How to Buy Silver: 4 Ways to Invest

Silver is one of the most popular investment options in the world of precious metals. While silver doesn’t approach the value of gold by weight, it has many industrial applications in fields such as electronics.

Silver is often used as a way for buyers to diversify both their commodity holdings and their portfolios in general.

There are a handful of ways to invest in silver — including acquiring and storing the physical metal yourself and buying into funds that invest in silver. Another option is owning stock in companies involved in the mining and production of silver.

Silver’s strength as an investment depends on the role it plays in your portfolio.

As a stand-alone investment, silver’s performance has been roughly similar to that of the blue-chip S&P 500 index over the past five years^[0]

Some investors own silver as a way to diversify away from stocks — many of the reasons cited for investing in silver are similar to the case for investing in gold.

The argument goes something like this: Because of silver’s inherent scarcity and the need for the material in applications such as electronics, the precious metal may retain value even under economic conditions such as a recession in which stocks and other investments suffer.

Of course, that argument isn’t a sure thing. Silver may or may not make sense for your portfolio, depending on your investment needs and your outlook on the state of the economy.

The most basic way to invest in silver is to buy it in its physical form. Just like with gold, a bar of silver is called bullion. Owning physical silver may do away with some of the complexities involved with other methods of investing in silver, but keep in mind that you’ll have to come up with a plan to ship it, store it and secure it.

Investors who buy physical silver tend to keep it simple, using bullion bars or government-minted coins. While silver jewelry or housewares may be beautiful (and hold some value), there are complications to using them as an investment. For one, there is some subjectivity in how to value the craftsmanship of items created from silver. In addition, silver is a soft metal, so manufacturers may add other materials such as copper to harden it for everyday use.

If you’re looking to get exposure to silver without actually owning silver, you can consider buying stocks in companies whose fortunes are deeply tied to the market for the precious metal. If you pursue this route, remember that buying individual stocks in any sector can be risky because of individual circumstances that can affect any one company.

Say the market for silver takes off, for instance, but the company you’re backing has a production slowdown or a labor dispute — you may not be able to take full advantage of the positive market conditions. On the other hand, if the company you invest in is uniquely successful, you can see gains beyond those on the market in general. Learn more about stocks.

Another option for silver investors is to buy into a silver mutual fund, which is an entity that’s set up to hold silver on behalf of investors. A benefit of these arrangements is that some of them are exchange-traded funds (ETFs), which means you can buy and hold them right in your brokerage account or potentially in your individual retirement account (IRA).

There may be some costs associated with silver funds. For instance, these funds typically charge management fees that you’ll want to evaluate before making a decision. And the tax considerations for commodity funds can be more complicated than with stock ownership, which rewards longer-term investors with lower capital gains rates^[0]

Another way to gain exposure to silver is through futures contracts, which are agreements to actually receive physical silver at a certain date. But just because you buy a silver future doesn’t mean you have to take delivery. They’re traded on commodity futures exchanges, where investors can buy and sell these agreements.

Keep in mind that futures investing is an advanced-level form of trading. If you get in over your head, it’s possible to lose more than your initial investment. Read more about futures trading.

If you choose to invest in silver stocks or funds, you have several options for how to carry out those purchases. It’s relatively simple if you already have a brokerage account: Log in, research the investment you want to buy and then pay for it. Learn about how to invest in stocks and how to invest in mutual funds.

Buying physical silver involves a level of complexity that you might not find with other investments. If you want to keep it in your own custody, you’ll need to figure out how to store it, for instance. Here are the basic steps you’ll need to take to buy physical silver.

1. Find a dealer you trust. Buying precious metals can carry the risk of scams if you’re not careful. You’ll want to make sure you work with a dealer whose background you know. Some brokerage services will sell precious metals, or your financial advisor may be able to direct you toward a dealer. If you’re evaluating a dealer on your own, you can use the National Futures Association’s Background Affiliation Status Information Center. 

2. Watch out for fees. You’ll not likely be able to get silver for the commodity’s current spot price. Like most retailers, silver dealers will mark up their prices so they can earn a profit. If you’re new to buying silver, consider getting a couple of quotes to see how the prices compare. 

3. Store your silver. Your silver’s no good to you if it gets lost or stolen. Your options for storing it include buying your own safe or using a bank’s safe deposit box. 

4. Consider buying insurance. Insurance is another cost, but it can help make sure your investment isn’t a total loss if something happens to your silver. 

Silver is one way to diversify your portfolio if you’re heavy on traditional investments, such as stock in large companies. That said, it’s just one of many options available to investors looking to rethink their investment mix.

A 2022 report prepared for the Silver Institute, an industry group, found that the annual gains of silver were correlated with those of large company stocks about 40% of the time between 1999 and 2022. Gold’s performance was even more distinct from that of stocks, at 7%^[0]

This data doesn’t necessarily make one of these investments better than the other. (And, of course, the historical record may not repeat in the future.) Overall, you’ll have to think about your portfolio and your investment goals specifically. It’s also very possible that neither of these precious metals has a place in your portfolio.