Ways to Invest in Silver

There are numerous reasons to invest in silver. Silver, as well as gold, help to safeguard wealth against a faltering dollar and a flagging economy. Investing in silver is also wise because of the high demand for silver for industrial and other uses which helps steadily drive up the value of silver. The fact is, the demand for silver has been rising while the supply has been decreasing for some time. This can only mean that the value of silver will continue to increase as time goes on and that those who invest in it now will see their wealth continue to grow as well.

Investing in silver mining stock has been for some people a lucrative, rewarding way to reap the benefits of investing in silver without having to find a reliable dealer. Many others have used the tried true method of buying physical bullion and storing it. Let's explore the more non-traditional method of silver stock first.

Types of Mining Stock

There are three main types of silver mining businesses that may offer stock on the open market: Silver specific mining companies, conglomerates, and junior exploration companies. Silver specific mining companies are those that deal directly with the production of silver. Stock prices for these companies are directly connected to the current price of silver.

Unlike silver specific companies, conglomerates do not deal strictly in silver. They may deal with other metals such as zinc, copper, and gold that produce silver as a by-product of mining and production. Because these businesses deal primarily in other areas, their stock prices are not tied directly to the price of silver. Nevertheless, these conglomerates can generate good returns and dividends. Conglomerates, because of the diverse nature of their production, are generally stable, low-risk investments.

At the other end of the spectrum lie junior exploration companies; as high-risk as conglomerates are low-risk. Junior exploration companies seek out proven silver reserves which they either cultivate or, more commonly, sell out to larger conglomerates. While it usually does not cost much to buy in to a junior exploration company, the payoff only comes if they get a solid hit (i.e. find a site with a lot of silver left unmined). A common strategy with this type of investment is to spread out investment capital between as many companies as possible to improve the chances of a significant hit. For those willing to take a risk in a purely speculative venture, this can be a potentially profitable means of investing in silver.

Selecting a Mining Company

As with any other investment, the stock is only as good as the company. It pays to research a silver mining company before you invest. A good silver mining company will be working with proven reserves and should already be generating a solid cash flow and good returns on assets and equity. The company should have a strong short-term production forecast and a balance sheet. The company should also be free of any political encumbrances, either external or internal (i.e. labor strikes, environmental litigation, etc.). In short, you should put the same care and consideration into selecting a mining company that you would into any other business you might consider investing in.

As you can see mining stock investments can be rewarding, but there is a tremendous amount of research involved. This is why the number one method for silver investing is the direct ownership of physical bullion. It can be stored easily for safekeeping either in your home or a third-party depository. Cornerstone Asset Metals is a private bullion dealer that safely guides investors in and out of the silver market through the direct ownership of silver bullion. Consider reviewing their website at the links below.