Forget Gold, Silver Is Soaring. Here Are Ways to Invest

February 23, 2011

Gold may get all the publicity in times of global unrest, but the price of silver recently surged to a 31-year high, and some believe the metal may be in the early stages of a multiyear bull market. Here are some of the easiest ways to invest in silver.

Gold may get all the publicity in times of global unrest, but the price of silver recently surged to a 31-year high, and some believe the metal may be in the early stages of a multiyear bull market. Here are some of the easiest ways to invest in silver.

Escalating violence and mounting uncertainty about protests in the Middle East and North Africa have fueled demand for so-called safe-haven investments, such as gold and silver. Silver for March delivery, the most metal’s actively traded contract, settled at a $32.862 Tuesday. The most actively traded gold contract, for April delivery, settled at $1,401.10 per troy ounce, after leaping to $1,407 intraday, according to the Wall Street Journal.

In addition to investors seeking safe havens amid the uncertainty and demand from jewelry makers, silver is getting a boost from industrial use as well -- demand for the metal is increasing in both the electronics and solar-power industries, according to the Journal.

Still, the recent surge in the price of silver suggests speculative trading, which could mean a near-term pullback in prices, Chris Burba, a strategist for Standard & Poor’s, recently told Kiplinger Personal Finance magazine. “We’ve seen a frenzied sort of buying since August,” he says. Investors have been buying silver up in heavy volume, and the metal’s price has traced rapid, steep gains over the past few months. He said, however, that he believes silver is in the early stages of a multiyear bull market. He believes it will revisit the $49.45 an ounce, set in 1980. (Silver traded as low as $3.51 an ounce in February 1991.)

There are a number of ways to invest in silver, and perhaps the easiest is to purchase an exchange traded fund that holds the actual metal. iShares Silver Trust (NYSE: SLV) is up 6.89% year-to-date and has an three-year annualized return of 21.6%, according to investment-tracking firm Morningstar.

Investors also can invest in individual silver mining company stock, including Canada's Silver Wheaton Corp. (NYSE: SLW), Silver Standard Resources Inc. (NASDAQ: SSRI) and Pan American Silver Corp. (NASDAQ: PAAS). But note that investing in mining companies can be riskier than investments that hold the actual metal itself. In addition to changes in the price of silver, mine accidents and political upheaval or civil unrest can influence mining company shares.

Like gold, you can also purchase the physical metal. The American eagle silver bullion coin, which is 99.99% pure silver, is available for direct purchase through the U.S. Mint. Silver bullion bars can be bought through various dealers. If you choose to hold the physical asset yourself, be sure to invest in a safe-deposit box at your financial institution or keep the metal in storage with a trustworthy silver dealer, rather than in your home, where the metal may be vulnerable to home damage or theft.