Making Silver Part of Your Investment Portfolio
You can use silver — a precious metal — as a hedge against inflation and to preserve part of your portfolio’s value. Because silver has important industrial applications, you can use the metallic to provide you with capital appreciation opportunities.
Buying physical silver as an investment
Here are a few silver coins to consider as investments:
Silver Maple Coins: These coins, which are a product of the Royal Canadian Mint, are the standard for silver coins around the world. Each coin represents 1 oz. of silver and has a purity of 99.99 percent, making it the most pure silver coin on the market.
100 oz. Silver Bar: If you’re interested in something a little more substantial than 1 oz. silver coins, you could buy the 100 oz. silver bar. Before buying it, check the bar to make sure it’s pure silver (you want 99 percent purity or above).
Investing in an silver exchange-traded fund
One convenient way of investing in silver is by going through an Exchange Traded Fund (ETF). Until 2006, there were no ETFs to track silver. However, Barclays Global Investors (a subsidiary of the investment bank) launched an ETF through its iShares program in April 2006 to track the price of silver. The iShares Silver Trust (AMEX: SLV) holds silver bullion in a vault and seeks to mirror the spot price of that silver based on current market prices.
Investing in silver mining companies
Another alternative investment route is to go through companies that mine silver. Here are a couple of companies that focus exclusively on mining silver:
Pan American Silver Corporation (NASDAQ: PAAS): Pan American Silver, based in Vancouver, has extensive operations in the Americas. It operates six mines in some of the most prominent locations in the world, including Peru, Mexico, and Bolivia.
Silver Wheaton Corp. (NYSE: SLW): Silver Wheaton is one of the only mining companies that generates all of its revenues from silver mining activity. While other mining companies may have smaller interests in other metals, Silver Wheaton focuses exclusively on developing and mining silver. It has operations in geographically diverse areas that stretch from Mexico to Sweden.
Investing in silver futures contracts
The silver futures contracts provide you with the most direct access to the silver market. Here are the most liquid silver futures contracts:
COMEX Silver (COMEX: SI): The COMEX silver contract is the standard futures contract for silver. It is traded on the COMEX division of the New York Mercantile Exchange (NYMEX), and represents 5000 Troy Ounces of silver per contract.
CBOT Mini-Silver (CBOT: YI): The Mini-Silver contract that trades on the Chicago Board of Trade (CBOT) represents a stake in 1000 Troy Ounces of silver with a purity of 99.9 percent. This contract is available for electronic trading.