How to Invest in Silver (2024 Guide)

This article has been reviewed and updated for 2024.

If you read “Why Buy Silver”, you will understand why silver is such a sought after precious metal: it is simultaneously a potentially profitable investment, safe haven, and proven financial insurance in times of economic upheavals. Aside from gold, no other investment can boast an impressive 4,000-year track record.

As a private investor new to the silver market, several questions immediately come to mind. Key among them is; how exactly do you buy silver?

This chapter seeks to guide you through the finer details of buying silver in order to address the following essential questions:

• How can I buy silver?
• What is the best way to invest in or own silver?
• Should I buy silver bars or silver coins?
• Is there VAT on silver?

Forms of Silver Investment

As a private investor, you too can buy pure, investment grade silver that can be delivered to you, or stored on your behalf in high-security vaults. Investment grade silver has the highest purity of 99.9% or .999 fineness. Also known as silver bullion, it comes as silver coins or bars and is the only type of silver that can be traded in the financial markets as an investment.

Although owning physical silver coins and bars is the preferred choice of smart investors, there are other more risky ways of gaining exposure to the silver price without directly buying silver bullion. These include silver Exchange Traded Funds, silver certificates, and shares in silver mining companies.

The following are the various forms of silver investment available today. Each type has its own characteristics that you need to consider before making your choice:

Silver Coins and Bars

Buying silver coins and bars is the favoured option of smart investors. Owning physical silver bullion means purchasing silver coins and bars from a reputable dealer like GoldCore and taking delivery of them, or having them stored on your behalf in specialised high-security vaults. This is the most recommended option due to the highly valuable nature of silver bullion.

Silver bullion is durable and can last forever because it cannot be destroyed by fire or water and cannot be hacked or erased in a cyber-attack. When you own silver bullion, you own an investment that is finite, tangible and portable. Silver coins and bars are highly liquid meaning they can be easily bought from one dealer and sold globally to other dealers.

Silver Certificates

Silver certificates are an option for investors willing to carry more risk of ownership in exchange for lower storage and insurance costs. They are bought from an issuer such as a government mint and have a unique number printed on high-security paper in your name. The certificate acts as title and proof of ownership of a specific quantity of silver. The mint cannot sell or transfer the silver bullion without your express authorisation and will remain under secure storage at the mint on your behalf.

Although different entities issue silver certificates, it is essential to buy your certificates from recognised high-rated government mints such as The Perth Mint of Western Australia.

Silver Certificates come with different ownership options that include:

Allocated Silver Certificates

When you buy allocated silver certificates, your silver is taken out of the mint's pool of silver and formatted into individual coins and bars of your choosing. These silver coins and bars are assigned to your certificate and are then stored as your specific holding in your name. This is the best way of owning silver certificates as it guarantees that your silver is individually identifiable at the mint as your own. Allocated silver certificates are the next best alternative to buying and taking delivery of physical silver bullion. For this reason, allocated silver certificates fetch a higher premium than unallocated certificates.

Unallocated Silver Certificates

This type of silver certificates gives you ownership of silver that remains part of the pool of silver used by the mint in its commercial activities. The quantity of silver you purchase is not individually allocated or identifiable at the mint as your own but is co-mingled with the silver bullion of every other investor. This type of silver is also known as pooled silver. The silver you purchase remains part of the Mint's inventory or reserves.

Certain types of unallocated silver certificates allow you to exchange them for silver bullion on demand. In such cases, the silver will be taken out of the mint's pool of unallocated silver and formatted at a cost to you, into coins and bars of your choosing, before being shipped to you or stored on your behalf at a fee.

Silver Exchange Traded Funds

Silver exchange-traded funds, just like gold ETFs, track the price and performance of gold. You can invest in a silver ETF through your stockbroker as a way of getting exposure to the silver price.

Although silver ETFs give you the opportunity to profit from the silver market, they are not necessarily reliable ways of investing in silver as financial insurance. This is because when you buy into an ETF, you essentially own a share of a fund which holds silver bullion as an underlying asset. You do not have direct ownership of the silver bullion, and in most cases cannot claim silver bars or coins held by the ETF.

Therefore, as a fund investor, you are exposed to several risks including fund mismanagement, fraud, economic catastrophes that may affect the entire market, and technological risks associated with all forms of electronic trading. Silver investment in an ETF will not be useful as insurance during a crisis or when markets collapse.

Silver Jewellery

Even though silver jewellery gives you direct ownership of silver, it is not an advisable way of gaining exposure to the silver market for various reasons.  Firstly, the price of silver jewellery does not track the spot price of silver. This is because the value of silver in silver jewellery forms a tiny fraction of the price. Jewellery is an artistic creation whose price is determined more by its craftsmanship than the value of silver in it. Silver jewellery, therefore, has little value as an investment.

Semi-numismatic and Numismatic silver

Semi-numismatic and numismatic silver coins have various characteristics that make them valuable as collectible items. Because of their scarcity, their value may be many times the spot price of silver. Numismatic silver coins usually have a historical significance, rare vintage, or were minted using a unique process. Such coins are like collectible art; one of a kind valuable items with limited circulation.

Despite their lucrative potential, investing in numismatic coins is not for the inexperienced collector; it demands an intimate knowledge of the numismatic coin market, and the unique characteristics that make them valuable. Just like rare art, unsuspecting buyers can be duped into overpaying for numismatic coins, and many have lost money in the process.

Furthermore, the price of numismatic coins is highly subjective and depends on their condition, significance of the era they belong to, demand from collectors, performance at auction, and rarity of the coin among other factors. Selling numismatic coins also involves finding a willing buyer in a small and highly specialised market. They, therefore, tend to be less liquid and harder to sell than bullion silver coins. Such factors do not affect the price of silver bullion coins and bars, making it less speculative and safer as an investment.

Digital Silver

Digital silver is sold to investors on various platforms by private companies but again it does not guarantee access to silver bullion. As an investor in digital silver, your silver is generally not allocated or segregated from that of all other investors and is therefore not individually identifiable, portable or accessible.

When you buy digital silver, you only have the option of selling your silver to the company that sold it to you. It, therefore, has less liquidity, unlike physical silver that can be sold to thousands of dealers globally.

In addition, companies offering digital silver, like any private company, can suffer from mismanagement, technological risks, or insolvency, which are the same risks an investment like silver is supposed to protect you from.

Digital silver, although cheaper than other forms of silver, comes with unnecessarily high risks that should be avoided by investors looking to secure their wealth.

Shares in Silver Mining Companies

The share price of companies that mine precious metals like gold and silver may appreciate or depreciate with the spot price of the metal. However, investing in silver mining companies will not give you direct exposure to the spot price of silver because 80% of all silver produced today is a by-product of other base metals such a lead or tin. This means that in most cases the primary activity of the company is not mining silver but rather it is mined as the result of mining for other metals. Investing in such a company means investing in the base metal rather than in silver, which does not guarantee any gains when silver prices rise.

Furthermore, shares in mining companies expose you to numerous risks such as mismanagement, bankruptcy, increased mining costs, shrinking deposits of silver and the high cost of investment for new mining ventures. Silver shares are therefore a bet that the mining company will find adequate silver underground, and extract it at a profitable price. Such a gamble may pay off at times, but it can be a risky investment, and hardly a good way to insure your financial wealth.

Types of Silver Coins

The most popular silver coins for investors are 1 oz 99.99% pure silver bullion coins minted by top sovereign mints such as The Perth Mint, US Mint, and Royal Canadian Mint and The Royal Mint amongst others. They include Silver Britannias, Austrian Philharmonics, Canadian Maple Leafs, US Silver Eagles, and Australian Silver Kangaroos. You can read more about investing in silver coins by clicking here.

Types of Silver Bars

Popular silver bars for investors are produced by refiners on the London Bullion Market Association's Good Delivery List. They include the Perth Mint, Royal Canadian Mint (RCM), Asahi, Engelhard, Johnson Matthey, Heraeus, PAMP, Metalor, and Umicore. These bars come in various sizes and weights, with the most popular being 1 oz, 10 oz, 1 kilogram, 100 oz, and 1000 oz bars. Each of these has a purity of between 0995 and .999. To read more about investing in silver bars, click here.

What You Should Consider When Buying Silver

Before selecting the type of silver investment that suits your requirements, first consider the following facts about investing in silver:

1. To hedge against political or economic uncertainty, buying physical silver delivered to you or stored on your behalf in specialised high-security vaults is the best option. Only then can you be confident that your silver is free of ownership risks common in other forms of silver investment.

2. The storage fees for silver are higher than those of gold. This is because, if in monetary terms, the value of one ounce of gold is equivalent to that of 85 ounces of silver. Therefore, €10,000 worth of silver will take nearly 85 times more vault space than €10,000 worth of gold. As a result, it is more expensive to store €10,000 worth of silver in a high-security vault than it is to store gold of similar value.

3. As a private investor, you can choose to purchase large bars of silver, e.g., 1,000 oz bars, rather than bars of a smaller size. However, if you want to sell some of your investment, you will have to sell all the 1,000 ounces in one go, as the bar cannot be divided into smaller sizes for sale. Alternately if you owned 1,000 1oz bars or coins, you can sell a few bars at a time and leave the rest in secure storage.

4. The premiums for silver coins tend to be higher than those of gold coins. This is because the same costs are incurred to refine, mint or cast silver coins and bars. However, since the price of silver is considerably lower than that of gold, these costs make up a higher percentage of the overall value of the finished product.

5. Silver, unlike gold, attracts value added tax (VAT) in some countries. As an investor in Ireland, there are ways that you can purchase silver bars and coins VAT Free. Click here to learn more about vat free silver bars and coins.

6. If you wish to invest in numismatic or semi-numismatic silver coins, bear in mind that their higher value is derived from their rarity and collectability. However, their intrinsic value is the same as that of any minted silver coin of a similar size.

Are you interested in purchasing silver bars and coins to be delivered to you or stored in specialised high-security vaults? Click here to find out more about opening an account with GoldCore and purchasing VAT free silver coins or bars.