How to buy Silver?

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Silver ETF

The most famous Silver ETF is the iShares Silver Trust (SLV) which is listed in the American Stock Exchange. Silver ETFs are supposed to pool the money from investors and buy an equivalent amount of silver to back the fund. Silver ETF is one of the easiest method to buy silver since the ETF is traded like stocks in the exchange. Currently, we have no silver ETFs listed in SGX and the closest is the Lyxor Commodities ETF, but the composition is very small compared to the entire fund. Thus, if you want to buy SLV, you would need a shares account that allows you to access to the US stock market. There have been questions on whether the Silver ETF has genuine backing of physical silver in their holdings, and it is important as an investor to find out this important criteria. If an ETF does not have a real silver backing, and when inflation hits, the ETF cannot follow up with the rise in the price of silver. In this case, your “silver investment” provides no hedging.

Advantages:

  • Buy and sell as long as the exchange is open
  • Do not need to find a storage
  • Low cost

Disadvantage:

  • May not be backed by physical silver

UOB Silver Savings Account

UOB has long been offering a Silver Account. As their website says, “You can buy and sell unallocated silver – through a passbook – at prevailing market prices in multiples of 10 ounces of silver each time, limited to a maximum of 500 ounces per account on Saturdays.” And for the cost, “An annual administrative fee (in ounces of silver) as low as 0.2 ounce per month or 0.375% p.a. on the highest balance per month, whichever is higher. The fee is subjected to GST, which will be deducted from your account in ounces of silver also.” The only question is that UOB did not state where the Silver would be stored, and would there be additional charges for the storage. In addition, are these Silver Bars or coins?

Warning: The keyword is “unallocated” just in case you miss it. Unallocated silver is the excess silver supply in the market. Selling unallocated silver helps the suppliers to clear their stock as well as the banks to profit from it. It is interesting to find out from an article from bullionvault that banks actually “owes” you the gold (the game of unallocated gold and silver is the same). It is the same as a cash savings account. You deposit a sum of money in the bank and the bank uses a large percentage of this deposit to do whatever she wants. She pays you paltry interest in exchange for using your money to earn money. It is the same as a gold deposit account. The banks buy the silver for you but will use it for her own purposes to profit from it. You may find that one day you are not able to get your money or the real silver out of it.

*It was clarified by Gregor (reader of this blog) that 1) UOB does not have unallocated silver storage. Unallocated implies that there is some silver to back the sold paper silver. Uob holds no silver at all so it is purely a paper game which most likely is haedged though a future contract. 2) Uob does not pay interest. They demand a “maintenance” fee for silver they don’t have.

Advantages:

  • Convenient way to own silver (though not as liquid as an ETF)
  • Own physical silver

Disadvantage:

  • Not sure what kind of [Silver (bars or coins?)
  • Not sure about the storage
  • Risk of not getting the real silver

Silver Futures

A method to buy silver that requires more sophisticated investment knowledge is futures. Futures is a form of derivatives and as all derivatives, they are complicated and if you do not understand or have not traded futures before, it is advisable to stay away. Those who engaged in Silver futures are more speculative in nature as all futures have expiry dates, and usually traders have no intention to exercise the contracts and receive the delivery of the physical silver. They just want to profit from the change in price over the period of the contract. To buy Silver futures, you would need to open a futures account with the local brokers. Futures accounts would require a higher capital outlay than a stock account as each contract size is as big as tens to hundreds of thousand dollars. They are highly leveraged which means your losses and profits are amplified.

Advantages:

  • Big transaction window (stay open longer than stock exchange)
  • Leverage

Disadvantages:

  • Requires more product knowledge
  • Leverage

Buy and store Silver on your own

The most inconvenient method to own silver is to buy it yourself as you have to administer the delivery process and finding a place to store the physical silver. There are a few local start-ups that facilitate the sale and delivery of physical silver. Take a look at Silver Bullion Singapore. BigFatPurse is not affiliated to or has any interest in this company, and not in a way recommending her products. Do your research and check the validity of the physical silver is of utmost importance.

Advantages:

  • See the real physical silver in your hands

Disadvantages:

  • Risk of scams
  • Not liquid
  • Buy and sell silver by yourself
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Co-Founder. Believer of the Factor-based Investing approach. Running a Multi-Factor Portfolio that taps on the Value, Size, Profitability and Momentum Factors. Quant at heart. Believe the financial industry can treat their customers better. Wants to change the world.
  • Hi,

    You can buy into companies that mine silver too 🙂 Since no company mine exclusively silver, you’ll get a good exposure into other metals (and perhaps commodities as well). I suppose if silver goes up, mining companies should go up too? 🙂

  • […] UOB has long been offering a Silver Account. As their website says, “You can buy and sell unallocated silver – through a passbook – at prevailing market prices in multiples of 10 ounces of silver each time, limited to a maximum of 500 ounces per account on Saturdays.” And for the cost, “An annual administrative fee (in ounces of silver) as low as 0.2 ounce per month or 0.375% p.a. on the highest balance per month, whichever is higher. The fee is subjected to GST, which will be deducted from your account in ounces of silver also.” The only question is that UOB did not state where the Silver would be stored, and would there be additional charges for the storage. In addition, are these Silver Bars or coins? Read more… […]

  • you can buy silver contract in the cash market, it too has its carry cost but you need not worry about expiry date.

    LP is right if you intent to invest in silver, buy the mining.

    however, the best way to trade is to arbitrate between gold and silver.

  • Thanks for the suggestions. I should add it to the post eventually.

    Coconut, what do you mean by buying silver in the cash market?

  • Just 2 clarifications.

    1) UOB does not have unallocated silver storage. Unallocated implies that there is some silver to back the sold paper silver. Uob holds no silver at all so it is purely a paper game which most likely is haedged though a future contract.

    2) Uob does not pay interest. They demand a “maintenance” fee for silver they don’t have.

    might as well go with a future account if price exposure and trading is wanted or physical bullion if a long term insurance is wanted.

  • oh… about the last post and how I know. I went to UOB and they told me at the counter that they do not have a single ounce of physical silver.
    If interested you can ask them directly.

  • Thanks Gregor! This is indeed an interesting discovery that UOB does not store the silver, and yet charges maintenance fee.

  • You can sell to the same bank that you bought the physical silver from (you should have a certificate). Or you can sell to pawnshops.

  • Spot gold/silver can be bought from CFD brokers if they offer commodities contracts. Off hand, I remember MFGlobal and IGmarkets.

  • you can contact me, I own some physical silver. Don’t buy contract or paper gold or silver, you will not help to increase demand so the price rise slowly. Also if the bank you bought from goes into trouble, your paper gold or silver will be gone as well, any government bank can close down, look at indonesia and greece. Feel free to email me at chephrenchua@gmail.com I am just starting out and maybe we can gather our capital and push for better price from supplier.

  • Good analysis on different approach to buy silver. I believe the easiest way is to buy through UOB Silver Savings Account but unfortunately it is not available in my country Malaysia and foreigners are not allow to buy from UOB Silver Savings Account.

  • I always wanted to buy silver but don’t know how. Big names like Robert Kiyosaki and many other financial advisors are recommending Silver, they say that silvers are better investment than gold. Could anyone advise me on how to purchase silver without getting con whatsoever. Is it better to have physical silver or paper? Thank you

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