Precious metals as part of your investment portfolio can be an excellent hedge in turbulent market conditions and just like gold, silver can offer great value. The problem that you have to accept when considering your options for buying silver, is that it can certainly be a volatile play with prices fluctuating to a degree that might take some investors out of their comfort-zone.
There are various ways of investing in silver and you can choose a method that is a good fit for your risk-profile but still offers you the prospect of good returns if you get it right.
You can take a leveraged position on silver in the futures market and speculate on the price rising or falling, based on your opinion.
Consumers and also producers of silver are able to manage silver price risk in this way by purchasing and selling silver futures. You can often find silver producers employing a short hedge in order to lock in a selling price for the silver they are producing, whilst those that require silver can initiate a long hedge in order to secure a purchase price they find acceptable.
You can speculate on whether the price will rise or fall by buying or selling silver futures. Silver futures are standardized exchange-traded contracts where each contract denotes a specific quantity of silver and a predetermined future delivery date.
Trading in silver futures takes place at the the New York Mercantile Exchange (NYMEX) or Tokyo Commodity Exchange (TOCOM).
You will find that NYMEX silver futures are quoted in dollars and cents per ounce and lot sizes of 5000 troy ounces. The TOCOM trades silver futures in units of 30000 grams (equivalent of 964.53 troy ounces) and all contract prices are quoted in yen per gram.
Silver bullion and coins
Regardless of what kind of silver you are buying, the deal will revolve around spot prices.
If you are interest in buying silver coins, it should be noted that the U.S federal government specifically mints silver coins, which come backed with an official guarantee of weight and silver purity. This helps you to avoid the potential scams where unscrupulous dealers try to sell you silver that is not always what it seems in some circumstances but when you buy government-backed coins, you will probably be paying a premium over the spot price for silver.
Official silver coins are available in other countries and the most popular in addition to the American Silver Eagle, are the Canadian Maple Leaf and Silver Cougar and the Silver Philharmonic, produced in Austria.
Buying silver bars is a popular investment strategy for those that are seeking exposure to this precious metal and you should find that you pay less of a premium over the spot price than you would for coins.
You can get good discounts if you are buying in bulk if you shop around and some investors consider that have some exposure to silver in their investment portfolio will stand the test of time and show a return, even historical prices are taken as a guide.