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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 to hedge against inflation. With inflation currently at 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.

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

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

🪙 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.

However, because of the various ways silver can be used and the gold to silver ratio price-wise is substantially lower in silver’s favour, silver is around 1.5 times more volatile than its golden cousin. Therefore, it does mean 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 clearly shown in the silver price history chart on the gold.co.uk. From 1974 to early 2022, the price of silver moved from an all-time low of £0.51 per ounce to an all-time high of £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 broader range of liquid investments, including commodities, corporate and government bonds or gilts, and equities from all over the world. For example, a silver stock UK fund or a physical silver UK investment are options you might like to consider.

Investing in gold and silver UK funds is a good hedge against inflation, but only if you invest long-term. 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.

If, for example, you were thinking of how to invest £100,000, you would be best advised to do so long term to avoid cashing out when the demand for silver is low, and the price has been driven down.

The various ways to invest in silver

There are several ways of investing in silver UK funds. For example, you can buy physical silver UK metal or invest in silver mining companies on the London Stock Exchange or look at the choice of silver ETFs available right now. In addition, there are several other options open to you, so let’s take a quick look at them.

The option to buy silver bars and silver coins

Buying silver bullion bars is only a good choice if you have safe, 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. So, it would be best if you considered 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 back this fund with physical, allocated silver. The silver conforms to the London Bullion Market Association’s Rules.

Another option is investing in silver by buying coins. They are easier to ship and store than bars, and all silver coins purchased 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 mutual funds. Nonetheless, there are some precious metals mutuals into which you can invest, three of which are:

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

Silver miners ETF options

These ETF options allow you to gain exposure to silver without actually having to take delivery of the metal. However, silver mining companies are businesses that add a further level of complexity and risk to investing in silver.

You should also bear in mind 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 lowers. However, it’s not a one-to-one ratio. If, for example, the silver price dropped by 10%, miners’ values could go down by only 5% or 20%. In other words, it is still a risky business.

Another option is to invest in Junior Silver Miners, such as the ETFMG Prime Junior Silver Miners ETF, which targets small silver miners. If anything, though, this is considered riskier but not as risky as investing in individual silver mining stocks.

The silver shares UK option

In the same way that you can buy silver bullion and bullion coins yourself, without taking investment advice, you can purchase silver shares UK equities. But if you are acting on your own, you need to understand how stocks and shares work, especially stocks and shares in precious metals.

You also need to be aware of the volatility of the silver bullion prices, as shown in the daily silver price chart.

UK silver shares ETFs

A safe option is to accept independent 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 are best viewed as long-term options, but they are one of the best and most reliable ways of investing in silver UK funds.

The price for ounces of silver is much less than the price for an ounce of gold. Back in April 2011, you could buy, per ounce, 31 times more silver than you could gold for the same price. In February 2016, the ratio differential reached nearly 80 to 1.

Today, 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 how to invest £10,000, a silver component in your ETC portfolio is a viable option. Options include:

  • Aberdeen Standard Physical Silver Share ETF
  • Global X Silver Miners ETF
  • iShares MSCI Global Silver and Metals Miners ETF
  • iShares Silver Trust ETF

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 would have to take physical delivery of the bullion once your share ownership reaches 50,000. However, for most UK investors, this will not be a problem.

Conclusion

Investing your money will always carry risk. Investing in 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.

For those new to investing, a general investment account could be the preferred option. You can check out the investor profile page on the Moneyfarm and decide which options you would like to explore further.

Please bear in mind that when talking about personal finances, you should only ever approach wealth specialist companies like Moneyfarm, which are approved, certified, and regulated by the Financial Services Authority.

Here at Moneyfarm, in order to provide investors with good diversification, we only choose the best high-quality ETFs to include in our ETF ISAs, which helps protect your portfolio, keeping it stable from the ups and downs that the various equities may experience.

If investing in silver UK funds is one of your preferences, we can help you invest with minimal risk while striving to achieve returns over and above inflation so that your money grows in real terms. So why not call us today?

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.