The 3 Best Ways to Invest in Silver

Gold World (07/13/2009)
"As an investment, silver remains one of our favorite vehicles for wealth accumulation. . . So, we've whittled down the docket of silver investment options to come up with the top ways to invest in the silver market today.

Investment #1: Silver Bullion

The simplest and most traditional way to invest in silver is to own the physical metal. Although in some countries silver bullion can be bought and sold over the counter at major banks, a more common method today is buying online through approved vendors. Silver bullion is generally sold in two forms: bars and coins.

Investment #2: Silver Exchange-Traded Funds (ETFs)

Next is silver Exchange-Traded Funds (ETFs). Instead of owning the metal outright, silver can be bought in the form of a security on some of the world's major stock exchanges.

Silver ETFs track silver's spot price and can be traded much like any other security. The drawback here, however, is the cost of ownership. With issuing companies applying management fees to the certificate, the certificate's value diminishes over time as the silver represented is sold off in small quantities.

Investment #3: Silver Production Stocks

Least direct of all are investments in the companies that pull the metal from the ground. Because silver mining companies usually mine other metals alongside it, the share price of such an outfit is rarely dependent on the price of silver alone.

Another factor to consider is the process of leveraging. Because cost of production and cost of product can vary, profit margins—the main driving force behind share value—will exhibit wider fluctuation patterns than the price of the metal alone. A 10% spike in the price of silver may well lead to a 15% - 20% gain in the mining company's shares. Conversely, a drop in value will have a similarly magnified effect in the opposite direction.

Non-market factors such as management decisions will also play a role in the growth or decline of your investment. As a more speculative approach, buying shares can yield the biggest gains, but can also result in the more sudden losses."

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Under SEC rules, analysts are required to disclose their interest in securities that they cover. We strongly encourage you to contact them to understand any potential conflicts of interest they may have.

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