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Investing in Silver in the UK: How to buy Silver Stocks

Investing in precious metals like gold and silver is often used as a hedge against inflation. With the current inflation rate at 9.9% here in the UK and set to soon be in double figures, protecting your savings will prevent your money from significantly eroding in value in real terms.

Many investors favour gold for investing, but silver is also a very worthy candidate. In this blog, we will look at why investing in silver UK funds is a good idea, how to start, the role silver can play in your investment portfolio, and its pros and cons.

🪙 Can I invest in silver?Absolutely. You can start with a small amount
❓What is a silver ETF?A silver ETF is a fund that only consists of one asset, which is silver
🤑 Most important thing to remember is?Silver is used to hedge against inflation
✍️ Ways to invest in silver?• Silver coins
• Silver bullions
• Silver stocks and shares
• Silver ETFs

Is investing in silver worthwhile?

Investors often refer to silver as being “poor man’s gold.” However, that is rather unfair. It is far more than simply a cheaper alternative to gold. Besides coins and jewellery, silver is used in many products, including electric vehicles, LED lighting, medical devices, and the manufacture of solar panels.

In 2021, the global demand for silver rose by 19%, and physical silver investment rose by 36%, both all-time highs since 2015. The industrial application of silver was also at an all-time high,  rising by 9%. In 2022, the global silver demand forecast is expected to rise to 1.112 billion ounces; the demand for physical silver investment is expected to jump 13%, while industrial use is expected to rise by 5%. By 2030, the utilization of silver in printed and flexible electronics, and brazing and soldering are expected to rise by 54% and 23%, respectively. So the demand for silver is also there, and it is also growing.

According to Frank Holmes, the CEO and chief investment officer of U.S. Global Investors Inc, silver is 1.5 times more volatile than its golden counterpart. This volatility is because silver is lower in price than gold and its wide use as an industrial metal and an investment vehicle. This means that investing in silver UK funds carries an element of risk. However, there are ways of offsetting risk, making investing in silver a worthwhile proposition.

Should silver be a component of your investment strategy?

The volatility of the silver bullion price is shown in the price history of silver. From 1974 to early 2022, the price of silver moved from an all-time low of £0.51 per ounce to £29.26. At the time of writing, the current price is £17.70 per ounce.

To have a sound investment strategy, you need to diversify your portfolio to include a wide range of investments, including commodities, corporate and government bonds or gilts, and equities from all over the world. Therefore, a silver stock UK fund or a physical silver UK investment are options you might like to consider.

As mentioned previously, investing in gold and silver UK funds is a good hedge against inflation, but only if you invest long-term. This is because precious metal prices are volatile. If you invest short-term, you could find that the value of your investment is considerably lower when the fund matures than when you deposited your money.

For example, if you were thinking of how to invest 100K in silver, investing for the long term to avoid cashing out when the demand for silver is low, and the price has been driven down is ideal.

The various ways to invest in silver

There are several ways to invest in silver. There is the option to buy physical silver UK metal, invest in silver mining companies on the London Stock Exchange or purchase silver ETFs. There are other choices open to you, so let’s take a quick look at them.

Silver bars and silver coins

Silver bullion bars are only a good choice if you have safe and secure storage facilities. You can buy silver bars in 10g to 1kg bars from the Royal Mint. However, the more you buy, the heavier and more expensive it will be to ship. You can store it in one of the vaults at the Royal Mint, but the charges are 2% per annum based on the average daily market price of the metal. you must consider the additional costs of buying physical silver UK metal.

One popular silver bullion UK option is WisdomTree Physical Silver. It is designed to offer investors an easy cost-efficient way of accessing the silver market by tracking the spot price of silver, less any management fees.

HSBC backs WisdomTree Physical Silver (PHAG) fund with physical allocated silver that conforms to the Good Delivery standards of the London Bullion Market Association.

Another option is investing in silver by buying physical coins. They are easier to ship and store than bars, and all silver coins bought from the Royal Mint don’t suffer Capital Gains tax if you are a UK resident. Also, shipping is free.

Precious metal funds

You can invest in silver via mutual funds or ETFs. However, while there are silver ETFs that you can invest in exclusively, this is not the case for many mutual funds, as many mutual funds have both gold and silver investments. Nonetheless, there are some precious metals mutuals with silver investments you can put money into. They include:

  • Invesco Oppenheimer Gold and Special Minerals Fund (OPGSX)
  • Franklin Gold and Precious Metal Funds (FKRCX)
  • USAA Precious Metals and Minerals Fund (USAGX)
  • Invesco DB Precious Metals Fund (DBP)

Silver miners ETF

“Silver miners” ETF allows you to gain exposure to silver without having to take delivery of the metal. Companies within a Silver miner ETF deal with the acquisition, exploration, development, and production of silver and other precious metals. However, silver mining companies are businesses that add further complexity and risk to investing in silver.

You should also remember that the silver mining industry is tied to the spot price of silver, meaning that investments can go down in value as the spot price decreases. However, it’s not a one-to-one ratio. For example, if the silver price dropped by 10%, the value of a silver miner could go down by only 5% or 20%. In other words, it is still a risky business. Examples of silver miners’ ETFs include:

  • Global X Silver Miners ETF (SIL)
  • iShares MSCI Global Silver Miners ETF (SLVP)

Another alternative is to invest in Junior Silver Miners, such as the ETFMG Prime Junior Silver Miners ETF (SILJ), which targets small silver miners. Although this ETF can be considered even riskier by some people, it is not as risky as investing in individual silver mining stocks.

Silver stocks

In the same way that you can buy silver bullion and bullion coins yourself, without taking investment advice, you can buy silver equities. Silver share equity includes silver mining stocks, also known as “silver miners” stocks and silver streaming company stocks.

But if you are acting independently, you must understand how stocks and shares work, especially stocks and shares in precious metals.  For example, you can invest in silver equity, but you also need to be aware of the volatility of silver bullion prices.

Some silver mining and silver streaming stocks include

  • Pan American Silver (PAAS)
  • Endeavor Silver Corp. (EXK)
  • Fresnillo (FRES)
  • Fortuna Silver Mines (FSM)
  • First Majestic Silver Corp. (AG)

Silver Shares ETFs

A safe option is to accept independent financial advice about how to buy silver shares UK funds in vehicles like silver ETFs and stocks and shares ISA accounts that include silver as part of your investment portfolio. Granted, these ETFs are seen as long-term options, but they are one of the best and most reliable ways of investing in silver UK funds.

Historically, the price per ounce of silver is always much less than that of an ounce of gold. For example, back in April 2011, for the same price, you could buy, per ounce, 31 times more silver than you could gold. In February 2016, the ratio differential reached nearly 80 to 1.

According to bullionbypost, at the time of writing, one ounce of silver would cost you £17.70, whereas one Troy ounce of gold would set you back over £1,450. Using the Troy ounce system, there are only 12 ounces to the pound, but the difference in price between the two metals is still huge.

The point is that you can buy much more silver per GBP than you can gold, so if it comes down to the question of, let’s say, how to invest £10,000, a silver component in your ETC portfolio is a viable option. Some silver shares ETF options include:

  • Aberdeen Standard Physical Silver Shares ETF (SIVR)
  • iShares Silver Trust ETF (SLV)
  • Invesco DB Silver Fund ETF (DBS)

One of the most popular ways of entering the silver market is through the iShares Silver Trust ETF listed above. It has an expense ratio (management fee) of 0.5%. There is, however, a rule that you can take physical delivery of the bullion (500,000 ounces of silver) once your share ownership reaches a “basket”, which is 50,000 iShares. However, for most UK investors, this may not be a problem.

Conclusion

Investing your money will always carry risks. Investing in silver bullion may not be the best way to invest in silver for UK investors unless you are very astute about investing and are prepared to take a short-term risk.

A general investment account could be the preferred option for those new to investing. Also, check out your investor profile and decide which options you would like to explore further.

Please bear in mind that when discussing personal finances, you should only ever approach wealth specialist companies that are authorised and regulated by the Financial Conduct Authority.

An independent FCA-authorised wealth specialist advice company can help you to choose the best high-quality ETFs, which will help to protect your portfolio by offsetting it from the ups and downs that various equities experience.

If investing in silver UK funds is one of your preferences, getting the best advice from a top wealth management advisor is the way to go.

FAQ

Is silver a good investment in the UK?

Silver can be a good investment depending on what it is used for, and it is cheaper than gold. Silver investments are used to hedge against inflation, and it is a great way to diversify your investment portfolio.

Can I buy silver VAT free?

No, you can not buy silver VAT free, even silver bullion, unlike gold bars or coins. Silver even purchase at the Royal Mint is subject to VAT at the current rate. However, there are ways investors can avoid such excessive taxes, such as storing silver in a bonded warehouse outside of the EU.

What is the best way to invest in silver?

The best way to invest in silver is to use ETFs or ETNs that own physical silver, silver mines, or track futures contracts. ETFs such as iShares Silver Trust (SLV), Aberdeen Standard Physical Silver Shares ETF (SIVR), Invesco DB Silver Fund (DBS), and Global X Silver Miners ETF (SIL). Don’t rule out the option of owning physical silver bullion.

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