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How to invest in silver
4 ways to shine up your portfolio with silver stocks.
Silver has been a valuable commodity for hundreds of years and while its purposes have changed throughout history, it has never lost its place on the Irish market. In part due to its inherent malleability, silver has managed to adapt to the changing times, keeping its value high even today.
This article will explore four different ways you can invest in silver stocks in Ireland and some of the risks that you may face.
4 ways to invest in silver
- Silver stocks
- Silver ETFs and ETCs
- Silver options or futures
- Silver coins and bullion
Buy silver stocks
You can handpick specific silver stocks to invest in. When you buy shares of a silver mining (or related) company, you can typically expect your stock to rise in value as the price of silver increases. With these silver stocks, you’re exposed to the same risks that come with buying into any company — such as bankruptcy. By that same token, there can be additional benefits when you buy silver stocks, such as dividends or potential higher returns.
In Ireland, you can invest in silver shares like Great Western Mining (GWM) on the Euronext Dublin. Alternatively, you can invest through overseas exchanges like the New York Stock Exchange (NYSE) with stocks like Gatos Silver Inc. (GATO) and Hecla Mining Co. (HL). This can be done through either a traditional or online broker.
- A lot of silver stocks to choose from.
- Control over your investment.
- Leave the market when you want.
- You might get dividends.
- Stocks are vulnerable to market fluctuations.
- Valuable metals can be especially volatile, and prices may vary wildly for no real reason.
Silver ETFs and ETCs
Rather than trusting your money to the stock of one or two companies, exchange-traded funds — or ETFs — offer the chance to invest in a basket of assets. They allow you to gain exposure to a range of silver companies on the market, essentially tracking the underlying price of these assets.
Many ETFs are a safe option for newcomers in Ireland to precious metals. You can buy or sell them like stocks, but the diverse range of assets within them means less vulnerability to market fluctuations. The broad scope of different companies in silver ETFs means you can focus either on the metal itself, on silver miners, or even silver spot prices. While there aren’t silver ETFs on the Euronext Dublin, you can always use your trading account to access silver ETFs on other well-known markets like the NYSE, Nasdaq, and more. The iShares Silver Trust (SLV), for example, tracks the spot price of silver by owning physical silver bullion, while the Global X Silver Miners ETF (SIL) tracks an index of silver mining companies.
ETCs, on the other hand, track the price of a commodity or commodity index. Just like ETFs, ETCs can be traded like regular stocks. A silver ETC to consider on the ISE is the WisdomTree Silver 1x Daily Short fund which tracks the Bloomberg Silver Subindex.
- A reliable option for investors that’s more resilient to market conditions.
- Gain far-reaching access to silver assets at reasonable prices.
- Because ETFs are a collection of assets, you lose some control that comes with investing in a single stock.
- Can incur management fees, trading fees and other expenses.
Silver options or futures
When you buy silver options or futures, you agree to buy stocks in a commodity at a set price, which you then receive some time in the future. The idea is that you end up buying stocks at a lower cost than prices would allow otherwise, but success heavily depends on market movements.
If the price rises between the time the futures contract is purchased and the contract expiry date, buying at today’s prices will be a profitable trade. The difference between the price you paid for an asset and its price at the time of delivery is the profit. This system also lets traders in Ireland profit from falling prices. If a trader thinks silver prices will drop, they can also buy a “short contract.” This means they put in an order to sell the asset at today’s prices, for delivery in the future. Now, if prices drop between the time the short contract was purchased and the contract expiry date, the price difference will be the trader’s profit for the trader.
Their vulnerability to market volatility makes silver options and futures risky. Some luck and a strong understanding of the futures market can reap large returns, but you can also lose money if you’re new to investing. And if you don’t roll over your futures contract before it expires, you could be stuck purchasing actual silver.
Investors from Ireland can buy silver futures through the COMEX market via platforms like Degiro and Interactive Brokers.
- Can yield solid rewards under the right conditions.
- Gives you straight ownership over your stocks.
- The wrong choices can result in the loss of a lot of money.
- A futures contract expires, triggering additional obligations if you fail to roll it over first.
- Not all brokerage accounts allow futures trading.
Silver coins and bullion
One of the most straightforward ways to invest in silver in Ireland is to buy physical silver bars or coins. Silver bullion, or coins, can range from 1 ounce to 5 or more kilograms. Silver bars typically comprise of 0.999 or 0.9999 silver.
Despite gaining full control over the asset, physical silver is a longer-term investment. Unlike buying and selling stocks or ETFs, where the only cost is the price, there are some other factors that go into the final amount you’ll pay for physical silver.
- Spot price: Like other investments, precious metal prices fluctuate all the time based on supply and demand.
- Markup: Like any retail product, when buying from a dealer, you’ll pay a markup on top of the actual cost for the silver.
- Premium: While some physical silver is pretty basic, certain products like coins also have additional value as collectibles. The premium can reflect the age of the silver (older or rarer coins are worth more) or the minting authority.
- Storage cost: Since it’d be impractical to store large amounts of physical silver bars in your home. You’d either have to purchase a safe or shop around for storage options from the retailer or with a bank.
For investors in Ireland looking to own physical silver, you can contact a seller like GoldCore and have them deliver your silver to you or store it in a secure vault on your behalf. Do note that physical silver may come with VAT taxes if your silver is imported from overseas. To avoid this, opt for VAT-free silver coins like silver Maples, Eagles or Kangaroos through local silver dealers.
- Direct control over your asset.
- Silver maintains its value well.
- Physical silver can sell at a premium compared to the spot market.
- Can take time to find a buyer for your assets.
- Involves storing, which invites a risk of fraud or theft.
- Physical storage can be inconvenient.
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What are Ireland’s silver stocks?
Silver stocks include shares of silver mining companies, mining companies with large exposure to silver assets, or silver streaming companies — companies that finance silver mining. You can invest in some of these stocks on the Euronext Dublin. Great Western Mining (GWM), for example, is a mineral exploration company with silver assets. For a better range of silver stocks, explore overseas markets like the London Stock Exchange or New York Stock Exchange. Here you’ll find silver stocks like precious mining company First Majestic Silver (AG) and precious metals streaming company Wheaton Precious Metals (WPM).
Why invest in silver stocks
Silver is a popular investment in different countries — Ireland included. Here are some reasons why people invest in silver stocks:
- Safe heaven asset. Silver stocks can act as a safe haven asset that hedges against risk.
- Affordable. Silver stocks are an affordable play on precious metals investing.
- Portfolio diversification. Silver investments help diversify your portfolio away from riskier assets like tech stocks.
Silver is a staple material for many modern industries, allowing you a number of routes for investing in it. But watch for inevitable risks:
- Fluctuating prices. Valuable metals fluctuate in price over small periods of time, sometimes with no apparent cause.
- Storage. Finding somewhere to store physical silver can be a hassle, and storing it with a broker comes with fees.
- Fraud. It’s tempting to look for the lowest prices, but those prices could be too good to be true. When buying physical silver, trade with reputable dealers to avoid being fleeced.
- Political and environmental events. Mining, refining and trading depends on often politicized resourcing and ownership, which threaten to drive up the cost for companies.
How do I choose the best silver stock?
In general, the best silver stock for you to invest in depends on your personal preference and due diligence. If you’d like to invest in silver miners, for example, you should search for a company that has a strong balance sheet, stable operations, and mining sercices in countries with low political risk.
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