How to Buy Silver Stocks
Reduce your portfolio risk., Know that your investment will be safely guarded., Understand silver's volatility., Some stocks may not track the price of silver., Purchase stock from conglomerates., Invest in junior exploration companies., Invest in...
Step-by-Step Guide
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Step 1: Reduce your portfolio risk.
Research suggests that precious metals have a weak, negative correlation to equities markets.
This means that when regular stock prices decline, silver, and by extension your silver stocks, will either increase in value, remain unaffected, or at least not lose as much value as the remainder of your portfolio., Since a trust holds the actual commodity, you don’t have to worry about storing silver or keeping it safe., Be aware that when investors are bullish on silver stocks, this pushes prices higher.
Alternatively, when silver prices decline or silver investing declines, stock prices will fall more rapidly.
Silver has a history of volatility, with prices declining annually about half of the time over the last 25 years.
It's best to handle silver stocks like you would any other high-risk investment: set a price floor (the lowest price you're willing to sell at) and stick to it.
If the market price gets down that low, immediately sell your position., Even if the value of silver rises significantly, it isn't guaranteed that your silver-related security will.
The share price of a mining company or silver ETF may move relatively independently of the actual price of silver.
If you're entering the market to make a bet on the price of silver directly, it's probably better to invest directly in silver bullion. , Conglomerates produce other minerals, such as gold and zinc, in addition to producing silver.
The prices of conglomerate stock do not move parallel to prices for silver, so they are not a good way to profit from rising silver prices.
However, they do provide a less volatile risk profile.
Before buying, consider the fact that stock prices for conglomerates tend to be high., These companies typically bet their capital on finding proven reserves of silver.
Exploration companies are truly speculative and have high risk-return volatility.
Because of this, you should purchase shares of many different small companies to diversity your portfolio, decrease risk, and increase your chances for picking a winning stock.
These stocks are generally cheap and very risky.
However, a successful exploration company's stock can experience sudden, massive jumps in value., These companies produce silver directly, and their share prices often correlate directly with silver market prices.
Before buying one of these stocks, you should:
Look for strong financial statements.
A company should have good cash flow, strong return on equity and assets, and at least a 2:1 ratio of current assets to current liabilities.
Check for a strong management team.
This will be evident in a company with a history of strong earnings.
Check for a good production forecast and proven reserves.
Beware of risks such as political threats to production, impending environmental litigation or potential labor strikes., These allow you to invest in a basket of silver mining companies and commodities, which gives you access to a wide range of high-quality producers and opportunities.
Choose ETFs that invest in companies holding silver bullion.
While direct investment in the commodities market can be quite volatile, a silver ETF will smooth out volatility a bit even while tracking market prices closely.
Alternatively, choose ETFs that invest in silver futures.
Like an ETF investing in bullion, ETFs that invest in futures will closely track the silver market., Full-service brokers offer a wide variety of products as well as research and investment advice.
However, they also tend to charge higher fees for a higher level of service.
Full-service brokers are paid on commission, meaning that they are paid according to how often you trade.
A full-service brokerage can be valuable if you need financial advice or have little investing experience.
Make sure your full-service broker has experience trading silver and commodities., These brokerages offer no investment advice.
Their job is simply to execute your trades.
These brokerages offer fewer products and charge lower fees than full-service brokerages.
Discount brokers receive a fixed salary for executing trades instead of being compensated on commission.
A discount brokerage is suitable if you have some investing experience or are comfortable educating yourself., You will have 24/7 access to your account and can manage your own transactions online.
The downside is you will have to monitor the markets yourself to make trades at certain prices., Once you've chosen a broker to use and a stock to purchase, place a buy order with the specified number of shares and your order instructions.
Order instructions can include the time you want the shares bought or the price you want them bought at.
Buying “at market” means buying silver stocks at the prevailing market price, whereas buying “at limit” means buying silver stocks only at or below a certain pre-selected price., A key part of investing in stocks is diversifying your holdings to protect yourself against negative market fluctuations.
You're already doing so by adding silver stocks to your portfolio, but you can diversify further by investing in different types of silver stocks.
This can mean investing in both silver mining companies and conglomerates, buying stock shares and ETFs, or buying silver stock shares in companies in different geographical regions. -
Step 2: Know that your investment will be safely guarded.
-
Step 3: Understand silver's volatility.
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Step 4: Some stocks may not track the price of silver.
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Step 5: Purchase stock from conglomerates.
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Step 6: Invest in junior exploration companies.
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Step 7: Invest in silver mining companies.
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Step 8: Invest in silver mutual funds and ETFs.
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Step 9: Talk to a full-service brokerage.
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Step 10: Investigate discount brokerages.
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Step 11: Manage your own online brokerage account.
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Step 12: Place your order.
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Step 13: Diversify your portfolio.
Detailed Guide
Research suggests that precious metals have a weak, negative correlation to equities markets.
This means that when regular stock prices decline, silver, and by extension your silver stocks, will either increase in value, remain unaffected, or at least not lose as much value as the remainder of your portfolio., Since a trust holds the actual commodity, you don’t have to worry about storing silver or keeping it safe., Be aware that when investors are bullish on silver stocks, this pushes prices higher.
Alternatively, when silver prices decline or silver investing declines, stock prices will fall more rapidly.
Silver has a history of volatility, with prices declining annually about half of the time over the last 25 years.
It's best to handle silver stocks like you would any other high-risk investment: set a price floor (the lowest price you're willing to sell at) and stick to it.
If the market price gets down that low, immediately sell your position., Even if the value of silver rises significantly, it isn't guaranteed that your silver-related security will.
The share price of a mining company or silver ETF may move relatively independently of the actual price of silver.
If you're entering the market to make a bet on the price of silver directly, it's probably better to invest directly in silver bullion. , Conglomerates produce other minerals, such as gold and zinc, in addition to producing silver.
The prices of conglomerate stock do not move parallel to prices for silver, so they are not a good way to profit from rising silver prices.
However, they do provide a less volatile risk profile.
Before buying, consider the fact that stock prices for conglomerates tend to be high., These companies typically bet their capital on finding proven reserves of silver.
Exploration companies are truly speculative and have high risk-return volatility.
Because of this, you should purchase shares of many different small companies to diversity your portfolio, decrease risk, and increase your chances for picking a winning stock.
These stocks are generally cheap and very risky.
However, a successful exploration company's stock can experience sudden, massive jumps in value., These companies produce silver directly, and their share prices often correlate directly with silver market prices.
Before buying one of these stocks, you should:
Look for strong financial statements.
A company should have good cash flow, strong return on equity and assets, and at least a 2:1 ratio of current assets to current liabilities.
Check for a strong management team.
This will be evident in a company with a history of strong earnings.
Check for a good production forecast and proven reserves.
Beware of risks such as political threats to production, impending environmental litigation or potential labor strikes., These allow you to invest in a basket of silver mining companies and commodities, which gives you access to a wide range of high-quality producers and opportunities.
Choose ETFs that invest in companies holding silver bullion.
While direct investment in the commodities market can be quite volatile, a silver ETF will smooth out volatility a bit even while tracking market prices closely.
Alternatively, choose ETFs that invest in silver futures.
Like an ETF investing in bullion, ETFs that invest in futures will closely track the silver market., Full-service brokers offer a wide variety of products as well as research and investment advice.
However, they also tend to charge higher fees for a higher level of service.
Full-service brokers are paid on commission, meaning that they are paid according to how often you trade.
A full-service brokerage can be valuable if you need financial advice or have little investing experience.
Make sure your full-service broker has experience trading silver and commodities., These brokerages offer no investment advice.
Their job is simply to execute your trades.
These brokerages offer fewer products and charge lower fees than full-service brokerages.
Discount brokers receive a fixed salary for executing trades instead of being compensated on commission.
A discount brokerage is suitable if you have some investing experience or are comfortable educating yourself., You will have 24/7 access to your account and can manage your own transactions online.
The downside is you will have to monitor the markets yourself to make trades at certain prices., Once you've chosen a broker to use and a stock to purchase, place a buy order with the specified number of shares and your order instructions.
Order instructions can include the time you want the shares bought or the price you want them bought at.
Buying “at market” means buying silver stocks at the prevailing market price, whereas buying “at limit” means buying silver stocks only at or below a certain pre-selected price., A key part of investing in stocks is diversifying your holdings to protect yourself against negative market fluctuations.
You're already doing so by adding silver stocks to your portfolio, but you can diversify further by investing in different types of silver stocks.
This can mean investing in both silver mining companies and conglomerates, buying stock shares and ETFs, or buying silver stock shares in companies in different geographical regions.
About the Author
Sharon Scott
Sharon Scott specializes in lifestyle and practical guides and has been creating helpful content for over 3 years. Sharon is committed to helping readers learn new skills and improve their lives.
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