How to invest in silver in the stock market

Written by eliah sekirin
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How to invest in silver in the stock market
The price of silver is closely tied to the price of gold. (silver coin image by Pali A from Fotolia.com)

Silver is a precious commodity that is typically a safe investment like gold. In contrast to gold, however, silver is more widely used in the industry. In addition to the use of silver for investment purposes and in jewellery, silver is used in photography and electronics, dentistry, mirrors and optics, and medicine. You can invest in silver by buying stock market shares from your broker.

Skill level:
Moderate

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Instructions

  1. 1

    Monitor the silver market and decide when is the best time to put your money into it. Typically, the price of silver advances when investors feel panicky about the world economy's prospects. On the other hand, silver becomes cheaper, when worldwide gross domestic product picks up.

    According to this simple observation, buy silver when the economy is doing well, but you feel that it is overheated and may decline a little in the short term. Avoid buying into silver stocks when the prices are already high and a recovery is very probable.

  2. 2

    Buy silver exchange-traded funds (ETFs). Exchange-traded funds are investment pools that are traded on organised stock exchanges such as the New York Stock Exchange (NYSE). Silver ETFs invest in silver bullion bars and other silver-related securities, and so their share prices closely track the price of silver.

    The biggest silver ETFs are iShares Silver Trust Fund (SLV), E-TRACS CMCI Silver ETN (USV), and PowerShares DB Silver Fund (DBS).

  3. 3

    Buy stocks of silver-mining companies. The biggest silver mines are located in Peru, Mexico, China, and Chile. The biggest mines in democratic countries are in Australia and Canada. The biggest independent publicly traded silver-mining companies are Penoles (Mexico), KGHM Polska Miedz (Poland), and Volcan Compania Minera (Peru). You can buy their stocks via a broker that deals in the over-the-counter (OTC) stock market.

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