By Lee Sherman
As the global economy slipped into recession at the beginning of the pandemic, investor fears saw silver, along with other commodities such as copper and crude oil, take a nosedive. But, more recently silver-backed exchange-traded funds (ETFs) have begun to see an increase in volume and so far in 2020, silver prices are outperforming the S&P 500 Index. The low interest rates enacted by the Federal Reserve as a hedge against inflation also make it a favorable time to invest in precious metals such as silver and gold.
How to Invest in Silver
Investing in silver can be a little bit more involved than just making a call to your broker. You can buy silver bullion in coin and bar form from dealers. Owning silver bullion outright means you can easily keep track of its current value. Right now, the current price of silver in the precious metals marketplace is $26.90 an ounce according to the London Bullion Market Association (LBMA). The LBMA and its member banks are the largest over-the-counter traders of physical metals in the world and the “London Fix Price” is agreed upon and fixed based on current buying/selling interest. The price changes constantly but it’s easy to check it yourself. You’ll probably have to pay a slight premium when you buy the silver and a discount when you sell it back. This isn’t a big deal if you plan to hold onto the silver for a while (which is what most financial advisors recommend) but these fees can add up if you are an active trader.
You will also need to find a way to store the silver bullion. If owning silver bullion sounds cumbersome (and it is) you’ll want to look at ETFs that are backed by silver. Each share of a silver ETF corresponds to a certain amount of silver and those shares typically track silver prices closely. Of course, trading in silver ETFs also comes with fees and they can be expensive. Silver ETFs have one big advantage over owning silver bullion, they allow you to participate in the silver market without having to build Fort Knox.
Another way to invest in silver is to invest in silver mining companies. This can be risky however, since a poorly run mining operation can bring down a company’s stock value, even if silver is on the ascendant. Also, most mining companies don’t pay dividends.
If uncertainty in the market has you looking for a safe-haven investment, you may want to ask your financial advisor about investing in silver. Even a pandemic can have a silver lining.
Lee Sherman is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Lee is an experienced journalist and editor with over 30 years of expertise with a significant history of writing in the personal finance and technology arenas.