5 Ways to Invest in Silver to Hedge Inflation

Many people are investing in gold as a hedge against inflation, but silver also provides unique investment opportunities, not only as a physical metal but also as stocks and exchange-traded funds (EFTs). Here are 5 ways to invest.

5 ways you can invest in silver

When people think of precious metals, they typically envision purchasing them in their various physical forms. However, they are several other ways to invest in silver these days, Bankrate reports. Such as:

·       Silver bars, bullion, or coins.

·       Silver mining stocks.

·       Exchange-traded funds (EFTs) that own silver mining stocks.

·       EFTs that own silver.

·       Silver futures.

Here’s a quick rundown on each…

1. Investing in silver bars, bullion, or coins.

Most investors focus on bullion bars and coins, while numismatic coins (meaning rare, collectible coins that have external value above the base value of the precious metal) have a separate market value from bullion and are mostly focused on by collectors.

It should be noted that US coins made before 1964, contain about 90% silver, and can be purchased at the value of their silver content.

2. Investing in silver mining stocks.

This is where you own stocks of companies that mine silver. If the price of silver rises, the company’s earnings should increase accordingly. Silver miners’ profits tend to rise faster than the price of silver, all else being equal. Secondly, if the miner can raise production over time, it will also increase its profits. This is a way to win above the price of silver itself.

3. Investing in EFTs that own silver mining stocks.

This is where you buy into an exchange-traded fund (ETF) that owns silver mining stocks. As an individual, you might typically own one or two individual mining stocks. But the advantage of silver mining EFTs is a portfolio of diversified mining stocks, which will lower your risk.

4. Investing in EFTs that own silver.

This is where you buy into an exchange-traded fund (ETF) that owns physical silver. This is a lower-risk method than owning silver futures. The EFT will deliver the return of silver prices minus its expense ratio. The funds are also highly liquid, enabling you to sell your silver at the market price any day the stock market is open.

5. Investing in silver futures.

Investing in silver futures is a way to make wagers on silver’s rising or falling price, without having to own the metal physically. It is essentially a form of speculation.

The pros of investing in silver

Silver has a reputation for being a good store of value during inflationary periods, US News reports. This is because silver has a dual nature as a precious metal investment, as well as being an industrial metal that is used in a variety of ways, such as in medical devices, electric vehicles, solar panels, LED lighting, jewelry, and other products.

Risks with investing in silver

All investments take on some form of risk. As opposed to gold, silver is about 1.5 times more volatile, US News reports. Part of the reason for this is its lower price, but also because silver acts as both an investment and industrial metal.