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Like gold, silver has been a valuable commodity for hundreds of years and is now seen as a safe haven during volatile markets. In uncertain or higher-inflation environments like we have today, investors will turn to precious metals including silver, adding to their appeal.
Silver has remained valuable in part due to its inherent malleability. This guide will discuss different ways to invest in silver from Australia and some of the risks you may face.
If you're looking to invest in silver in Australia, you have 4 main options:
Buy physical silver
Invest in silver stocks
Buy silver exchange-traded funds (ETFs)
Trade silver via the futures market
Buy physical silver
If you're looking to invest in silver, you can do so by buying the asset itself and storing it.
This is one of the more traditional ways of investing in silver as it allows you to get your hands on the tangible asset. There are a few ways to get exposure to physical silver, including but not limited to purchasing silver bullion and silver coins.
"Bullion" refers to high-purity silver that is officially recognised as being at least 99.5% pure silver. When buying silver bullion, it's important to remember that you are purchasing by weight regardless of whether it's in the form of a bar, a coin or anything else.
More collectible forms such as commemorative silver coins will often be much more expensive per gram than silver bars, so check how much you're paying by weight before buying silver.
Pros
Easiest way to start investing
Physical silver is far cheaper than physical gold so you can get started for less
Over the long-term, silver generally delivers inflation-beating returns
Physical silver can sell at a premium compared to the spot market
Cons
You have to store the silver somewhere
Security risks – you lose your investment if it gets stolen
Buy silver shares
One common way to invest in silver is over the stock market.
When you buy shares in a silver mining (or related) company, you can typically expect your stock to rise in value as the price of silver increases.
The main difference between investing in physical silver and stocks in the silver industry is 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 such as dividends or potential higher returns.
Valuable metals can be especially volatile and prices may vary wildly for no real reason
Investing in silver ETFs
Investing in a silver-themed ETF can be an easy way of gaining exposure to silver prices or companies in the silver sector. ETFs are investment funds that trade on stock exchanges and track the prices of underlying assets.
Some silver ETFs simply track silver spot market prices while others track a collection of companies in the silver mining industry, or a combination of the 2. This makes ETFs an easy and flexible way of adding silver to your portfolio.
As it currently stands, there's only one pure-play silver ETF in Australia, the ETF Security "ETFS Physical Silver" ETF (ETPMAG). You can learn more about how this works in our comprehensive guide to ETFs.
Pros
A quick, easy and flexible way of buying, selling and trading silver
Gain far-reaching access to silver assets at reasonable prices
Can be safer than buying individual stocks
Cons
Can incur management fees, trading fees and other expenses
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Purchase silver futures or options
By investing in silver futures, you are agreeing to buy an asset at a future set price. In other words, you are agreeing to pay today's prices for an asset that gets delivered sometime in the future.
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 profit from falling prices. If a trader thinks 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.
With traditional futures trading, you're dealing with physical commodities. Typically only professional traders buy and sell contracts over the futures market.
Retail traders in Australia typically trade silver futures through contracts for difference (CFDs). CFDs are derivative investment products that allow you to trade on the future prices of underlying assets such as commodities, stocks and indices. Because they allow you to trade using borrowed funds (leverage), they can be highly risky and are only for more experienced traders. Learn more about CFD trading in the complete guide.
Pros
Under the right conditions, futures can yield solid rewards for their investors
Futures and options can be used to day trade and make longer-term investments
Can profit on the price of silver going up or down
Cons
Futures markets are incredibly risky and should only be used by sophisticated investors
With leverage, you can lose more than your initial investment
Markets don't always behave the way you would expect
Compare CFD broker to trade silver futures
Disclaimer: General information only. All forms of investments (and in particular, trading CFDs, commodities and forex) carry significant risk, including the risk of losing more than the invested amounts, market volatility and liquidity risks. Past performance is no guarantee of future results. Such activities are not suitable for most investors.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.
How much is silver worth now?
Why do people invest in silver?
There are 2 main ways people think about silver's value as an investment. One is as a practical and in-demand commodity whose properties give it many practical applications, similar to zinc or aluminium. The other is as a precious metal with a finite supply and inherent "folk value" similar to gold.
Silver prices are based on a combination of these 2 factors, which gives it a unique investment profile.
Silver as an industrial commodity
Silver's chemical and physical properties, such as its conductivity and antibacterial properties, make it essential for electronics, healthcare and other applications.
It's also malleable, ductile, reflective, relatively corrosion-resistant and not overly common, which historically made it a practical choice of metal for jewellery, coins and similar applications.
These also formed a practical foundation for silver's status as a precious metal.
Silver as a precious metal
Silver's (and gold's) innate value as a precious metal is typically described in the context of its finite supply or scarcity.
It's not certain how much silver is left in the world, but some estimates suggest that Earth will run out of silver by 2050. However, these estimates depend on a range of assumptions around silver's continued use, how much we recycle and how likely miners are to uncover large previously unknown sources of silver.
One economic theory holds that a commodity such as silver, which is in constant demand while having a finite supply, should carry a constantly growing intrinsic value.
Proponents of this theory will often contrast the scarcity of silver with the theoretically infinite amount of government money, such as Australian dollars, that can enter circulation.
For this reason, silver is often regarded as a hedge against inflation and currency devaluation. Its prices have been known to run opposite to the changing values of currencies.
Is silver a safe investment?
As mentioned above, silver is a staple material for many modern industries and there are a number of routes available for investing in it. However, regardless of which way you approach it, your investment will inevitably come with risks:
Fluctuating prices: Valuable metals have a tendency to fluctuate in price over small periods, sometimes with no real cause.
Storage: Finding somewhere to store physical silver can be a hassle, and storing it with a broker will come with a fee.
Fraud: While it is tempting to look for the best prices, if it's too good to be true, it probably is. When buying physical silver, trade with reputable dealers to avoid being fleeced.
Political and environmental events: Political and environmental issues can make the mining, refining and trading process more expensive for companies, causing price fluctuations.
Silver has a number of properties that appeal to investors. It can offer protection during volatile markets and it's a tangible asset. You can start investing in silver for a lot less than you can in gold and it has a long history as a financial asset.
Silver can be found all over the world, with some of the largest mines in Australia, Mexico and Bolivia. It is extracted from ore veins and refined before being distributed.
Important information: Powered by Finder.com.au. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.
Charlie Barton is a publisher at Finder. He specialises in banking and investments products. Charlie has a first-class degree from the London School of Economics, and in his spare time enjoys long walks on the beach.
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Re – bullion silver 1 kg bars marked ‘CITY MINT VICTORIA’ was this a vintage mint and if so what is it called now?
Thank you
Hi David, I’m afraid I can’t help with this one. If you have such a coin I would contact a coin appraiser who may have the knowledge you seek.