Popular among investors, silver is one of the most traded precious metals on the market. Interest is stronger than ever with the growth of green technologies such as electric vehicles, medical devices, and solar panels. As inflation worries and a rebounding global economy loom, the demand for precious metals, such as silver, is only expected to grow over the next several years. There are many ways to invest in silver, but which option is the best? Investing in silver stocks and silver bullion are two different ways to go about it. This guide will walk you through each method and discuss the benefits of investing in each.
What is silver bullion?
Classified as a highly concentrated form of silver, bullion is typically defined as 99.9 percent pure, like a coin or bar. The physical cash is usually intended for investment purposes and comes in the form of bars or coins, but some gather various coins for personal collections. In the old days, saving silver coins became the easiest way for everyday people to build wealth.
The collection of silver coins accelerated in the mid-20th century as silver prices rose, forcing many international governments to either reduce the silver content in circulating coins or remove them altogether. As inflation spiked in the 1970s, silver demand intensified, introducing pure silver bullion coins in the 1980s as an investment vehicle. Unlike jewellery or rare coins, silver bullion has little collectible value. Silver bullion comes in three primary forms: coins, bars, and rounds.
Most pure silver bullion coins weigh one troy ounce, 31.1035 grams, or 1.097 “regular” ounces. The American Silver Eagle, produced by the U.S. Mint, is the world’s most popular silver bullion coin. Still, there are other international coins you can invest in — like the Canadian Silver Maple Leaf and the Austrian Silver Philharmonic. It’s important to note that the number of coins you have, no matter the nation that minted them, equals the total ounces of silver you own.
Silver bullion bars are made similarly to silver bullion coins. Available in many shapes and sizes, it can range from one gram to five kilograms. Private refineries mostly create silver bullion bars. However, they are available at the Royal Canadian Mint and the Perth Mint of Australia. Silver bars are cheaper than legal tender bullion coins of the same weight and purity.
While they may look like coins, silver bullion rounds have several distinct features that set them apart. Silver rounds have no seigniorage charge — profit that a national mint makes off selling the coin — so they sell for much less than bullion coins. However, because of this, the rounds aren’t officially protected by anti-counterfeit laws. They are also produced much more frequently than coins and have lower premiums than bullion coins. Additionally, there is more option for design. Because they are cheaper to buy, the value is much lower than that of a bullion coin or bar.
Silver mining stocks
Silver mining stocks are one of the best ways to access the silver market without storing bullion. Unlike the option above, which requires a safety deposit box or a safe, you don’t have to secure the physical coins. What’s more, silver stocks have the potential to grow beyond the limits of the currency. For example, if silver prices rise by six percent and you have invested in bullion, your gain is six percent. If you own silver stocks, your gains could be much higher, depending on how much stock you own. What’s more, you can dodge storage fees and premium costs that are associated with bullion.
Ultimately, the best choice of silver investment is dependent upon the individual. But if you’re looking to avoid the physical hassles of owning bullion, investing in silver mining stocks is likely your best bet. The growing demand for green technologies is compelling mining to search for the metal and place bets on its applications. Seasoned investors know that these technologies are here to stay, so silver mining stocks might be your best bet if you’re looking to hedge your portfolio against risk. Likewise, if you’re a collector enthused by silver bullion coins, the same results could apply, albeit moderately.
Unlike gold, silver is utilized in several industrial and medical applications. It has long been used in the auto industry, solar panels, and other sustainable technologies such as medical devices and LED lighting. And it’s not going anywhere anytime soon. Choose the method best for you.