Silver as an investment
Overview
 
Silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...

, like other precious metal
Precious metal
A precious metal is a rare, naturally occurring metallic chemical element of high economic value.Chemically, the precious metals are less reactive than most elements, have high lustre, are softer or more ductile, and have higher melting points than other metals...

s, may be used as an investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

. For more than four thousand years, silver has been regarded as a form of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...

 and store of value
Store of value
A recognized form of exchange can be a form of money or currency, a commodity like gold, or financial capital. To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved....

. However, since the end of the silver standard
Silver standard
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century...

, silver has lost its role as legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

 in many developed countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...

 such as the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. In 2009, the main demand for silver was for industrial applications (40%), jewellery
Jewellery
Jewellery or jewelry is a form of personal adornment, such as brooches, rings, necklaces, earrings, and bracelets.With some exceptions, such as medical alert bracelets or military dog tags, jewellery normally differs from other items of personal adornment in that it has no other purpose than to...

, bullion coin
Bullion coin
A bullion coin is a coin struck from precious metal and kept as a store of value or an investment, rather than used in day-to-day commerce. Investment coins are generally coins that have been minted after 1800, have a purity of not less than 900 thousandths and are or have been a legal tender in...

s and exchange-traded products.
Like most commodities, the price of silver is driven by speculation
Speculation
In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...

 and supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

. Compared to gold, the silver price is notoriously volatile
Volatility (finance)
In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...

.
Encyclopedia
Silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...

, like other precious metal
Precious metal
A precious metal is a rare, naturally occurring metallic chemical element of high economic value.Chemically, the precious metals are less reactive than most elements, have high lustre, are softer or more ductile, and have higher melting points than other metals...

s, may be used as an investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

. For more than four thousand years, silver has been regarded as a form of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...

 and store of value
Store of value
A recognized form of exchange can be a form of money or currency, a commodity like gold, or financial capital. To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved....

. However, since the end of the silver standard
Silver standard
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century...

, silver has lost its role as legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

 in many developed countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...

 such as the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. In 2009, the main demand for silver was for industrial applications (40%), jewellery
Jewellery
Jewellery or jewelry is a form of personal adornment, such as brooches, rings, necklaces, earrings, and bracelets.With some exceptions, such as medical alert bracelets or military dog tags, jewellery normally differs from other items of personal adornment in that it has no other purpose than to...

, bullion coin
Bullion coin
A bullion coin is a coin struck from precious metal and kept as a store of value or an investment, rather than used in day-to-day commerce. Investment coins are generally coins that have been minted after 1800, have a purity of not less than 900 thousandths and are or have been a legal tender in...

s and exchange-traded products.

Silver price

Like most commodities, the price of silver is driven by speculation
Speculation
In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...

 and supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

. Compared to gold, the silver price is notoriously volatile
Volatility (finance)
In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...

. This is because of lower market liquidity
Market liquidity
In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value...

, and demand fluctuations between industrial and store of value uses. At times this can cause wide ranging valuations in the market, creating volatility.

Silver often tracks the gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...

 price due to store of value demands, although the ratio can vary. The gold/silver ratio is often analyzed by traders, investors and buyers. In Roman times, the ratio was set at one to 12 or 12.5. In 1792, the gold/silver ratio was fixed by law in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 at 1:15, which meant that one troy ounce
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...

 of gold would buy 15 troy ounces of silver; a ratio of 1:15.5 was enacted in France in 1803. The average gold/silver ratio during the 20th century, however, was 1:47. The lower the ratio/number, the more expensive silver is compared to gold. Conversely the higher the ratio/number, the cheaper silver is compared to gold.
Year Silver price (yearly cum. avg.)
US$/ozt
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...

Gold price (yearly cum. avg.)
US$/ozt
Gold/silver
ratio
1840 1.29 20 15.5
1900 0.64 20 31.9
1920 0.65 20 31.6
1940 0.34 33 97.3
1960 0.91 35 38.6
1970 1.63 35 22.0
1980 16.39 612 37.4
1990 4.06 383 94.3
2000 4.95 279 56.4
2005 7.31 444 60.8
2009 14.67 972 66.3
2010 20.19 1225 60.7
2011 (cum. thru 19 Aug) 41.20 1850 44.5


From September 2005 onwards, the price of silver has risen fairly steeply, being initially around $7 per troy ounce but reaching $14 per ozt
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...

. for the first time by late April 2006. The monthly average price of silver was $12.61 per troy ounce during April 2006, and the spot price
Spot price
The spot price or spot rate of a commodity, a security or a currency is the price that is quoted for immediate settlement . Spot settlement is normally one or two business days from trade date...

 was around $15.78 per troy ounce on November 6, 2007. As of March 2008, it hovered around $20 per troy ounce
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...

. However, the price of silver plummeted 58% in October 2008, along with other metals and commodities, due to the effects of the credit crunch
Credit crunch
A credit crunch is a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates...

. By April 2011, silver had rebounded to reach a 31-year high hitting $49.21 per ounce on April 29, 2011 due to economic concerns about inflation and uncertainty regarding bailouts in the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...

.

Large traders or investors

The silver market is much smaller in value than the gold market. The London silver bullion market turns over 18 times less money than gold. With physical demand estimated at only $15.2 billion per year, it is possible for a large trader or investor to influence the silver price either positively or negatively. For example:

From 1973 the Hunt brothers
Nelson Bunker Hunt
Nelson Bunker Hunt is an American oil company executive. He is best known as a former billionaire whose fortune collapsed after he and his brother William Herbert Hunt tried but failed to corner the world market in silver. He is also a successful thoroughbred horse breeder.-Personal:Hunt was born...

 began cornering the market
Cornering the market
In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated. Another definition: "To have the greatest market share in a particular industry without having a monopoly...

 in silver, helping to cause a spike in January 1980 of the London Silver Fix to $49.45 per troy ounce, silver futures to reach an intraday all-time high of $50.35 per troy ounce and a reduction of the gold/silver ratio down to 1:17.0 (gold also peaked the same day in 1980, at $850 per troy ounce). In the last nine months of 1979, the brothers were estimated to be holding over 100 million troy ounces of silver and several large silver futures contract
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

s. However, a combination of changed trading rules on the New York Mercantile Exchange
New York Mercantile Exchange
The New York Mercantile Exchange is the world's largest physical commodity futures exchange. It is located at One North End Avenue in the World Financial Center in the Battery Park City section of Manhattan, New York City...

 (NYMEX) and the intervention of the Federal Reserve put an end to the game. By 1982 the London Silver Fix had collapsed by 90% to $4.90 per troy ounce.

In 1997, Warren Buffett
Warren Buffett
Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is...

 purchased 130 million troy ounces (4,000 metric tons) of silver at approximately $4.50 per troy ounce (total value $585 million). On May 6, 2006, Buffett announced to shareholders that his company no longer held any silver.

In April 2006, iShares
IShares
iShares are a family of exchange-traded funds managed by BlackRock. The first iShares were known as WEBS but were since rebranded.Each iShares fund tracks a bond or stock market index...

 launched a silver exchange-traded fund
Silver exchange-traded fund
Silver exchange-traded products are exchange-traded funds , exchange-traded notes and closed-end funds that aim to track the price of silver. Silver exchange-traded products are traded on the major stock exchanges including the London and New York Stock Exchanges...

, called the iShares Silver Trust , which as of November 2010 held 344 million troy ounces of silver as reserves.

In April 2007, Commitments of Traders Report
Commitments of Traders
The Commitments of Traders is a report issued by the Commodity Futures Trading Commission enumerating the holdings of participants in various futures markets. These futures markets are places to buy or sell, for example, grains, cattle, financial instruments, metals, petroleum, etc., and in the...

 revealed that four or fewer traders held 90% of all short silver futures contracts totalling 245 million troy ounces, which is equivalent to 140 days of production. According to Ted Butler, one of these banks with large silver shorts, JPMorgan Chase, is also the custodian of the SLV silver ETF. Some silver analysis have pointed to a potential conflict of interest, as close scrutiny of Comex documents reveals that ETF shares may be used to "cover" Comex physical metal deliveries. This led analysts to speculate that some stores of silver have multiple claims upon them. On 25 September 2008 the Commodity Futures Trading Commission
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....

 (CFTC) relented and probed the silver market after persistent complaints of foul play. On September 1, 2010, Bloomberg reported that JPMorgan Chase will be closing their Proprietary Trading Desk.

Industrial, commercial and consumer demand

The traditional use of silver in photographic development has been dropping since 2000 due to the growth of digital photography. However, silver is also used in electrical appliances (silver has the lowest resistivity of industrial metals), photovoltaics
Photovoltaics
Photovoltaics is a method of generating electrical power by converting solar radiation into direct current electricity using semiconductors that exhibit the photovoltaic effect. Photovoltaic power generation employs solar panels composed of a number of solar cells containing a photovoltaic material...

 (one of the highest reflectors of light), RoHS
Restriction of Hazardous Substances Directive
The Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment 2002/95/EC was adopted in February 2003 by the European Union. The RoHS directive took effect on 1 July 2006, and is required to be enforced and become law in each member state...

 compliant solder, clothing and medical uses (silver has antibacterial properties). Other new applications for silver include RFID tags, wood preservatives, water purification and food hygiene. The Silver Institute have seen a noticeable increase in silver-based biocide
Biocide
A biocide is a chemical substance or microorganism which can deter, render harmless, or exert a controlling effect on any harmful organism by chemical or biological means. Biocides are commonly used in medicine, agriculture, forestry, and industry...

 products coming onto the market, as they explain:
The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long-term rise in industrial and jewelry usage.

Hedge against financial stress

Silver, like all precious metals, may be used as a hedge
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...

 against inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

, deflation or devaluation. As Joe Foster, portfolio manager of the New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

-based Van Eck International Gold Fund, explained in September 2010:

Bars

A traditional way of investing in silver is by buying actual bullion bars. In some countries, like Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

 and Liechtenstein
Liechtenstein
The Principality of Liechtenstein is a doubly landlocked alpine country in Central Europe, bordered by Switzerland to the west and south and by Austria to the east. Its area is just over , and it has an estimated population of 35,000. Its capital is Vaduz. The biggest town is Schaan...

, bullion bars can be bought or sold over the counter
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....

 at major bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

s.

The flat, rectangular shape of silver bars makes them ideal for storage in a home safe
Safe
A safe is a secure lockable box used for securing valuable objects against theft or damage. A safe is usually a hollow cuboid or cylinder, with one face removable or hinged to form a door. The body and door may be cast from metal or formed out of plastic through blow molding...

, a safe deposit box
Safe deposit box
A safe deposit box or wrongly referred to as a safety deposit box is an individually-secured container, usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions...

 at a bank, or placed in allocated (also known as non-fungible) or unallocated (fungible or pooled) storage with a bank or dealer. Silver is traded in the spot market
Spot market
The spot market or cash market is a public financial market, in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market in which delivery is due at a later date...

 with the code
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...

 "XAG". When settled in United States Dollars, the code is "XAGUSD".

Various sizes of silver bars:
  • 1000 oz troy bars – These bars weigh about 68 pounds avoirdupois (31 kg) and vary about 10% as to weight
    Weight
    In science and engineering, the weight of an object is the force on the object due to gravity. Its magnitude , often denoted by an italic letter W, is the product of the mass m of the object and the magnitude of the local gravitational acceleration g; thus:...

    , as bars range from 900 ozt to about 1,100 ozt (28 to 34 kg). These are COMEX
    Comex
    Comex may refer to:*COMEX, a division of the New York Mercantile Exchange *COMEX , a French company in undersea engineering*COMEX, a gold trust owned by iShares...

     and LBMA good delivery bars.
  • 100 oz troy bars – These bars weigh 6.8 pounds (3.11 kg) and are among the most popular with retail investors. Popular brands are Engelhard
    Engelhard
    Engelhard Corporation is a former American Fortune 500 company headquartered in Iselin, New Jersey, USA. It is credited with developing the first production catalytic converter. In 2006, the German chemical manufacturer BASF bought Engelhard for $US5 billion....

     and Johnson Matthey
    Johnson Matthey
    Johnson Matthey plc is multinational chemicals and precious metals company headquartered in London, United Kingdom.It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.-History:...

    . Those brands cost a bit more, usually about 40 cents to 2.00 dollars per troy ounce above the spot price
    Spot price
    The spot price or spot rate of a commodity, a security or a currency is the price that is quoted for immediate settlement . Spot settlement is normally one or two business days from trade date...

    , but that price may vary with market
    Market
    A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...

     conditions.
  • Odd weight retail bars – These bars cost less and generally have a wider spread, due to the extra work it takes to calculate their value and the extra risk due to the lack of a good brand name.
  • 1 kilogram bars (32.15 oz troy)
  • 10 oz troy bars and 1 oz troy bars (311 and 31.1 g
    Gram
    The gram is a metric system unit of mass....

    )

Coins and rounds

Buying silver coin
Silver coin
Silver coins are possibly the oldest mass produced form of coinage. Silver has been used as a coinage metal since the times of the Greeks. Their silver drachmas were popular trade coins....

s is another popular method of physically holding silver. Examples are the one ounce 99.99% pure Canadian Silver Maple Leaf
Canadian Silver Maple Leaf
The Canadian Silver Maple Leaf is a silver bullion coin issued annually by the government of Canada. The coin has been minted by the Royal Canadian Mint since 1988....

 and the one ounce 99.93% pure American Silver Eagle. Coins may be minted
Mint (coin)
A mint is an industrial facility which manufactures coins for currency.The history of mints correlates closely with the history of coins. One difference is that the history of the mint is usually closely tied to the political situation of an era...

 as either fine silver or junk silver
Junk silver
Junk silver is an informal term used in the United States, United Kingdom, Canada and Australia for any silver coin which is in fair condition and has no numismatic or collectible value above the bullion value of the silver it contains. Such coins are popular among people seeking to invest in...

, the latter being older coins with a smaller percentage of silver. U.S. coins 1964 and older (half dollar
Half dollar (United States coin)
Half dollar coins have been produced nearly every year since the inception of the United States Mint in 1794. Sometimes referred to as the fifty-cent piece, the only U.S. coin that has been minted more consistently is the cent.-Circulation:...

s, dime
Dime (United States coin)
The dime is a coin 10 cents, one tenth of a United States dollar, labeled formally as "one dime". The denomination was first authorized by the Coinage Act of 1792. The dime is the smallest in diameter and is the thinnest of all U.S...

s, and quarters
Quarter (United States coin)
A quarter dollar, commonly shortened to quarter, is a coin worth ¼ of a United States dollar, or 25 cents. The quarter has been produced since 1796. The choice of 25¢ as a denomination, as opposed to 20¢ which is more common in other parts of the world, originated with the practice of dividing...

) are generally accepted to weigh 24.71 grams of silver per dollar of face value, which at their nominal silver content of 90%, translates to 22.239 g of silver per dollar. All U.S. dimes, quarters, halves and 1 dollar pieces contained 90% silver since their introduction up until 1964 when they were discontinued. The combined mintage of these coins by weight exceeds by far the mintages of all other silver investment coins.

All 1965-1970 and one half of the 1975-1976 Bicentennial San Francisco proof and mint set Kennedy half dollar
Kennedy half dollar
Within hours of the assassination of John F. Kennedy on November 22, 1963, Mint Director Eva Adams called Chief Engraver Gilroy Roberts, informing him that serious consideration was being given to depicting Kennedy on one of the larger silver coins: either the silver dollar, half dollar, or...

s are "clad" in a silver alloy and contain just under one half of the silver in the pre-1965 issues.

Junk-silver
Junk silver
Junk silver is an informal term used in the United States, United Kingdom, Canada and Australia for any silver coin which is in fair condition and has no numismatic or collectible value above the bullion value of the silver it contains. Such coins are popular among people seeking to invest in...

 coins are also available as sterling silver
Sterling silver
Sterling silver is an alloy of silver containing 92.5% by mass of silver and 7.5% by mass of other metals, usually copper. The sterling silver standard has a minimum millesimal fineness of 925....

 coins, which were officially minted until 1919 in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 and 1945 in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

. These coins are 92.5% silver and are in the form of (in decreasing weight) Crowns, Half-crowns, Florin
Florin (English coin)
The Florin or Double Leopard was an attempt in 1344 by English king Edward III to produce a gold coinage suitable for use in Europe as well as in England . It was 108 grains of nominal pure gold and had a value of six shillings The Florin or Double Leopard was an attempt in 1344 by English king...

s, Shilling
Shilling
The shilling is a unit of currency used in some current and former British Commonwealth countries. The word shilling comes from scilling, an accounting term that dates back to Anglo-Saxon times where it was deemed to be the value of a cow in Kent or a sheep elsewhere. The word is thought to derive...

s, Sixpence
Sixpence
Sixpence may refer to:*Sixpence *Sixpence *Sixpence *Flat cap, also called a sixpence*Sixpence None the Richer, an American pop/rock band...

s, and threepence
British Threepence coin
The threepence or thrupenny bit was a denomination of currency used by various jurisdictions in England, Ireland, Scotland and Wales, until decimalisation of the pound sterling and Irish pound in 1971...

. The tiny threepence weighs 1.41 grams, and the Crowns are 28.27 grams (1.54 grams heavier than a US $1). Canada produced silver coins with 80% silver content from 1920 to 1967.

Other hard money
Hard money (policy)
Hard money policies are those which are opposed to fiat currency and thus in support of a specie standard, usually gold or silver, typically implemented with representative money....

 enthusiasts use .999 fine silver rounds as a store of value. A cross between bars and coins, silver rounds are produced by a huge array of mints
Mint (coin)
A mint is an industrial facility which manufactures coins for currency.The history of mints correlates closely with the history of coins. One difference is that the history of the mint is usually closely tied to the political situation of an era...

, generally contain a troy ounce of silver in the shape of a coin, but have no status as legal tender. Rounds can be ordered with a custom design stamped on the faces or in assorted batches.

Exchange-traded products

Silver exchange-traded products represent a quick and easy way for an investor to gain exposure to the silver price, without the inconvenience of storing physical bars. Silver ETPs include:
  • iShares Silver Trust launched by iShares
    IShares
    iShares are a family of exchange-traded funds managed by BlackRock. The first iShares were known as WEBS but were since rebranded.Each iShares fund tracks a bond or stock market index...

     is the largest silver ETF on the market with over 340 million troy ounces of silver in storage.
  • ETFS Physical Silver and ETFS Silver Trust launched by ETF Securities
    ETF Securities
    ETF Securities is a global company based in London, UK, specialising in managing exchange-traded funds , Exchange Traded Commodities and Exchange Traded Currencies - History :...

    .
  • Sprott Physical Silver Trust is a closed-end fund created by Sprott Asset Management. The initial public offering was completed on November 3, 2010.

Certificates

A silver certificate
Silver Certificate
Silver Certificates are a type of representative money printed from 1878 to 1964 in the United States as part of its circulation of paper currency. They were produced in response to silver agitation by citizens who were angered by the Fourth Coinage Act, which had effectively placed the United...

 of ownership can be held by investors instead of storing the actual silver bullion. Silver certificate
Silver Certificate
Silver Certificates are a type of representative money printed from 1878 to 1964 in the United States as part of its circulation of paper currency. They were produced in response to silver agitation by citizens who were angered by the Fourth Coinage Act, which had effectively placed the United...

s allow investors to buy and sell the security without the difficulties associated with the transfer of actual physical silver. The Perth Mint Certificate Program
Perth Mint Certificate Program
The Perth Mint Certificate Programme allows individuals, and corporations to own investment grade gold, silver and platinum bullion stored in vaults in the Perth Mint of Western Australia . The bullion is stored in a government mint and insured by Lloyd's of London...

 (PMCP) is the only government-guaranteed silver-certificate program in the world.

The U.S. dollar has been issued as silver certificates in the past, each one represented one silver dollar payable to the bearer on demand. The notes were issued in denominations of $10, $5, and $1; however, since 1968, they can no longer be redeemed for physical silver.

Accounts

Most Swiss banks offer silver accounts where silver can be instantly bought or sold just like any foreign currency. Unlike physical silver, the customer does not own the actual metal but rather has a claim against the bank for a certain quantity of metal. Digital gold currency
Digital gold currency
Digital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...

 providers and internet bullion exchanges, such as BullionVault
BullionVault
BullionVault is an internet gold and silver bullion exchange, founded in 2005 by Paul Tustain. It is owned by Galmarley Ltd. and based in London, United Kingdom. Purchased gold and silver is held in personally allocated storage with Via Mat International in either London, New York or Zurich...

, offer silver as an alternative to gold. At least some of these companies do not allow investors to redeem their investment in actual silver.

Derivatives, CFDs and spread betting

Derivative
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...

s, such as silver futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

 and options
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...

, currently trade on various exchanges around the world. In the U.S., silver futures are primarily traded on COMEX
Comex
Comex may refer to:*COMEX, a division of the New York Mercantile Exchange *COMEX , a French company in undersea engineering*COMEX, a gold trust owned by iShares...

 (Commodity Exchange), which is a subsidiary of the New York Mercantile Exchange
New York Mercantile Exchange
The New York Mercantile Exchange is the world's largest physical commodity futures exchange. It is located at One North End Avenue in the World Financial Center in the Battery Park City section of Manhattan, New York City...

. In November 2006, the National Commodity and Derivatives Exchange (NCDEX) in India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

 introduced 5 kg silver futures.

Firms such as Cantor Index, CMC Markets
CMC Markets
CMC Markets is a UK based financial derivatives dealer. The company offers online trading in spread betting, Contract for difference and Foreign Exchange across world markets...

, IG Index and City Index
City Index Group
City Index Group is a broker providing online financial spread betting, FX, and CFD trading. As well as Britain, it operates in United States, Australia, China, Singapore, Poland and Germany. Today, the group consists of the City Index Limited, Finspreads, FX Solutions and IFX Markets...

, all from the UK, provide contract for difference
Contract for difference
In finance, a contract for difference is a contract between two parties, typically described as "buyer" and "seller", stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time...

 (CFD) or spread bets
Spread betting
Spread betting is any of various types of wagering on the outcome of an event, where the pay-off is based on the accuracy of the wager, rather than a simple "win or lose" outcome, such as fixed-odds betting or parimutuel betting. A spread is a range of outcomes and the bet is whether the outcome...

 on the price of silver.

Mining companies

These do not represent silver at all, but rather are shares
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

 in silver mining companies. Companies rarely mine silver alone, as normally silver is found within, or alongside, ore containing other metals, such as tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...

, lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...

, zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...

 or copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...

. Therefore shares are also a base metal
Base metal
In chemistry, the term base metal is used informally to refer to a metal that oxidizes or corrodes relatively easily, and reacts variably with diluted hydrochloric acid to form hydrogen. Examples include iron, nickel, lead and zinc...

 investment, rather than solely a silver investment. As with all mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...

 shares, there are many other factors to take into account when evaluating the share price, other than simply the commodity
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....

 price. Instead of personally selecting individual companies, some investors prefer spreading their risk by investing in precious metal mining mutual fund
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...

s.

Taxation

In many tax regimes, silver does not hold the special position that is often afforded to gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...

. For example, in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 the trading of recognized gold coins and bullion products is VAT
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...

 exempt, but no such allowance is given to silver. This makes investment in silver coins or bullion less attractive for the private investor, due to the extra premium on purchases represented by the irrecoverable VAT (charged at 20% in the United Kingdom and 19% for bars and 7% for bullion products with face value, e.g. US Silver Eagle and Maple Leaf
Canadian Maple Leaf
The Canadian Maple Leaf coins are bullion coins of gold, silver, platinum, or palladium. The coins are issued by the Royal Canadian Mint.-List of coins:*Canadian Gold Maple Leaf*Canadian Platinum Maple Leaf*Canadian Silver Maple Leaf...

, in Germany). The only jurisdiction in Europe where physical silver can be bought and sold at a VAT rate of 0% is Estonia. Estonian companies that sell silver, generally offer storage for the customer who can take delivery of his purchase later or sell it back to the vendor.

Other taxes such as capital gains tax
Capital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...

 may apply for individuals depending on country of residence (tax status) and whether the asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...

 is sold at increased nominal value.

See also

  • Diamonds as an investment
    Diamonds as an investment
    -History:Diamonds have been treasured as gemstones since the ancient times. Popularity of diamonds has risen since the 19th century because of successful advertising in spite of a greatly increased supply. Diamonds are not normally used as a mainline store of value during times of crisis, because...

  • Full-reserve banking
    Full-reserve banking
    Full-reserve banking, also known as 100% reserve banking, is a banking practice in which the full amount of each depositor's funds are kept in reserve, as cash or other highly liquid assets...

  • Gold as an investment
    Gold as an investment
    Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...

  • Palladium as an investment
    Palladium as an investment
    Like other precious metals, palladium may be used as an investment. Palladium price peaked near US$1,100 per troy ounce in January 2001 driven mainly on speculation of the catalytic converter demand from the automobile industry. Palladium is traded in the spot market with the code "XPD"...

  • Platinum as an investment
    Platinum as an investment
    Platinum has a much shorter history in the financial sector than either gold or silver, which were known to ancient civilizations.Platinum is relatively scarce even among the precious metals. New mine production totals approximately only 5 million troy ounces a year...

  • Precious metal
    Precious metal
    A precious metal is a rare, naturally occurring metallic chemical element of high economic value.Chemically, the precious metals are less reactive than most elements, have high lustre, are softer or more ductile, and have higher melting points than other metals...

  • Silver exchange-traded product
  • Fall of the rupee


External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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