Preserve Your Wealth by Investing in Silver

Thanks to the worries over the global financial systems and the growing aversion to paper money and assets, investing in precious metals like silver and gold has never been more popular. Silver lasts forever, and holding a proportion of your wealth in silver means you can stop worrying about all that money printing goverments are doing in a vain attempt to reduce global debt levels.

There are obvious downsides to investing in silver. Your silver could get lost or stolen by thieves. It should also be regarded as a store of wealth, rather than an income earning investment. Unlike a share in a business or cash in a bank account, silver pays no dividend.

There are many ways of investing in silver. Many people like the security of being able to physically touch their silver holdings. It is easy to buy physical silver. Obviously silver jewellery and tableware is one way to invest in physical silver. It is also possible to buy small silver bars. As well as silver bars, silver coins are always popular - especially silver Canadian dollars. When buying physical silver be wary of buying an item that is too far above the current spot price of silver. Obviously you should always buy from a reputable dealer!

By the way, if you have lots of silver at home then you must also invest in a household safe!

Even with a household safe, there is a danger associated with storing such valuable investments in the home. Investing in small silver bars and coins can also be expensive as they are often priced at a high premium over the current spot price of silver as published by Bloomberg and other financial industry commentators.

Exchange Traded Funds (ETFs) are popular investment vehicles that invest in a wide range of shares, commodities and other items. Exchange Traded Funds are traded on stock markets like shares, and unlike unit trusts it is possible to trade in and out of them in real time. ETFs have no up-front charges, although there is usually a small annual charge of around 0.5% of the fund holding's value. Due to the high liquidity of these ETFs they make ideal vehicles for trading the short term fluctuations in the silver price. Be wary though - the silver price is famously volatile!

ETFS Securities offers a wide range of ETFs for investing in silver, all of which are listed on the London Stock Exchange. These ETFs can be either paper based, or physical metal based. Paper based silver ETFs are derivatives, and they track the silver spot price rather than being a share in a bar of silver. By comparison the physical silver ETFs actually invest in silver bars, so each share of the physical silver ETFs directly relates to a piece of a silver bar held in a bank vault.

Feeling particularly bullish about silver? The leveraged silver ETF (stock ticker symbol LSIL) tracks the silver price by a multiple of two. This means that if the silver price goes up 2%, the leveraged silver ETF price will rise by 4%. Of course the reverse is also true - a 2% silver price fall will result in LSIL falling by 4% in value.

Is silver overvalued? For investors who think the silver price has risen too much, ETFS Securities offers an ETF that increases in value as the spot price of silver decreaes - ETFS Short Silver (London Stock Exchange ticker symbol SSIL). If the silver price soars then this ETF can theoretically fall in value to zero, but the advantage of ETFs compared to spread betting is that it is only possible to lose your initial investment, and not more than your initial investment as is the case with spread betting on the silver price.

As well as buying the metal itself, shares in silver mining companies are also an investment option. Note that the shares in mining companies do not always directly track the silver price. Investing in smaller mining companies can also be extremely risky, although there is always the chance of a new mine striking it lucky and sending the share price soaring!

Listed on the London Stock Exchange as ticker symbol FRES, Fresnillo Plc. is the world's largest silver mining company. It also produces gold from two mines in Mexico.

What do you think about silver? Is it a good investment? Is gold better? Leave feedback below!

The author of this article is not authorised by the UK authorities to give financial advice. This article does not consitute financial advice. The value of investments described in this article may rise and fall and you may not get back your initial investment. Before making investment decisions consult an independent financial adviser.