A silver necklace may be a fashion statement. A silver investment could help you turn a profit, potentially diversify your portfolio, and possibly help hedge against inflation. Whether you opt for physical bars or coins or silver-related investments, buying silver comes with unique investing implications. Here’s what you need to know before you buy this precious metal or silver-related investments.
Ways to buy silver
It’s possible to buy physical silver, contracts that control silver, stocks of companies that mine for silver, and exchange-traded funds (ETFs) or mutual funds that attempt to track the price of silver or those that include silver mining companies. Each way to buy silver works differently and has unique pros and cons.
Physical silver
It may surprise you to learn that the silver you find in your jewelry box may have a different value than the type of silver that might be purchased as an investment. Commercially available silver jewelry tends to be composed of sterling silver, an alloy of silver and other metals. Pure silver assets for investors are most often in the form of bars and coins (aka bullion) and tend to be worth more per ounce than sterling silver jewelry.
Investors can buy silver from precious metal dealers online or in person. Some brokerage firms, like Fidelity, allow you to purchase coins and bars through a brokerage account or individual retirement account (IRA). The cost will depend on the amount of silver you want to purchase and the current market value of silver. You can also expect an additional markup from any dealer.
If you invest in physical silver, it’s important to take steps to store it safely. If you’re ordering silver through a brokerage firm, they will usually work with a company that can store it for you. If you plan to store your purchase at your home, it is a good idea to find out if your homeowners insurance will cover your investment. If not, factor in the cost to store it elsewhere, such as in a bank safety deposit box.
Financial investments
If you’re considering silver-related investments, you’ll need to start with an investment account like a brokerage account or IRA. Selecting the best silver investment for your portfolio will depend on a number of factors, including your goals and risk tolerance, as well as the outlook for the silver market going forward.
- Silver funds: ETFs and mutual funds hold baskets of individual investments, such as stocks of silver mining companies. If you want to invest in silver bars or coins, you can select a physical silver-backed ETF or mutual fund. Those shares would give you fractional ownership of real silver. Like other ETFs and mutual funds, these same products that invest in silver-backed or silver-related securities may be subject to trading commissions, fees, and market risk. ETFs or mutual funds that invest in securities related to the silver industry may offer a level of built-in diversification, since you’re not investing in a single company, coin, or piece of bullion.
- Silver futures: When you buy a silver futures contract, you agree to purchase a set amount of silver at a certain price, though you can sell the contract before that date comes. Why would you do that? To capitalize on speculated price changes—that is, to buy before you think prices might rise, and set the sell date before you think prices will fall. If this sounds complex and risky, that’s because it can be. This type of investing is generally only suitable for more experienced investors and those who can afford to lose the money they’re investing. (Note that Fidelity doesn’t offer futures trading but does offer an actively managed futures ETF.)
- Silver stocks: Another way to access the silver market is by buying stock in companies that mine silver. Stock investing is more straightforward than futures, but it still has its challenges and risks. A silver mining company, for example, may face internal challenges that have nothing to do with the price of silver, which then impact its stock price. Also, many silver mining companies also mine for things other than silver. Investors should always research an individual company before purchasing its stock.
How to buy silver
Now that you know your options for adding silver to your portfolio, here is a step-by-step guide for investing in silver:
How to buy silver bullion or coins
- Research and compare reputable metal dealers. The US Mint’s list of Authorized Purchasers of United States Mint Bullion is a good place to start.
- Review bar and coin purchase options at each retailer. Remember that dealers want to make a profit, so compare markup prices to see which seller is offering the best price for the bullion.
- Buy your bullion in person, online, or over the phone. Your payment options may be limited to cash, check, or wire transfer at some in-person dealers. For the convenience of buying from a reputable online dealer instead, you may pay a fee. (Psst … here’s how to buy precious metals by contacting Fidelity.)
- Arrange for proper storage of your physical silver. That could be in a safe at home or at a bank or other facility.
How to invest in silver funds, futures, or stocks
- Choose where you’ll have your account. If you don’t already have a taxable brokerage account or IRA, you’d need to open one—or a futures trading account with a futures broker. You could consider choosing an institution where you already have accounts, to make things easier.
- Choose the type of account you want to open. IRAs come with tax advantages but also contribution limits and withdrawal rules. While your investment earnings, such as dividends, are taxed yearly in a brokerage account, there are no contribution limits, and you can take out money whenever you want. Here’s how to open a brokerage account or visit our IRA page to open a Roth, Rollover, or Traditional IRA.
- Fund your account. Connect your brokerage account or IRA to your bank or transfer from another investing account.
- Research and choose your investments. That can include silver-related ETFs, mutual funds, stocks, or futures contracts. Try Fidelity’s fund screener for ideas.
- Place your order. When you evaluate an individual investment on Fidelity’s site or app, look for the green Buy button.
How to buy silver online
- Select at least 2 reputable online metal dealers to compare. Seek honest reviews and check out their Better Business Bureau ratings before purchasing.
- Compare prices. Review spot and markup prices for bars and coins at each retailer.
- Add your preferred purchases to your cart. Check out as you normally would from an online retailer.
- Arrange for proper storage. Some online retailers may offer secure storage boxes that you can add to your purchase.
Is silver a good investment?
As with any other investment, buying silver should be considered within the context of your outlook for silver prices, investing goals, and risk tolerance.
Physical silver and silver investments may offer a way to profit if the price goes up, as well as diversify your portfolio and help hedge against inflation. But investing in silver can be risky and volatile. Whether it helps you turn a profit depends on how the metal’s value changes over time. Just remember past performance can’t guarantee future results. A financial professional could help you determine if silver deserves a spot in your portfolio.