Investing in Silver with an ETF

Investing in a silver ETF is becoming more and more popular in today's market. For years, there were only a few ways to invest in silver efficiently. You could buy a futures contract on silver or you could actually buy and hold silver in your own possession. Besides owning a silver mine, these were about the only options that you had to get involved. Now with a silver ETF, you can get in the game of silver with minimal headaches and good opportunity for profit. Here are a few things that you may want to consider about silver ETFs and how they work. 

Silver ETFs

The silver ETF is kind of like a mutual fund that invests in silver. The term ETF stands for exchange-traded fund, and the fund is traded over an exchange like a stock. An ETF is made up of thousands of shares in particular securities. They can buy stocks of particular companies, bonds, commodities, and futures contracts to make up the ETF. When you buy into a silver ETF, you are indirectly investing in the silver market. They could be physically buying silver, taking out futures contracts on silver, or investing in silver companies. Regardless of how the mix of assets is allocated, if the price of silver goes up, it is good news for those in a silver ETF. 

Benefits of Silver ETFs

  • Flexibility--When you actually buy silver bullion, it can be very difficult to move when you want. You have to go through all of the hassle of buying and selling physical goods. However, with a silver ETF, you can just get onto your broker's trading platform and make the deal. With the click of a mouse, you can buy and sell shares of your silver ETF. Whatever the market price for the ETF is at the moment that you want to buy is what you pay. 
  • Hedge against inflation--Historically, when the value of the dollar goes down, people start to invest in commodities like gold and silver. Therefore, when the value of the dollar is down, the value of silver goes up. If you implement a commodities investment strategy as part of your portfolio, it can help keep the value up when the economy is bad. 
  • Affordability--Some assets, such as gold, are very expensive to invest in. This leaves many potential investors unable to get involved. However, silver is relatively inexpensive to invest in. This allows you to get more silver for your portfolio and take advantage of price movements. 
  • Moves independently--Commodities like silver and gold tend to move more independently than other assets. They are not as strongly correlated as some things are to one another. It is nice to have something in your portfolio that does not depend on everything else to move. You can make your investment decisions based more on the asset itself this way. 
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