There are multiple strategies available for investing in gold and silver: purchasing physical bullion or investing through ETFs that track precious metal prices are two options available to investors.
Among precious metals exchange-traded funds (ETFs), SLV is one of the biggest. Investors can trade shares of this ETF on stock markets just like stocks.
iShares Silver Trust
iShares Silver Trust (SLV) provides investors with a cost-efficient and straightforward means of investing in silver markets. Each share represents an undivided fractional beneficial interest in its net assets – composed mostly of silver held by its custodian, less expenses and liabilities of the trust – traded on New York Stock Exchange Arca under symbol SLV. Baskets may only be bought and sold as multiples of 50,000 shares at any one time in exchange for physical silver at current spot price.
Physical metals can be difficult to purchase and sell. Finding someone willing to accept your bars or bullion can be hard, while storage fees eat into your investment and transport costs can add up quickly. That’s why investing in ETFs like SLV makes sense for many investors; hedge fund billionaire Ray Dalio even recommends having some exposure to precious metals as part of an all-weather portfolio composed of stocks, bonds and real estate investments.
iShares Physical Precious Metals Basket Shares
One of the oldest ways to invest in precious metals is purchasing physical coins and bars. This approach can be both cost-effective and convenient; you can easily store it away.
Although buying physical metal can be cumbersome and impractical for investors, exchange-traded fund providers have come up with innovative ways of accessing these commodities – one such product being the iShares Physical Precious Metals Basket Shares ETF (GLTR), which tracks spot prices of gold, silver, platinum and palladium while lessening trust expenses.
This basket-type product stands out from traditional silver ETFs by holdings that include precious metal miner stocks such as Wheaton Precious Metals (WPM), which operates directly, while others hold royalty or streaming interests in mining operations. Therefore, it makes an excellent investment if you seek exposure to both mining companies and precious metals.
Market Vectors Gold Miners ETF
If you want to invest in gold miners without owning physical bullion, GDX may be your ideal investment vehicle. This exchange-traded fund (ETF) holds shares from major gold mining firms that track an index by market capitalization weighted valuation – with major firms holding larger positions than smaller mining operations in this popular fund.
This fund takes an international approach and is not restricted to companies mining gold and silver, nor those using derivatives to reduce returns for investors.
Sprott’s junior gold miners fund can offer more upside than larger rivals and is an attractive investment choice for investors who expect the price of gold to increase, as smaller mining companies could grow production faster than their larger peers. However, investors should bear in mind that risks in this space tend to be greater than when using large-cap ETFs; movements tend to fluctuate more widely among funds in this space, creating opportunities during boom periods but more suffering during bust periods.
Market Vectors Silver Miners ETF
Precious metals-related exchange traded funds saw gains Thursday as higher Treasury yields and a weaker dollar spurred demand for hard assets such as silver mining funds like Market Vectors Silver Miners ETF (NYSEArca: SILJ), PureFunds ISE Junior Gold Miners ETF (NYSEArca: GLDJ) and VanEck Vectors Gold Miners ETF (NYSEArca: VGMN).
GDXJ gives investors access to small-cap mining companies seeking to expand production. While smaller miners could offer higher returns than their larger rivals, there is also greater risk associated with development costs that might require costly fixes in their development process. Therefore, this investment must only be undertaken by experienced traders willing to accept this level of risk.
