How to Buy Silver in the Stock Market

Decide whether you're better off with actual silver over stocks in silver companies.

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In the 1970s, comedian Rodney Dangerfield complained to audiences that he got no respect from the people he met. The same could be said about silver, the precious metal that historically has taken a back seat to its coveted cousin, gold. But that doesn’t mean silver isn’t valuable. From coins to bullion, silver maintains a respectable presence on international commodities markets -- whether investors choose physical assets or more intoxicating silver futures.

Step 1

Decide between metal and stocks. According to Business Insider, silver tends to increase in value in response to an increased digital money supply, rather than being just a safe alternative to speculative investing. But there’s a difference between amassing actual silver and buying stocks in silver companies. According to investment firm Zeches Financial Services of Tucson, Arizona, your decision to choose stocks over bullion might come down to whether you feel comfortable acquiring “nonphysical forms of ownership” rather than taking physical possession of your silver stash. Savvy commodities investors usually walk a middle road and buy both.

Step 2

Do your homework. Silver stocks, coins and bullion rise and fall like all investments, but timing is everything, and so is knowledge. Money Morning analysts recommend keeping tabs on the silver market until you fully understand how the mining and availability of silver ore drives sales, buys and trades. It’s also important to know how and when to react to outside influences such as inflation, international turmoil, and domestic news that can range from election outcomes to weather patterns. Once you've familiarized yourself with the silver market, you are ready to move on to the next stage by finding a conduit for your stocks.

Step 3

Use a broker. Both full-service and discount brokers can offer the reassurance you crave when buying silver in a stock market. Full-service brokers charge higher commissions, but in return you can expect a bounty of expert advice, solid research and insights based on your broker’s expertise. Discount stockbrokers are adequate resources if you already have a good handle on the silver market and all you want is a conduit to the marketplace at lower commissions/fees. Finally, if you’re already a whiz at wandering around stock markets but you are just getting into silver, you might wish to manage your own online brokerage account.

Step 4

Build a diverse portfolio. You can buy silver stocks from market conglomerates that charge fairly high commissions and fees in return for fewer risks. Alternately, you can wade into stocks issued by highly speculative exploration companies searching for new silver reserves in domestic or international markets. Play it safer by buying silver stocks in already-established mining companies with strong financial records reflecting healthy cash flows, strong management teams, good reputations and industry standing. Look into companies focused on exchange-traded funds, or pick mutual funds that include silver stocks.

Step 5

Monitor your portfolio. David Christensen, CEO of ASA Gold and Precious Metals in San Mateo, California, recommends staying on top of everything in your silver-based portfolio so you’re prepared to move in anticipation of market changes. According to Bankrate.com, you’ll know you have reached a high level of investment sophistication when you’re comfortable trading in silver futures. These are risky, but you could make a fortune if you manage them properly. Bottom line: You picked silver over other stocks for very specific reasons, not the least of which is because it’s a proven hedge against inflation.

Warning

  • Doug Eberhardt, author of “Buy Gold and Silver Safely,” says the downside of silver is that it’s usually more volatile than other precious metals. That's yet another reason to keep close watch on your assets.

Photo Credits

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About the Author

Based in Chicago, Gail Cohen has been a professional writer for more than 30 years. She has authored and co-authored 14 books and penned hundreds of articles in consumer and trade publications, including the Illinois-based "Daily Herald" newspaper. Her newest book, "The Christmas Quilt," was published in December 2011.

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