How to Invest in Silver Stocks or Bars

by Mike Parker

Silver, gold and other precious metals have been used as money by various cultures for thousands of years. Investors in the 21st century value silver for its commercial uses and for its value as an investment commodity. There are a number of ways to invest in silver, including silver bullion, coins and stocks.

Open an account with a reputable investments brokerage. You typically must provide the firm standard identification, including your taxpayer identification number or Social Security number. Most investment brokerages have a minimum deposit requirement. Full-service brokerage firms are the most expensive, but they provide the most personal service. If you are not confident of your abilities to make competent investment decisions, you might need an investment professional at a full-service firm. Discount brokerages provide limited investment advice but charge less than full service firms. Online trading firms are the least expensive. They might provide access to research but they typically do not provide advice. You make your own investment decisions, and the brokerage executes your orders.

Do your research. Silver has both commercial and speculative qualities. You need to be aware of current demand for the metal, both as a commodity and as an investment. Silver is used in photography, medicine, jewelry, tableware, solar energy panels, batteries, electronics, water purification, soldering and brazing, and for numerous other commercial applications. Silver can be considered a hedge against inflation, as the price of precious metals tends to rise with inflation. But silver's value might decrease if inflation remains low.

Determine the type of silver investment that best meets your investment objectives and temperament. You can buy silver in a variety of forms, including silver bullion or bars, coins, silver certificates, mutual funds and silver mining stock. If you purchase bullion, bars or coins, you might have to store them in a secure location, such as a safe-deposit box. This can give you easy access to your silver investment, but the silver might not be convenient to sell. Silver mutual funds and silver stock can be more negotiable, but they are not pure silver investments.

Place a buy order through your investment broker. Silver stocks, mutual funds and bullion are traded on the open market, typically in a double auction setting. You can enter an order at the market, and your order will be executed at the current price asked by the seller. You can enter a limit order at a set price that you are willing to pay, and the order will be completed if a seller is willing to sell at or below your price. You typically have the option of taking possession of your silver stock, mutual fund shares or bullion, or of having your investment broker hold your assets in street name.

Warning

  • Any investment in silver, silver stocks or silver mutual funds involves risk. You could lose some or all of your investment. Past performance is never a guarantee of future results.

About the Author

Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.

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