trust these institutions with their money. Subject to the effects of global crises and financial crashes, smart investors cannot place their livelihoods into the hands of fiat currency.
Investing in silver, particularly hard assets like physical silver, is a great way to protect your wealth and your future. There are plenty of silver sovereign coins on the market so they’re easy to buy and sell. This offers investors a highly fluid but fully protective way to create a safe haven using silver. With so many compelling reasons to buy into this lucrative market, take your opportunity to invest in silver today.