There are a lot of different ways you can invest in silver, but what is really the best way to buy silver? In this article, you will find out not only the best way to invest in silver, but also the biggest mistake investors make that causes them to overpay for silver.
Best Way to Buy Silver – ETFs and BullionVault
There are two ways I recommend as the best way to invest in silver – either an exchange-traded fund (ETF for short; the major ETF for silver is NYSE:SLV) or through BullionVault. We have no affiliation with either entity, but after reviewing all the different methods for how to invest in silver, both of these stand out as superior methods.
Best Way to Buy Silver – BullionVault
The best way by far in my opinion to buy or sell silver for the normal investor is through BullionVault. This company holds over a billion dollars in precious metals between their vaults in New York City, London, and Zurich (Switzerland). What you can do is buy gold or silver through their site and they will store it independently.
The fees are so marginal that you can buy silver for barely more than spot rate and then sell for barely less than spot rate. This small fee difference is the administration fee. You also have to pay .48% (or about 1/200th) of the value of your silver for storage and protection purposes.
This may seem large, but really less than .5% is nothing compared to how much you would pay to have to get silver shipped to your house or for the insurance policy you would have to pay on it to get deposited at the bank. Additionally, the ease of selling it when you want to at a very fair price more than pays for the administrative cost.
Think about it this way: you could buy bullion yourself from a dealer or at a local exchange, but you are typically going to pay 4-5% more than spot (market) rates. If you want to sell it, you are only going to be able to sell it for 95-98% of the spot rate locally. The fact is it is just not an economical method to buy and own your own silver and the administrative fees of BullionVault are so much lower and more convenient than it would be for you to buy or own.
Best Way to Invest in Silver – ETFs
An exchange-traded fund, or ETF, allows you to buy and sell silver as if it was a stock. The biggest ETF for silver is the iShares fund, which is denoted at SLV on the New York Stock Exchange. You can buy this through a stock broker just like you would stock in any other company.
The storage and sale fees for ETFs tend to be slightly higher than BullionVault, but the main advantage of ETFs is that you can treat them like normal stocks. In other words, you can short an ETF. For example, if you suspect that silver has bubbled and is going to crash, you can “sell” shares of a silver EFT today, and buy them back later after the price has decreased for a large profit.
Of course, this assumes the price will crash and that your brokerage will lend you the credit to sell the stock short. If the price rises, then you will actually lose money on your short sale.
However, seasoned investors that know what they are doing often like to deal in EFTs rather than in bullion because you have more options when it comes to buying and selling. For new investors just learning how to invest, you are much better off not worrying about shorts and sticking to BullionVault since it is so straight forward. You buy the silver, if the price rises, you can sell it later, or you can keep it for a longer period of time for a long-term investment. It does not get any easier or cheaper than that.
Best Way to Buy Silver – Investor Mistakes
There are a lot of mistakes people make when they are just learning how to invest in silver. Below, I will give my top 2 mistakes that investors unfortunately make when getting into the silver market. These can also be equally applied for investing in gold:
Mistake #1: Buying collectors coins. Coins are rarely a good investment because dealers try to charge extra for their collecting value. They are hard to resell at collector’s rates, making this a poor investment.
Mistake #2: Owning your own physical silver. Silver is very expensive to own physically, just because it is hard to resell at spot rates, it has to be stored safely, and it needs an insurance policy (which is costly). Some people like to think it might be safer to physically own silver instead of “virtual silver” or “fake money”.
After all, if some sort of doomsday scenario played out, tat money might disappear! Well, of course, that is possible, but if you are really concerned about the end of the world, you should be stocking up on non-perishable food, water, batteries, a medical kit, and a bomb shelter before you worry about stocking up on precious metals.
Mistake #3: Putting too much money into silver. Silver is a volatile market, and it is susceptible to crash at any time. Just look at historical silver prices over the last 100 years and you will see just how rapidly the price of silver can rise and fall.
Best Way to Buy Silver – Conclusion
By far, the best way to invest in silver for the normal person is through a broker like BullionVault. If you want the freedom and advanced options that comes with owning a stock that represents silver, consider checking out SLV on the NYSE or another exchange-traded fund. Be sure to check administration fees on whatever you want to buy into – if these are too high they will eat into your profit!