Silver Trading

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Silver Prices and Silver Trading

In the past several years, the price of silver has skyrocketed as investors have flocked to the precious metal in times of uncertainty. This year, the price of silver touched a 31-year high as concerns about inflation and the Eurozone crisis pushed the value of silver to nearly $50 an ounce.

For creative and careful investors alike, trading silver can reap profits at a time when the stock market and other investment instruments are unstable and unpredictable. While the price of silver has similarly been erratic, the general direction that silver prices have been moving over the past decade has been up.

Silver’s price is fueled by the basic economic principle of supply and demand as well as by speculation from investors. The direction of silver prices tends to track and follow gold because of value demands, even though silver prices are more volatile due to higher market illiquidity.

Silver Trading: How to Do It

There are many ways and several investment vehicles in which to conduct silver trading. These include bullion bars, coins, exchange-traded funds and notes, and certificates.

Bullion

Silver trading using bullion bars is considered the old-fashioned way of investing in the shiny metal. Bullion bars are physical blocks that are tangible assets and one of the two direct ways of trading silver by actually handing silver.

Silver bars, much like their gold counterparts, are flat and rectangular and come in many different sizes and weights. The largest silver bars are 1000 troy ounce bars that weigh about 68 pounds. Other silver bars come in 100 troy ounce, 32.17 troy ounce (1 kilogram), 10 troy ounce, and 1 troy ounce varieties.

In the European banking centers of Liechtenstein and Switzerland, silver bars can even be traded over the counter at banks. However, most owners of these silver bullion bars store their silver bars at home or in a bank deposit box a way of protecting one’s wealth or as an investment in the hopes that silver prices rise.

Silver Coins

Silver trading using silver coins is another way of dealing with the commodity by actually holding physical silver.

Minted silver coins can either be fine silver or junk silver, which consists of coins that only contain a small percentage of silver. Examples of fine silver coins are the one ounce 99.93 percent pure American Silver Eagle coin and the one ounce 99.99 percent pure Canadian Silver Maple Leaf coin.

Much like with bullion, silver trading with coins is a way to invest in silver by actually holding silver. One key difference is that some silver coins are accepted as legal tender, whereas bullion is not.

Exchange-Traded Products

For those who want to conduct silver trading without getting their hands on physical silver, exchange-traded funds and notes are an excellent alternative, especially for those who are familiar with stocks already.

Exchange-traded funds (ETFs) are investment funds that are traded on stock markets much like traditional stocks. Instead of buying into a particular company’s stock, investors can buy into exchange-traded funds which derive their net value from holding assets in a variety of silver commodities and bonds. ETFs are designed to track and mimic silver prices without the need to buy physical silver.

Certificates

Silver traders can invest in silver bullion easily without the need to buy and sell actual bars with silver certificates. Certificates represent different values of silver, allowing those who want to perform silver trading a simple avenue to do so.

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