As a tangible asset with utility, silver is often used to safeguard against inflation and uncertainty in the markets, as well as to diversify a stock and bond portfolio. That said, holding large quantities of physical silver can be quite a hassle. Fortunately, there are several strategies for investors to capitalize on silver’s price fluctuations without the responsibility of physically owning it. In this guide, we’ll delve into various methods you can invest in silver in the UK. We’ll also offer practical advice for fruitful investing, discuss the pros and cons of investing in this lustrous mineral, as well as provide recommendations for the top brokers to consider.
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How to invest in silver in the UK?
Investors in the UK have multiple options at their disposal for directly or indirectly investing in silver, including:
Physical silver
The conventional method of investing in silver involves physically owning the precious metal. This is typically in the form of coins, bullion, or jewellery.
- Silver bullion coins: The Royal Mint’s silver bullion coins, exempt from Capital Gains Tax for UK residents, are available in two alloys: 999 fine silver and 999.9 fine silver;
- Silver bullion bars: These bars, stamped with the weight and purity level, range in weight from one ounce to over 10 kilograms;
- Jewellery: Silver jewellery can be worn and later sold when needed. It can also serve as a tangible store of value and be passed down through generations as an heirloom. Note that a markup of at least 20% is typically added to the piece of jewellery to cover design and manufacturing costs.
Note
It’s crucial you only purchase silver from the Royal Mint or a reputable dealer. You should also take into account the costs associated with insurance and storage. The Royal Mint, for instance, charges an annual fee of 1-2% (plus VAT).
Aside from the inherent value of silver, some coins might carry an added numismatic value due to their age, specific denominations, or rarity, and hence, can trade at a premium. However, for pure investment purposes, avoiding collectible coins and paying extra for non-silver characteristics is advisable.
Silver CFDs
There are several other ways to invest in silver without owning the precious metal physically. One such method is trading silver contracts for differences (CFDs). Investors can easily buy silver CFDs through online investment platforms like eToro.
A CFD is a financial instrument that tracks the underlying asset’s price but doesn’t represent ownership of the asset. Trading CFDs allows investors to take advantage of all price movements by employing either long or short positions, respectively.
CFDs are traded on margin. This means that brokers lend investors extra funds to boost leverage and increase their position size. Typically, brokers require investors to maintain certain account balances before authorizing such trades.
Note
Silver ETFs
If you prefer to bypass the complexities of owning physical silver or engaging with the fast-paced and margin-bound derivatives market, a viable alternative could be investing in an exchange-traded fund (ETF) that follows the commodity.
Investing in ETFs is also an affordable way of tracking the price of silver or broader commodities, charging annual management fees of around 0.1-0.2% compared to 0.5%-1.0% for actively-managed funds.
Another advantage of investing in silver ETFs is that they are highly liquid. So you’ll be able to sell your funds at what’s likely the best price, and you can do so on any day the stock market is open.
Two of the largest silver ETFs are iShares Silver Trust (NYSE: SLV) and Aberdeen Standard Physical Silver Shares ETF (NYSE: SIVR). Additionally, traders can speculate on the silver market through an ETF that owns futures contracts, like ProShares Ultra Silver (NYSE: AGQ). However, the fund’s structure makes it more suitable for short-term speculation than long-term investment.
ETFs offer exposure to silver’s price fluctuations, so the fund’s performance should generally mirror the rise or fall of silver’s value, excluding the fund’s annual fees. Of course, silver can be volatile like gold and other commodities, especially over short periods. But with an ETF, you’ll be able to dodge some of the more significant risks of owning physical silver yourself, including theft risk, illiquidity, and unfavorable pricing when it’s time to trade.
Silver-related stocks
An alternative strategy is to invest in silver mining, refining, and trading companies, as their share prices tend to be closely tied to the price of silver. That said, their value is also typically influenced by other factors, such as the company’s overall performance, as well as broader geopolitical and environmental concerns.
Shareholders in mining profit if the share price rises, along with receiving income in the form of dividends.
Unfortunately, there are no stocks exclusively related to silver. This is because while some companies in the metals sector that mine silver, mostly focus on extracting industrial metals like iron ore, copper, and aluminum, with silver primarily produced as a byproduct.
Furthermore, companies that mine precious metals typically focus on gold. As a result, even though a number of companies mine some silver, it usually comprises a comparatively small part of their revenue.
Despite these factors limiting your investment options, a few still stand out: First Majestic Silver Corp (NYSE: AG), Wheaton Precious Metals (NYSE: WPM), and Pan American Silver (NYSE: PAAS).
Reminder
Silver-related ETFs
Silver-related ETFs can be a sensible option for investors who favor a more passive investment approach that incorporates the advantages of holding shares in individual mining companies with the security of portfolio diversification. Ultimately, because these funds are distributed across the industry, the underperformance of a single miner won’t overly affect your investment.
Prominent funds in this sector include Global X Silver Miners ETF (NYSE: SIL), iShares MSCI Global Silver Miners ETF (CBOE: SLVP), and ETFMG Prime Junior Silver Miners ETF (NYSE: SILJ).
Note
Where to buy silver in the UK?
If you don’t want to buy physical silver, you’ll need a brokerage account to buy silver stocks or funds or engage in silver CFD trading. While countless online platforms are available, the one that suits you will depend on your investment style (long-term buy-and-hold strategy or a more active swing or even day trading approach) and needs (e.g., whether you want to trade on margin).
With a funded account, you can choose the silver-related assets that align with your preferences and place the order through your broker’s website.
To securely buy silver in the UK, consider eToro, which offers:
- Commodities trading;
- CFDs trading;
- Commission-free stock trading;
- 3,000+ stocks from 17 exchanges;
- Fractional shares available;
- User-friendly platform.
Best Precious Metals Broker for Intermediate Traders and Investors
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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eToro USA is registered with FINRA for securities trading.
How to buy silver in the UK with eToro: step-by-step
- Step 1: Create an eToro account and complete the verification process;
- Step 2: You have to fund your account before you can start buying silver. Several deposit methods will be available to you, including linking your bank account, using a debit or credit card, as well as employing third-party payment methods like PayPal, Neteller, or Skrill;
- Step 3: Navigate to the commodities markets page, and choose ‘silver’ to access the silver trading dashboard, or visit the stocks or ETFs market and input the silver-related stock or ETF ticker symbol;
- Step 4: Click on BUY;
- Step 5: Input the desired cash amount or number of units for your trade;
- Step 6: Review and adjust the stop loss, leverage, and take profit settings;
- Step 7: Click ‘open trade.’
Silver price today
Common mistakes to avoid when investing in silver
Investing in silver can be a great way to diversify your portfolio, in addition to offering a safe haven during times of economic tension and potentially acting as a hedge against inflation. Nonetheless, like with any investment, navigating through the silver market carries its unique complexities.
Be sure to avoid these common mistakes as you venture to silver investments:
- Not diversifying: Aim to build a balanced and diversified portfolio around your silver investments that incorporate a mix of financial instruments such as stocks, bonds, and cash;
- Market timing: Don’t try to time the market. Instead, opt for a long-term investment approach, like dollar-cost averaging, to lessen the effects of market volatility;
- Investing in unfamiliar territory: Ensure you understand the silver investment options available to you. For example, if you choose to invest in silver mining stocks, it’s crucial to analyze the company’s fundamentals and be aware of any geopolitical and environmental risks linked to its operations;
- Abusing leverage: Margin trading amplifies your risk-to-return ratio and is more appropriate for experienced traders, as silver’s price is notoriously volatile;
- Getting caught in scams: Be wary of scams where sellers may try to sell silver at inflated prices or sell counterfeit products. Prospective investors can benefit from resources like the Commodity Futures Trading Commission (CFTC), which provides guidelines to help identify potential fraudulent schemes;
- Using sketchy platforms: If you’re trading silver products through an online broker or a similar platform, ensure that it’s a regulated broker with a licensed from relevant authorities.
Pros and cons of investing in silver
Pros
- Hedge against inflation: Safeguarding your portfolio through silver investments can be a viable strategy if you’re concerned about increasing prices. Historically, silver values have climbed during periods of heightened inflation;
- Low correlation to traditional markets: Silver’s value isn’t directly tied to traditional assets, such as stocks or bonds, making it an excellent option for portfolio diversification;
- Physical ownership: For some investors, the tangible aspect of holding silver coins or bars brings satisfaction;
- Industrial demand: Silver is widely used in various industries, such as electronics, medicine, and renewable energy, potentially driving its price up over time.
Cons
- Volatility: The price of silver can be highly volatile, which could lead to significant losses if the market moves against you;
- Lower historical returns: Compared to other investments like stocks or real estate, silver has generally provided a lower return over the long term;
- Expensive: Silver is a scarce commodity due to its limited supply globally and trades at a premium price;
- Storage and insurance costs: Physical silver requires safe storage and insurance, which can add to the cost of ownership;
- Risk of loss and robbery: Similar to owning valuable jewellery, owning silver carries the inherent risk of loss or theft.
In conclusion
To sum up, silver investment offers numerous opportunities for investors looking to diversify their portfolios, hedge against inflation, or shield their wealth during times of economic instability. In addition, its wide-ranging industrial applications further highlight silver’s intrinsic value.
That said, potential investors must also acknowledge the challenges of silver investing. Some of these include storage issues, the risk of loss or theft, price volatility, and relatively meager historical returns.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about investing in silver in the UK
How to invest in silver in the UK?
You can invest in silver in the UK by buying silver ETFs, silver-related stocks, and ETFs or trading silver CFDs. These financial instruments offer exposure to silvers’ price fluctuations without requiring physical ownership of the precious metal. This way, they accommodate various risk appetites and growth prospects.
How to invest in silver stocks in the UK?
To invest in silver stocks in the UK, start by registering with a regulated online broker. After funding your account, you can select and buy silver stocks using the broker’s platform.
How to buy silver in the UK?
To buy silver in the UK, set up an account with a trustworthy online broker. Then, you should buy shares of silver-related companies (or ETFs) or invest in silver ETFs. Make sure you closely monitor your investments and make necessary adjustments to your portfolio over time.
Where to buy silver in the UK?
You can trade silver in the UK via regulated online brokerages overseen by the Financial Conduct Authority (FCA), like eToro. In addition, you can buy physical silver from various dealers and banks, either online or in person. Investment-grade silver bullion coins and bars can also be acquired from the Royal Mint.
Is it worth investing in silver?
Whether an investment in silver is the right choice for you depends on different factors. These include your financial goals, risk tolerance, and investment portfolio. Consider the investment’s advantages and disadvantages and consult a financial advisor before making any decisions.
Best Precious Metals Broker for Intermediate Traders and Investors
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Invest in Gold, Silver and 3,000+ other assets including stocks and cryptocurrencies.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
