Investing in Silver
Known as the poor man’s gold, silver has been used as a form of money or value for thousands of years. Today its still used as a valuable commodity and many investors use silver to help hedge their risks in uncertain economic times. The silver market is a much smaller market in terms of value then the gold market. Since physical demand is a lot less than the gold market, the silver market can be manipulated.
In the early 1970s when Nelson Hunt and his brother William Hunt tried to manipulate the silver market. By 1980 the price of silver was nearly $50 per ounce and the Hunt brothers were estimated to have over 100 million ounces of silver. The brothers would go on to lose most of their money though after a series of trading rules were changed and intervention from the Federal Reserve.
Another controversy started in 2007 when it was revealed that fewer than four traders held 90% of short sliver futures contracts that represented 245 million ounces. The problem was that JPMorgan Chase was one of these holders. JPMorgan Chase also runs the SLV sliver ETF. Many silver analysts pointed this out to be a potential conflict of interest. By 2008 After multiple complaints, the Commodity Futures Trading Commission finally probed the silver market. In 2010, JPMorgan closed down their proprietary trading desk for commodities..
Today, investors continue to flock to precious metals such as gold and silver due to the massive uncertainty in the financial markets especially the ones in Europe. Since 2000, the price of an ounce of silver has rose from around $5 to over $40.
As with gold, there are many ways people can invest in silver including physical silver, ETFs and mining companies.
How to Invest in Silver
Bars and Coins – Buying silver bullion is the traditional way to invest in silver. In some countries such as Switzerland, you can buy bars of silver over the counter at major banks. Coins are another popular way of investing in silver. A lot of people look for older times and quarters because they had up to 90% silver in them.
Silver ETFs – Silver ETFs are similar to gold ETFs. They are a quick and easy way for investors to invest in silver without the hassle of storing it. Popular silver ETFs are iShares Silver Trust (NYSE:SLV), ETFS Physical Silver (LSE:PHAG), ETFS Sliver Trust (NYSE:SIVR) and Sprott Physical Silver Trust (NYSE:PSLV).
Silver Mining Companies – Some investors like to invest in mining companies. There are hardly any silver mining companies though since silver is usually found when mining for other metals such as lead and copper. Investors will also need to take into account a lot more than just the price of metals when investing in a mining company.