Investing in Silver sensibly in 2022: is it worth Buying Silver?

John James
October 13, 2021
What to look for when investing in silver? Anyone looking for an investment product that promises both a secure increase in value and a certain degree of crisis resistance should take a closer look at silver.
investing-in-silver

Anyone looking for an investment product that promises both a secure increase in value and a certain degree of crisis resistance should take a closer look at silver.

While gold is often the first choice among the precious metals among investors, silver is somewhat overshadowed. This is unfounded. Buying silver can also be a sensible investment.

An investment in silver can take two forms. Either as a physical investment, for example, by buying silver coins, or as a security. Everything to consider when buying silver is explained below.

Table of Contents

What to look for when investing in silver

You should pay attention to the following points when buying silver:

  • Why should you invest in silver? Silver is one of the most frequently traded raw materials worldwide and is one of the oldest metals that can be used commercially. In terms of trading volume, silver is right behind gold as a commodity. There are many uses for silver in numerous industries. Silver can either be bought as a commodity or invested in companies that produce or process silver in the form of stocks, CFDs or ETFs.
  • Where can you buy silver? Silver can either be purchased as a commodity, or you can invest in companies in the form of stocks, CFDs, or ETFs that produce or process the metal. This works best with our test winner ETFinance. In our opinion, ETFinance is the absolute best broker, as you can buy stocks and ETFs here completely free of charge. Of course, you can also buy the raw material yourself on ETFinance.
  • What can the future of silver look like? Silver has long been considered a good investment and was last driven up by the 2021 short squeeze. A long-term investment with high returns cannot be ruled out.

Where to invest in silver Our silver broker comparison:

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How can you invest in silver?

If you want to invest in silver, you have several options. On the one hand, you can buy the raw material. On the other hand, you can invest in companies in the form of stocksCFDs, or  ETFs. In our test, we had the best experience with the online broker ETFinance, as you can buy shares in silver on the platform as well as the raw material silver in the form of a CFD. We explain how this works here:

etfinance

Step 1: Open an account with ETFinance

If you wanted to buy silver as a commodity, you would need a place to store the commodity. You are, of course, responsible for the storage yourself. This means that you are exposed to some risks, such as theft. So it is worthwhile not to purchase the raw material directly – but by means of an ETC (Exchange Trade Commodities), a contract for difference or stocks that are involved in the production and processing of silver.

What kind of silver you want to buy depends on your preferences. Of course, you can still buy silver or silver bars, but you are not protected in the event of a loss. It is, therefore, worthwhile to invest in silver through a broker. With our test winner ETFinance, you have different options to purchase silver.

The advantage of ETFinance: ETFinance is a regulated broker and is subject to deposit protection, so in the event of bankruptcy, your assets are still protected.

Our recommended broker is, therefore, ETFinance – you can open an account here.

Step 2: registration

Once you’ve decided on a broker, the next step is to register and log in.

At ETFinance, you have several registration options. In addition to the option of creating a user account yourself, there is also the option of registering via a Facebook or Google account, which once again simplifies the process considerably.

To open an account, all you need in the first step is a  username, email address and a  strong password. With this, you first open a  demo account with ETFinance, whereby you can trade unlimited with virtual credit.

However, if you want to invest in silver stocks, CFDs or ETFs, you can switch to live mode or simply make a deposit. A valid ID is required for verification.

Step 3: transfer money

After registering, you have to decide how much money you want to invest in silver or stocks. We generally recommend never investing more than 5% of your capital in a single share or commodity. So possible losses are manageable.

However, how much you want to invest in the Coinbase share is entirely up to the trader. The minimum deposit amount at ETFinance is 250 EUR. If you can then decide on a certain amount, you have to add the desired capital to your customer account. To do this, simply click the Add Money button

ETFinance offers various payment options with which you can deposit money into the customer account. The most popular payment options are PayPal, credit card or bank transfer. It should be noted that a bank transfer usually takes 2-3 working days for the credit to reach the customer account. However, if you want your money in your account faster, there are other payment methods available.

Below is an overview of all the payment methods available at ETFinance:

Payment optionPossible?
Buy silver with a credit card.✔️
Buy silver with PayPal.✔️
Buy silver with Skrill✔️
Buy silver by bank transfer.✔️
Buy silver with Neteller.✔️
Buy silver with UnionPay.✔️

Step 4: the purchase

After you have deposited funds into the customer account, you first look for the desired asset. This can be, for example, the raw material, but also, for example, a silver mine share. Both are possible on  ETFinance :

Here you choose how much money you want to buy silver for. You can also set whether you want to trade with or without leverage (with leverage if you want to trade, without if you want to hold on to for a longer period of time).

You can also use the Stop Loss and Take Profit values ​​to set whether your gold should be sold automatically if it exceeds or falls below a certain value.

And that was about it. If you click on the “ Open Trade ” button, your Silver CFD will be in your portfolio!

Why is ETFinance the best broker to invest in silver?

ETFinance is a multi-asset platform that is great for investing in silver. There are several reasons for this. On the one hand, you have top security here: The broker’s license (Forex Broker, CFD Broker, Stock Broker, Commodities & Crypto Broker) comes from Cyprus’s EU country. So  European regulations have to be adhered to. Otherwise, ETFinance would not be able to offer its service in the first place.

Furthermore, ETFinance offers  various options for investing in silver  (to be found on ETFinance under Silver):

investing-in-silver

CFDs on silver

The most user-friendly and cheapest way is to invest in silver as a contract for difference (CFD). A silver-CFD is like trading on a stock exchange, except that the instrument the price of the underlying asset (in this case silver) replicates but does not represent ownership of the precious metals.

Silver is after gold is one of the most popular assets in the class of precious metals. This instrument can be used to open both a short and a long position on the ETFinance platform.

Silver stocks

Another method would be to have a portfolio of stocks that are performing in line with silver. For example, silver mining companies’ silver deposits may still be in the ground, but when the price of metals moves, the company’s share price moves too. The correlation between the price of silver stocks and silver itself can vary. Finally, stocks are also subject to other price drivers, such as broader volatility in the stock markets.

Silver ETFs (ETCs)

Investors can also potentially access silver more cheaply through ETFs, including the iShares Silver Trust. This ETF is designed to mimic the price of the metal and is backed by more than 325 million ounces of physical silver.

Fees when buying silver

We compare the fees of the largest brokers with the following example:

  • We buy silver stocks worth € 1,000
  • We hold silver stocks for a month and sell it again
  • We assume that the course will not change in the 30 days

With these assumptions, we now compare the fees of Comdirect, ETFinance & Libertex :

providersComdirectETFinanceLibertex
Depositfor freeFreefor free
Purchase fees3.90 €Free0.22%
Holding feesfor freeFreefor free
Sales charges3.90 €Spreads0.22%
Payoutfor freeFreefor free
Total fees€ 7.80Reasonable€ 4.40

Silver price development – current silver price:

If you look at the silver price development over the last few decades, it shows the attractiveness of the investment very well.

At the end of 1990, 30 years ago, the silver price was the equivalent of 3 euros per troy ounce. In 2005 the price had doubled to 6 euros and rose to over 10 euros in 2006. The financial crisis from 2007 onwards hardly affected the development of the silver price. The crisis resistance was already evident here, while stocks experienced a slump during this period.

At the beginning of 2011, silver was able to exceed the mark of 20 euros per troy ounce and reached a peak of just under 30 euros by April 2011. After that, prices fell to a good $ 15 from 2012 to 2013, but that was the last notable drop. Since then, the silver price has remained stable and has seen a slight upward trend since 2019.

Buy silver comparison: What types of silver investments are there?

Investors who are determined to invest in silver are faced with the question of what form the investment should take. It must first be decided whether to invest in physical silver, which has to be stored, or whether to invest in silver security.

If the choice falls on physical investment, silver coins or silver bars are ideal. An investment in silver products such as cutlery, on the other hand, makes less sense. When buying, you not only have to pay the material value but also a price that is measured, for example, according to the design or a brand.

On the other hand, only the material value is usually paid out when purchasing. The situation is different with silver jewelry. Rare pieces can sometimes be resold to collectors and dealers at significantly higher prices. However, such an investment requires a great deal of expertise in order to be able to correctly assess the market value and the performance of the jewelry.

investing-in-silver

Invest in physical silver bars

Investing in silver bars or coins is therefore much easier and less risky. However, silver coins have the disadvantage of higher production costs due to the individual minting of the coins.

If you don’t care about the ideal value, you should buy bars. This has been particularly true since January 1, 2014. Since then, 19 percent VAT has also applied to silver coins purchased domestically, provided they are not subject to differential taxation.

The situation is different if the precious metal dealer uses differential taxation for silver imports and purchases for private individuals. This is possible, for example, when importing from non-EU countries such as the USA, Canada or Australia. Then the reduced import sales tax rate of seven percent takes effect, from which the investor can also benefit.

The dealer does not show the 19 percent on the net sales price but only on the difference between his purchase and sales price. Due to the low trading margins for the precious metal, there is not 12 percent on top, but only about one percent.

However, the trader is not obliged to this differential taxation. Investors should inquire about the conditions in advance when buying silver coins.

If differential taxation does not apply, an investment in bars offers buyers the best price/performance ratio in terms of production costs. The production is simple so that hardly any production costs are added to the purchase price. In addition, the bars can be bought in various weight classes between 100 and 1,000 grams, depending on your preference or budget.

However, if you want to buy a larger supply of silver, you should use the 1-kilogram bars. The relationship between manufacturing cost and silver value is the best. If a partial amount of silver is to be sold later, the bars can also be cut into small bars.

Buying silver: where are the pitfalls?

When buying silver, regardless of whether it is coins or bars, it is essential to pay attention to the seriousness of the seller. It is therefore only advisable to buy from a reputable precious metal dealer. The buyer recognizes this, for example, from experience reports and online reviews of other buyers. It is also worth taking a look at the website and the imprint.

Dealers who have been active in the market for many years and are based in SouthAfrica appear more trustworthy. Certifications, for example, by the TÜV or membership in a professional association, such as gold and silversmiths, can also be an indication of a fair provider.

Another alternative is to buy silver from banks. It is advisable to compare several offers and to examine the silver on-site before buying it.

Open your eyes on eBay and Co.

Buyers should be particularly careful with offers on auction platforms such as eBay. Again and again, particularly cheap silver prices are advertised here.

However, there are black sheep among the sellers on such marketplaces who sell silver with a reduced degree of purity or, in the worst case, no real silver at all.

At the latest when selling, a significant discount can be expected. Ideally, the product has a fine silver content of 99.9 percent.

Investors should also think twice about buying bars. At first glance, these thin bars are attractive because they have a predetermined breaking point stamped in advance, similar to a bar of chocolate. This allows subsets of the ingot to be easily separated and sold on.

However, there is a catch. The production costs of such bars are higher and are added to the purchase price. As a result, the price / performance ratio is usually worse here than with classic bars.

A factor that should not be neglected when buying silver as a coin or bar is its state of preservation. In the case of silver coins, in particular, a bad condition with, for example, milky stains from contact with moist air can lead to a significant devaluation when sold to a dealer.

The same goes for scratches. Investors should not only pay attention to this when buying but also continue to ensure that they are in possession of the silver. Good packaging such as plastic tubes for coins or boxes can help. They protect the silver from environmental influences.

How is the silver protected from theft?

As with all physical investments, the same applies to silver that the buyer should think about the safekeeping of his investment in advance. Simply putting the coins or bars in the desk drawer is not a good idea.

An in-house safe offers significantly better protection in the event of a break-in. Of course, this should not be visible in the room but in a place that is difficult to see. In the case of larger silver stocks, it can make sense to keep them in different places so that you don’t end up empty-handed in the event of theft.

The safe deposit box is an excellent alternative to the home safe. The bank does charge a fee for the storage, but this is to be assessed as low in relation to the possible loss, especially in the case of larger silver stocks. However, it should be clarified in advance whether the bank is liable for the damage through insurance if a bank robbery occurs.

Buying silver without VAT – is that possible?

If you want to physically purchase the raw material silver without VAT, you can also do this from SouthAfrica. If you want to use silver as an investment, you can buy large silver bars and have them stored in so-called duty-free warehouses. These are warehouses for untaxed and duty unpaid interim storage.

The catch is, however: As soon as you get physical possession of the silver and it leaves the warehouse, you have to pay the usual VAT.

Another option would be: buy silver coins.

Silver coins are available without VAT included, but the spread for silver coins without VAT is relatively high compared to silver bars. So you should buy silver coins only for security reasons, instead of as an investment.

We, therefore, advise buying silver in the form of stocks, CFDs or ETFs from ETFinance.

Buying Silver as an ETF: What are the Best Silver & Silver Mining ETFs

In addition to the physical possession of silver, silver can also be bought as security on trading platforms such as ETFinance. Such a purchase is also possible at banks, for example, in the form of an ETF.

However, access to silver ETFs is not that easy due to an EU directive on securities funds. According to this, the proportion in a certain good, such as silver, must not exceed 20 percent.

Outside the EU, for example, in Switzerland, the Zürcher Kantonalbank has the silver ETF ” ZKB-SILBER-ETF ” in its program. 

Since May 2020, it has also been possible to trade an  ETC from the issuer  Xtrackerts ETC on Xetra. With the Xetra Silver ETC, investors have the opportunity to participate in the performance of the silver price.

These exchange-traded securities enable investors to invest in commodities. The DB Physical Silver ETC should be mentioned here. It is published by Deutsche Asset Management, which is mainly owned by Deutsche Bank.

When investing in silver non-physically, silver mines can also be of interest. As can be assumed, it is not directly about the development of the silver priceprice butbut about the security of a silver mine. However, there is a strong correlation between the rising silver price and the price development of a silver mining ETF.

As the silver price rises, the value of the silver mine ETF usually also increases. Sometimes even disproportionately. In addition, depending on the offer, a dividend can be paid out regardless of the price.

But there is also a certain risk compared to investing directly in silver security. The price of the silver mining ETF is determined by the price of silver and depends on the management of the mine operator. If problems arise here, such as mismanagement or new environmental regulations that put the mine operators under pressure, this can lead to a fall in prices.

Also, regardless of the performance of silver. Conversely, the silver mine ETF can, of course, also benefit from positive headlines from the mine operator.

The best Silver ETFs at a glance

Silver ETFsISINWKNsymbol
Coba ETC 1x Silver Daily Long ETCDE000ETC0191ETC019X005
db Physical Silver Euro Hedged ETCDE000A1EK0J7A1EK0JXAD2
ETFS Physical Silver ETCDE000A0N62F2A0N62FVZLC
iShares Physical Silver ETCIE00B4NCWG09A1KWPRSSLN
Xtrackers IE Physical Silver EUR Hedged ETC SecuritiesDE000A2UDH55A2UDH5SLVRLN
Buy silver as a CFD

investing-in-silver

As mentioned earlier, the easiest and cheapest way to use it is to invest in silver as a Contract for Difference ( CFDs ). A silver-CFD is like trading on a stock exchange, except that the instrument the price of the underlying asset (in this case silver) replicates but does not represent ownership of the precious metals.

In general, investing in CFDs is associated with higher risks with regard to the raw material silver. Correspondingly, however, the chances of a possible win are also significantly higher.

Buying Silver Stocks: What Are the Best Silver & Silver Mining Stocks?

If one wanted to buy silver stocks, one could have a portfolio of stocks that are performing in line with the silver. For example, silver mining companies’ silver deposits may still be in the ground, but when the price of metals moves, the company’s share price moves too. The correlation between the price of silver stocks and silver itself can vary. Finally, stocks are also subject to other price drivers, such as broader volatility in the stock markets.

The best silver stocks

Wheaton Precious Metals share

Wheaton Precious Metals Corporation is a  Canadian precious metals trading company headquartered in Vancouver. The pure precision metals company has added another major deal to its portfolio.

The company claims to be the largest silver streaming company. In the long term, the company receives a certain number of production quantities of silver at a discounted price. Almost two-thirds of the company’s income comes from the silver business alone.

Wheaton Precious Metals currently has agreements with 20 silver mines and 9 projects in the development phase.

Pan American Silver

The Canadian mining company was founded in 1994 and operates several silver mines, including silver mines in Mexico, Peru, Bolivia, Argentina and Canada. The mining company produces around 26 million ounces of silver annually, making it one of the largest silver producers.

The company generates around three-quarters of its sales in Mexico and Peru. There is also zinc, lead and gold mined. The current share price is $ 24.50, with a market capitalization of $ 5.5 billion.

Fresnillo

Fresnillo is a British mining company and a subsidiary of the Mexican group Penoles. The company is listed on the London Stock Exchange and the Bolsa Mexicana de Valores. The company currently employs around 3830 people.

Silver and gold are predominantly mined in three mountain trails operated by the company in Fresnillo in Zacatecas, Cinega in Durango and Herradura in Sonora.

Fresnillo is the world’s largest silver producer.

Buy silver stocks or not?

  • Silver price consistently strong for years
  • High returns cannot be ruled out
  • Is considered crisis-proof
  • Protection against negative interest rates and a zero interest rate policy
  • More independent than gold
  • It is possible to invest in silver with little capital
  • No sure returns
  • Risky price development
  • Silver is nominally less valuable than gold

Buy silver: Reddit

After hearing more and more people in early January 2021 about how private investors were declaring war on the significant US hedge funds, something similar is now happening with silver. Social media users like Reddit and Twitter initially bought shares in Gamestop, Nokia, AMC and Blackberry to force major investors to close their short sales. Thus the shares of the companies have jumped in the air.

The next price explosion occurred thanks to Reddit users for silver. However, the market here is harder to crack than it is for stocks. Currently, the sub-forum of Reddit r / Wallstreetbets aims to bet massively on the rising silver prices. Silver hit an 8-year all-time high of USD 30.03 per coin on February 1, 2021. This means that the price of silver has risen by over 15% in just one week.

Investors primarily target stocks of silver miners (such as Pan American Silver) and index funds. The prices have moved up accordingly. How long this trend will continue remains to be seen.

Buy Silver Comparison: What’s the Best Silver Investment?

As an investor, you naturally ask yourself whether you should invest in the commodity or stocks or CFDs. Generally speaking, this depends on the investor’s preferences, but there are advantages and disadvantages to both real silver and silver CFDs:

Real silver

  • Real silver (coins or bars)
  • More cumbersome to buy and store
  • Higher trading fees
  • No diversification
  • Risk of theft
  • VAT must be paid

Silver CFDs and ETFs

  • Easier to buy and sell than real silver
  • Low costs and less effort
  • Special assets that are protected against bankruptcy
  • Risk diversification
  • Diversification of the portfolio
  • Not real silver
  • Risk of hacking attacks

When should you buy or sell silver?

There is currently a real boom in buying silver. Silver is considered a lower risk investment than gold but with fewer returns. Silver is currently at a record high, and it does not appear that this will change for the next several months.

After all, the price of silver depends on several factors. Supply and demand are crucial. The lower the quantity, so to speak, in relation to the purchase wish, the higher the price increases.

However, the price of silver could remain relatively stable as the industry always needs silver. For example, silver is used in smartphones, laptops, TV sets and solar cells. So there will always be an offer of silver.

In the end, everyone has to decide when is the best time to buy or sell silver. We currently advise buying silver.

Buying silver: the bottom line

investing-in-silver

In the shadow of gold, silver is not on the list of many investors. However, silver offers some good arguments for buying it as a physical good or in the form of securities.

This is supported by the excellent price stability in comparison with classic company shares or cryptocurrencies, also and especially in times of crisis. The relatively low price compared to gold also makes silver attractive, especially for small investors.

Last but not least, as a natural raw material, silver is a commodity that is becoming increasingly scarce, and investors can hope for a good price development when demand increases.

Suppose you shy away from buying silver in the form of coins or bars, for example, because you are concerned about safekeeping. In that case, you can also invest in silver via securities such as ETF, ETC as an alternative. So when looking at commodities, investors shouldn’t just look at gold. Buying silver can be worthwhile.

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FAQs

Investing in silver is worthwhile because silver counts as a crisis-proof investment in addition to the tax advantages.

You can invest in silver in four forms: physical purchase, silver CFDs, silver stocks and silver ETFs. Each and every option has its various advantages and disadvantages.

There is no general answer to this. However, the ETFs that invest primarily in silver and charge low fees seem to be good.

This can be done quickly using an online broker that offers ETFs. You look for the ETF of your choice and buy it. The dividend distribution will then be forwarded to the client, provided the selected ETF is distributing and not accumulating.

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