Silver:  Investing In Precious Metals

Silver is being used today as a investment commodity along with three other popular precious metals.  They are gold, palladium and platinum.  Silver is also considered a currency and has held value for more than 4 centuries.

Physically Holding Silver

Physically holding silver is the most popular way of holding this precious metal.  The Canadian Silver Maple Leaf is 99.99% pure silver.  Silver coins are defined as either “junk silver” or “fine silver”.  Older coins with a lower silver content are considered junk silver.  The dime, quarter and US fifty-cent pieces that were minter in 1964 or earlier fall in this category.  These coins are made up of 90% silver and are 8/10 troy ounce per 1 USD of face value.

Six Ways To Invest In Silver

The most traditional way of investing is silver is to buy silver bullion.  Most banks in Switzerland buy or sell silver bullion bars over the counter.  Storage of these bars is usually in a bank safe deposit box or a silver dealer will store in one of two places:  an allocated (non-fungible) or an unallocated (pooled) storage.

A silver account can be opened by an investor using one of the major banks in Switzerland.  Buying or selling silver is done over the counter just like any foreign currency.  Instead of owning the actual silver, the account holder has a claim against the bank for the for the amount purchased by the customer.  The backing for the silver account is either allocated storage or unallocated storage.

Another option for ownership of silver is acquiring a silver certificate. This permit’s the investor to buy and sell the commodity without the physical transfer of the silver which at times may be inconvenient.  The Perth Mint Certificate Progamme, which is the only one in the world guaranteed by a national government, is fully guaranteed by the Government of Western Australia.

Another way of exposure to silver pricing is through an ETF.  The most well-known ETF’s are iShares Silver Trust (ticker symbol NYSE: SLV), Central Fund of Canada, (ticker symbol TSF: CEF, NV: A, NYSE: CEF) and ETFS Silver Trust (ticker symbol NYSE: SIVR).  Inconveniences that accompany the handling of silver are cancelled with trading in ETFs.

A Contract for Difference or CFD is used by noted financial firms, especially those in Britain.  This investment uses a buyer and seller to enter into an agreement.  The seller agrees to pay the buyer the difference between the value of silver at the contract time and the current value. The buyer pays the seller if the difference is negative at the time of contract is placed.  By using a Contract for Difference, the investor is able to take advantage of long or short positions thus allowing speculation on the market.

It must be stated that the United States no longer gives silver a forced tender status because of the abandonment of the silver standard.  Former President Lyndon B Johnson announced on August 15, 1967 that the U.S. was no longer using any precious metal including silver as a means of redeeming currency.