How to trade or invest in silver

Discover what silver investing and trading are

Silver investing and trading are two methods of gaining exposure to the price of silver. Investing in silver assets would give you ownership of the underlying, while trading silver is purely speculative. There are a variety of silver markets available to trade or invest in, including:

• Bullion

The traditional means of investing in silver is to buy actual bars or coins. Over the years, the costs of storing bullion and insurance have caused the method to decline in value

• Spot

The spot price is the price at which silver is currently trading – buying at this price would mean the asset could be exchanged and delivered ‘on the spot’. The market enables traders to get exposure to the price of silver without taking ownership of bullion

• Futures

Silver futures are contracts to exchange the metal at a specific price on a date in the future. Both parties in the contract – the buyer and seller – have the obligation to uphold their end of the deal

• Options

Silver options are contracts that give the holder the right – but not the obligation – to trade silver for a set price, on a set date. Call options give the right to buy silver, while put options give the right to sell it

• ETFs

Exchange traded funds (ETFs) can track the movement of physical silver bullion or a basket of the shares of companies within the silver industry. Trading or investing in silver ETFs gives you a broader exposure than you’d get from a single position

• Stocks

Trading on or investing in stocks can be a great way to get indirect exposure to the precious metals. You can find a variety of opportunities in every element of the industry, including mining, production, funding and sales

Learn about the relationship between silver and gold

The comparison between gold and silver dates back centuries, with silver literally coming in ‘second place’ to the rarer metal – marking the runner-up in competitions since the 1800s. Both precious metals are considered safe-haven assets, although gold is – again – the more popular choice.

The relationship between the two can be monitored using the gold-silver ratio, which shows the amount of silver it takes to buy one ounce of gold.

For example, if the ratio is 20 to 1, then at the current market price it would take 20 ounces of silver to buy an ounce of gold. If silver’s value is up, then the ratio would narrow as it takes less silver to make the purchase. When the ratio narrows or widens, it can be a good indicator of an opportunity to buy or sell gold and silver.

A higher ratio indicates a good time to buy silver, as it is cheaper in comparison to gold. A lower ratio indicates a good time to buy gold, as silver is becoming more expensive.

Historically, the price ratio was fixed at 15:1, as it was believed that it would help stabilise the global economy. However, in 1873, it started to fluctuate once the gold rush caused an oversupply in the market – leading to the hoarding of silver.

Although the price ratio is no longer fixed, there remains a strong correlation between the two. The relationship is now based on their uses, rather than the policy of world governments.

Understand what moves the price of silver

Silver, like any market, is driven by supply and demand. However, the price of silver is often far more volatile than other metals, as it has a variety of different uses and factors that can impact its value, including:

Decide how you want to trade or invest in silver

Discover how you can take a position on silver and choose which method is right for you.

Open your first trade

You can trade our proprietary silver spot prices, futures contracts and options via CFDs. Alternatively, you can get indirect exposure via silver company stocks and ETFs – either by trading or investing.

Once you’ve decided how you’ll take a position, it’s important to think about whether you want to buy or sell silver, the position size you’ll take and how you will manage your risk.

Choose whether to go long or short on silver

When you trade silver assets via CFDs, you can open a position to buy or sell the market – known as going long or short. You’d buy if you expected the market value to rise in a given timeframe, and you’d sell if you thought it would decline.

Investing in silver stocks and ETFs would mean you could only go long – taking advantage of a longer-term rise in prices. However, you’d gain voting rights and receive any dividends that are paid.

Monitor your trade and close your position

Once you’ve opened your position, you can see your trade in the ‘positions’ section of our platform – enabling you to monitor your running profit and loss.

It’s important to keep an eye on silver market news while your position is open and continue to perform technical analysis so that you can identify key turning points in the market.

Ready to open your first trade? Create an account now

When you decide it’s time to close your position, you can simply click ‘close’.

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