Silver as an Investment
By investing in silver, the investor gains exposure to a metal with interesting industrial properties. The price of silver also tends to rise in times of inflation and a weaker US dollar and has a low correlation with the stock market. Thus, silver contributes to risk diversification in a traditional portfolio of equities and fixed income assets. The price of silver also tends to rise in times of market turmoil, which means that it acts as an effective protection for portfolios in times when risk aversion in the market is high.
Silver [Ag] is a precious metal with high resistance to corrosion and oxidation and has the best thermal and electrical conductivity of all metals, which makes it indispensable in our high-tech and green world. It also has antibacterial properties that make it useful in medicine, water purification and other consumer products. There are no spare stocks of silver today, which leads to a physical shortage and a potential price increase. Silver is often just a by-product for the largest mining companies, which can provide the conditions for a perfect location for focused silver mining companies.
To invest in silver is an opportunity to participate in an investment that provides interesting opportunities in a world transitioning to more sustainable future. Due to the precious metal´s unique properties, it will become indispensable for many industrial uses in the green technology space.
Why invest in Silver?
Silver is a unique metal as it is important for both industry and used as money. Silver is also the metal that conducts heat and electricity best, which makes it important for the green transition. A silver investment has historically proven an efficient way to protect a traditional portfolio of stocks and bonds in times of market distress. Silver also acts as an inflation hedge, thereby protecting portfolios from value depreciation in times of rising prices. A silver investment plan is useful for every long-term investor to consider in order to get the highest risk adjusted returns from a multi-asset portfolio.
Why invest in silver mining?
Silver and silver mining companies are assets that play an important role in an investment portfolio. Its low correlation with the broad stock market contributes to a higher risk-adjusted return in a portfolio that largely consists of equities and interest rates.
Investing in silver mining companies gives an investor a leveraged bet on the price of silver while at the same time benefiting from dividends paid by the mining companies.
How to invest in silver?
There are several ways to invest in silver:
- Physical silver: You can buy the physical raw material and store it at home, or in another safe place. More information about this further down.
- ETCs (Exchange Traded Commodities): By buying an ETC, you own physical silver, but you do not have to take care of the storage yourself.
- Derivatives: Investment products that follow the price of silver, but where you have a counterparty risk against the issuer of the product.
- Shares: The share price of the mining companies that extract silver is strongly linked to the spot price for silver. Mining company shares often move more than the price of the underlying asset because you also add a company risk. This means that the share goes up more when.the silver price goes up, and vice versa.
- Commodity Funds: There are different types of silver investment funds. When you invest in a fund, you pay a fee for an expert (fund manager) to select the underlying assets that provide exposure to gold. A fund may include any of the options listed above. There are two types of funds:
- Daily traded fund: Often actively managed, which means that an expert reviews the holdings and rebalances at regular intervals.
- Exchange Traded Fund: A basket of securities that follows an index and is traded as a stock.
Why invest in silver mining companies with AuAg Funds?
- AuAg Funds offers funds that focus on providing exposure to precious metals and elements in green technology. What they have in common is that these assets offer protection against monetary inflation and are necessary in the transition to a green economy – trends that are highly topical today.
AuAg Funds offers exposure to silver both via daily traded funds and an ETF. The AuAg Silver Bullet and the AuAg ESG Gold Mining UCITS ETF (ESGO)fund invest in silver mining companies. By investing in silver mines, the fund provides a leveraged silver investment. The fund finds silver mining companies to invest in through a rigourous investment process which also takes sustainability aspects into account.
More about investing in physical silver
ETCs For those who want to supplement their portfolio with a straight 1:1 exposure to silver, it is the cheapest/easiest to use the ETPs [ETCs] available to buy at, e.g. Avanza and Nordnet.
Make sure the products have allocated physical gold and no counterparty risk. An ETC is also constructed via an SPV whose assets are entirely separate from the issuer's assets. Examples of some products that meet these criteria are:
- Wisdomtree Physical Silver [VZLC]
Then there are also, among others, Xtrackers Physical Silver [XSIL], BlackRock /iShares Physical Silver [ISLN] and all American ETFs, but these are not available to Swedish retail customers at present. Compare current fees and spreads. Currency exchange fees and the platform's brokerage also charge the deposit.
Silver "in hand" If you want to build your own physical reserve, you have a few companies below that we have been in contact with:
- Sweden - Nordic Gold Trade
- Sweden - Liberty Silver
- Switzerland - Golden Switzerland
- Switzerland - Gold Switzerland