Methods of investing in Silver..
Bars
A traditional way of investing in silver is by buying bullion
bars. In some countries, like Switzerland and Liechtenstein,
bullion bars can be bought or sold over the counter of the
major banks.
Physical silver, such as bars or coins, may be stored in
a home safe, a safe deposit box at a bank, or placed in
allocated (also known as non-fungible) or unallocated (fungible
or pooled) storage with a bank or dealer.
Various sizes of silver bars:
1000
oz troy bars. – These bars weigh about 68 pounds avoirdupois
(31 kg), and vary about 10% as to weight, as bars range
from 900 oz to about 1100 oz (28 to 34 kg). These are COMEX
good delivery bars.
100 oz bars. – These bars weigh 6.8 pounds avoirdupois
(3.11 kg), and are among the most popular with retail investors.
Popular brands are Engelhard and Johnson Matthey. Those
two brands cost a bit more, usually about 40-50 cents per
ounce above the spot price, but that price may vary with
market conditions.
Odd weight retail bars. – These bars cost less, and
generally have a wider spread, due to the extra work it
takes to calculate their value, and extra risk due to the
lack of good brand name.
1 kilogram bars (32.15 oz)
10 oz bars and 1 oz bars (311 and 31.1 g)
Coins
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Buying
silver coins is another popular method of physically
holding silver. One example is the 99.99% pure Canadian
Silver Maple Leaf. Coins may be minted as either fine
silver or junk silver, the latter being older coins
with a smaller percentage of silver. For example,
U.S. pre-1965 half dollars, dimes, and quarters are
90% silver.
Junk
silver coins are also available as sterling silver
coins, which were officially minted until 1919 in
the United Kingdom and Canada, and 1945 in Australia.
These coins are 92.5% silver, and are in the form
of (in decreasing weight) Crowns, Half-crowns, Florins,
Shillings, Sixpences, and threepence. The tiny threepence
weighs 1.41 grams, and the Crowns are 28.27 grams
(1.54 grams heavier than a US $1). Canada produced
silver coins with 80% silver content from 1920 to
1967.
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Rounds
Some hard money enthusiatists use .999 fine silver rounds
as a store of value. A cross between bars and coins, silver
rounds are produced by a huge array of mints, generally
contain an ounce of silver in the shape of a coin but have
no status as legal tender. Rounds can be ordered with a
custom design stamped on the faces or in random assorted
batches.
Certificates
A certificate of ownership can be held by silver investors
instead of storing the actual silver bullion. Silver certificates
allow investors to buy and sell the security without the
hassles associated with the transfer of actual physical
silver. The Perth Mint Certificate Program (PMCP) is the
only government guaranteed silver certificate program in
the world.
The
U.S. dollar, denominated in $5 and $1, was once a silver
certificate.
Accounts
Most Swiss banks offer silver accounts where silver can
be instantly bought or sold just like any foreign currency.
Unlike physical silver, the customer does not own the actual
metal, but rather has a claim against the bank for a certain
quantity of metal. Many digital gold currency providers,
such as e-gold and GoldMoney, offer silver as an alternative
to gold and work on a similar principle. Other electronic
silver accounts include the eLibertyDollar and Phoenix Silver.
Silver accounts are backed through unallocated or allocated
silver storage.
Exchange-traded
funds
Exchange-traded funds (or ETFs) represent a quick and easy
way for an investor to gain exposure to the silver price,
without the inconvenience of storing physical bars. The
silver ETFs are:
iShares
Silver Trust (NYSE: SLV), launched in April 2006 by iShares.
Central Fund of Canada (TSX: CEF.NV.A, NYSE: CEF) has 45%
of its reserves held in silver with the remainder invested
in gold.
ETFS Silver (LSE: SLVR), launched in September 2006 by ETF
Securities to track the DJ-AIG Silver Sub-Index. Unlike
the iShares Silver Trust, ETFS Silver is not backed by physical
silver bullion.
Mining
companies
These do not represent silver at all, but rather are shares
in companies that mine silver. Companies rarely mine silver
alone, as normally silver is found within, or alongside,
ore containing other metals, such as tin, lead, zinc or
copper. Therefore shares are also a base metal investment,
rather than solely a silver investment. As with all mining
shares, there are many other factors to take into account
when evaluating the share price, other than simply the commodity
price. Instead of personally selecting individual companies,
some investors prefer spreading their risk by investing
in precious metal mining mutual funds.
Spread
betting
Firms such as Cantor Index and IG Index, both from the UK
offer the ability to take a bet on the price of silver through
what is known as a spread bet.
Derivatives
Derivatives, such as silver futures and options, currently
trade on various exchanges around the world. In the U.S.,
silver futures are primarily traded on COMEX (Commodity
Exchange) which is a subsidiary of the New York Mercantile
Exchange. In November 2006, the National Commodity and Derivatives
Exchange (NCDEX) in India introduced 5 kg silver futures.
