The Silver is investing more and more popular, as well as his cousin Gold. However, the two precious metals have very different characteristics. This is because investors are not going to buy silver for the same reasons they would buy gold. In this guide, we will take you step by step through how to open an account with one of the best online brokers to buy money quickly and easily.
We will also explain all the specifics of Silver. We will also analyze the historical evolution of the price of Silver . And we will also explain to you the factors that influence the price of Silver.
Buying silver: how to invest in silver easily?
To invest in silver in 2021 , the first step will obviously be to choose a broker. You will then have to follow an account opening procedure, deposit funds, and then use the trading platform to buy money. Here is the list of steps to follow:
All these steps will be explained in detail in the next sections.
Step 1 - Choose an online broker to invest in silver
There are a lot of online brokers, and their offerings are very diverse. It is therefore sometimes complicated for novices to choose a broker. Despite everything, a few stand out for the quality of their service and their market dominance.
This is particularly the case with the broker eToro , which offers a platform that is easy to learn and which is particularly appreciated by novice traders, whether trading in Silver or other markets. We will detail below all the strengths of this broker, and explain how to open an account.
eToro: The Best Broker to Buy Silver
Created in 2007, eToro is a broker with long experience, and which is undoubtedly currently one of the market leaders. The ease of use of the trading platform is often cited. Of course, security is also assured, with regulation in Europe.
Moreover, no presentation of eToro would be complete without noting that it is the undisputed leader in social trading. It is indeed possible on eToro to identify the best traders, and to automatically copy their positions. You will be able to find experienced traders who specialize in silver, and replicate their performance.
It is also important to note that the online broker eToro offers two options for investing in Silver, with CFDs, which allows you to take advantage of leverage, or with an ETF, the iShares Silver Trust.
Finally, regarding the costs, it should be noted that it is difficult to do better than eToro. Indeed, in the case of CFDs on Silver, no commission is charged (on the other hand, the spread must be taken into account). Regarding the Silver ETF, there is also no commission, but minimal management fees charged by the ETF issuer.
- Benefits of EToro
- Possibility of investing in Silver via CFD or ETF
- No commission for buying money
- Best CopyTrading Platform
- Account demo trading offered
- Easy to master platform
- Regulation in Europe
- Scholarship Application available
- Disadvantages of Etoro
- Only 1 ETF on the money offered
- No futures contracts on Silver
Step 2 - Open a trading account
After this presentation of eToro, let's get to the heart of the matter by explaining in detail how to open an account and buy Silver.
Complete the basic registration form
You will need to enter some basic information on this form such as:
During this step, you will also have to choose the username and password that you will use to identify yourself on the eToro trading interface.
Once you have completed the form and clicked on the 'create account' button, you will immediately be able to explore and test the eToro trading platform with a demo trading account. Credited with € 50,000 virtual, this account will allow you to learn how to use the eToro platform.
Good to know: You can also open your eToro account via the trading application . The procedure is exactly the same.
Step 3 - Verify the account
Subsequently, in order to be able to deposit funds and thus switch to real trading, you will need to verify your account.
It is a procedure that has two parts:
The 'Know Your Customer' (KYC) questionnaire, which will contain several questions about your investor profile and your investment expectations.
The sending proof of identity and residence.
Although this may seem restrictive, it is in fact reassuring. Indeed, all well-regulated brokers are legally obliged to follow this procedure when opening an account.
Once this step is complete, you will be able to fund your account.
To make your first deposit on the eToro trading site, click on ' Fund Deposits ' at the bottom left of the platform.
Select the amount to deposit, then choose the chosen payment method to use. You will also be asked for details of the payment method to use.
eToro requires a minimum amount of $ 200 to open a trading account.
Step 5 - Buy Money
Now that your account is funded, you can move on to buying cash . To do this, from the eToro platform, type 'Money' in the search field at the top.
This will show you the two options for buying money from eToro. These are Silver CFDs or the iShares Silver Trust ETF , which is an exchange traded fund that tracks the price of Silver. Take the example of a CFD purchase on silver.
Once on the eToro Silver CFD card , you will need to click on the 'trade' button to open the order window.
You will need to configure several settings on this window. First of all, the amount to invest. But also the leverage to be used, and also the stop-loss and the limit to be applied. Then click on the 'set order' button to validate your purchase order on Silver.
You can then follow in real time the evolution of your position and its gains and losses from the eToro trading interface.
Historical price, quotation and price of Silver
money has not always been an investment . People used money as real money. People used it in daily transactions, while gold was mostly owned and used by the wealthy. Some people call silver 'poor man's gold'. And since it was a monetary metal, its value has remained relatively stable. In this section, we will therefore analyze the silver course to try to draw lessons for the future.
Price of silver in the 1960s
Until the 1960s, the price of silver remained below $ 1 an ounce. This was one of the fundamental reasons the US government routinely minted silver coins. However, when the price of silver began to rise, the U.S. government withdrew silver from U.S. coins under the 1965 Coins Act .
After being demonetized, the price of silver increased. As the price rise intensified, it began to take on the characteristics of an investment.
Price of silver in the 1970s and 1980s
In early 1970, the price of silver was $ 1.80. In 1980, the price of silver peaked at $ 49.45 per ounce. This represents an incredible price increase of over 2,700% in a decade. But by 1982, the price of silver was falling below $ 5. It did manage to climb back to $ 15 in 1983, but then immediately began a downtrend, falling back to $ 5 as early as 1986.
Recent evolution of the price of silver
In the 90s, the price of silver was mainly marked by stability, between 3.5 $ and 7 $ approximately. the price of silver started the 2000s at around $ 5. The 2000s were then marked by a powerful surge in silver, until it came close to $ 50 in 2011 .
Its value has thus increased tenfold in a decade. But as with every violent silver rally, there followed a strong downtrend. Thus, silver had fallen below $ 15 in 2016. A consolidation of between $ 15 and $ 20 approximately then continued until 2020. The silver price, faced with the pandemic, rose sharply and continued to rise at the end of the year. early 2021, hitting the key $ 30 threshold.
Invest in Gold or Silver?
Traditionally, gold has been viewed as the most common investment metal, possibly because it is still viewed as a monetary asset. After all, the world's major central banks all hold significant gold reserves.
In recent decades, silver has become more of an industrial than a monetary metal . The gold / silver ratio has traditionally been between 50: 1 and 80: 1, but it dropped to almost 115: 1 in early 2020.
We can therefore consider that historically, Silver is currently inexpensive compared to Gold.
The different ways to invest in money
There are many ways to invest in silver. We will go through them below.
Trading CFDs on silver
The easiest way to invest in Silver is probably to buy CFDs on silver, for example with the broker eToro. CFDs exactly replicate the price changes of an underlying asset, while allowing leverage . This increases performance (but also the risk of loss). Finally, CFDs also allow you to bet down on Silver.
Buy ETFs on silver
For traders, exchange-traded funds that own silver themselves offer an effective substitute for direct possession of bullion. Each share of an ETF in silver corresponds to a certain theoretical amount of money, and the prices of ETF shares generally follow the prices of silver quite closely .
Like any mutual fund or ETF, money ETFs have fees that are charged to shareholders, but they tend to be quite small. The iShares Silver ETF, for example, charges an annual expense ratio of 0.5%. It is available from the online broker eToro.
Some investors don't like to invest in silver ETFs because they don't give you actual possession of the money. In addition, ETF stocks can trade at a premium or a discount to the actual value of money, resulting in some discrepancies depending on when you trade the stocks. However, to make trading easier, ETF shares allow you to participate in the general movements of the silver market.
Buy physical money
The clearest way to invest in silver is to go and buy the physical metal. Silver bullion is available in both coins and bars, and most coin and precious metal dealers offer silver bars in different sizes and formats. In general, you can find coins and bars as small as an ounce , or large silver bars up to 1000 ounces.
The advantage of owning silver bullion is that you can directly follow the market price of silver. However, there are a number of downsides. First, you will usually pay a small premium to buy silver from traders, and you will often have to accept a small discount when you decide to sell it back to your trader.
If you are going to hold your money for a long time, these costs are not huge, but for those who want to trade frequently, they are usually too high to bear multiple times in a row. In addition, the storage of money involves logistical difficulties and additional costs.
Buy shares of silver miners
Another way to invest in silver in the stock market is to buy shares of silver mining companies. The value of silver mining stocks generally increases when the price of silver goes up and decreases when silver performs poorly.
Often times, for a given increase in the price of silver bullion, mining stocks will increase several times that percentage amount. However, the challenge with silver miners is that you also have to deal with the risks of operating a mine.
Sometimes an accident in a mine or a poor result in exploring a potential property for silver will cause a particular company to perform poorly, even though the silver market is generally strong. It is difficult to hedge against this company-specific risk, although owning baskets of mining stocks can offer some protection.
What is the right investment in silver for you?
The best investment in silver depends on your needs. If all you want is perfect exposure to silver as a commodity, then physical bullion or silver ETFs work well, with the choice depending on your willingness to hold the real metal for a while. long time or negotiate it.
For those looking for a return, mining stocks might be suitable.
Investing in silver is not for everyone. But if you think the market is ripe for earnings, then looking at which companies have the most exposure to silver can give you the greatest benefits if your beliefs turn out to be correct.
Bottom Line: The two best ways to buy money therefore seem to be CFDs, for short-term traders, or ETFs, for investors who have a more long-term view. The online broker eToro offers both of these options with no brokerage fees.
Advantages and disadvantages of investing in silver
In this sections, we will detail the strengths and weaknesses of investing in silver.
Benefits of investing in silver
Let's start by detailing the benefits.
Coverage against economic instability
As we mentioned before, the price of silver has been relatively stable for most of history. But like the price of gold, the price of silver tends to rise during times of economic or financial instability . This happened in the 1970s and during the financial collapse of 2008. And also in the face of the covid-19 pandemic of 2020.
Hedging against falling stocks
Money is very speculative and usually only rises when traditional investments, like stocks and bonds, are down. This is why it should be viewed as an alternative investment (or speculation) to offset losses of traditional assets in times of financial turmoil.
Interesting daily volatility
Finally, silver displays a volatility that offers many opportunities in the short term . This is the case in scalping trading as well as in day-trading or swing trading. Traders appreciate that silver offers up and down trading opportunities every day.
The risks of investing in silver
Now let's turn to the risks of buying silver.
The main risk associated with investing in silver is price instability. As we have seen, the price of silver can rise dramatically, but it can also be reversed just as quickly.
If you buy silver during a steep rise in price - which unfortunately the average investor does - you may be preparing for a steep drop.
Influence of industrial demand
Another risk factor is that, unlike gold, the price of silver is heavily influenced by industrial demand. The price of silver can be low if industrial demand is suppressed by the same factors that cause instability in financial markets.
Sometimes high fees
If you choose to invest in silver coins or bars, transaction fees can be high - 5-10% is not uncommon. If you pay this both on the buy and on the sell side, the price will have to increase dramatically just for you to recoup your transaction costs. Note, however, that this problem does not arise with eToro. Indeed, the two options of the broker to invest in money, CFDs and ETFs, are not subject to any commission!
The 9 factors that determine the price of silver
Despite a history of volatility, since 2002 the value of silver has risen more than that of any other precious metal, and experts expect its price to continue to rise.
Unlike gold, platinum and other precious metals, industrial demand accounts for more than half of the total demand for silver. Manufacturers use silver in many high-tech devices such as cell phones and flat panel televisions, and its unique properties mean that other metals cannot be used in its place .
The small number of active silver mines in the world means that the supply cannot be increased significantly in response to demand. As demand increases while supply remains static, experts predict that the price of silver will continue to rise.
The electronics industry alone does not represent all of the demand for silver. This metal is used in many high-tech medical devices, and researchers are increasingly finding applications for silver in drugs due to the metal's biocidal properties.
As an antibacterial and antimicrobial metal, hospitals and other medical institutions are exploring the use of silver as a disinfectant. These special properties of silver continue to stimulate demand for this metal and influence its price.
The price of gold is largely determined by investment demand, as investors view it as a hedge against inflation. Due to the volatility of the silver market, it was previously used more for a quick return than as an investment to preserve wealth.
However, the industry's need for silver at all costs has made it more attractive as a long-term investment. The decline in the amount of silver has led investors to store the precious metal, especially as many of them are trying to diversify their portfolios by holding physical assets.
The political climate
When political events cause uncertainty and economic instability on a global scale, investors turn to precious metals to protect their wealth from the volatility of global financial markets. In the case of silver in particular, prices could be affected by a supply constriction if the natural resources of the countries that mine the metal are nationalized.
In addition to these factors, increases in the gross domestic product of industrialized countries lead to a growing demand for consumer electronics and other manufactured products that use silver in their production, resulting in a corresponding increase in demand for this metal, raising its price.
Yields are declining from year to year, putting upward pressure on operating costs. The average yield of the first six silver mines has fallen by 38% since 2005 . The global average cost of production, expressed in US dollars, for primary mines was estimated at $ 7.74 / oz in 2014, largely due to the depreciation of producers' currencies against the dollar.
However, this does not cover the entire cost of producing the silver. Part of the problem with defining the viability of silver mining is that there is no one-sided measure to account for the true cost of producing silver, a problem gold miners are also facing. faced since the majority of the metal is mined as a by-product with other metals.
Evolution of the US dollar
Like most commodities in the international market, silver is valued in US dollars. In principle, a decline in the value of the US dollar against the currency of the purchaser of a commodity means that the commodity will have to spend less of its own currency to purchase a given amount of that commodity. As the product becomes cheaper, the demand for that product increases, causing the price to rise and vice versa.
As with gold, but to a lesser extent, the value of silver, a commodity fiat currency, will also be largely determined by its attractiveness to other fiat currencies - paper fiat currencies issued by central banks.
A weaker dollar can also deter producers from increasing production. For example, a depreciation of the US dollar against the Mexican peso can reduce the profit margins of a silver miner in Mexico. All of the miner's income will be collected in US dollars, which will now buy fewer pesos, but a certain proportion of the costs will be denominated in pesos and will remain constant (at least in the short term). Therefore, the prospect of a lower profit margin is an incentive to reduce the silver supply (and indirectly for mines where silver is mined as a by-product).
Request for jewelry and silverware
Silver has similar working qualities to gold, enjoys greater reflectivity, and can achieve the brightest polish of any metal. Pure silver does not tarnish easily, but to make it durable for jewelry, it is often alloyed with small amounts of copper. It is also widely used with base metals in gold alloys.
In addition to being a key component of Chinese industrial demand, the money is also used as collateral by cash-strapped businesses that cannot obtain credit using traditional banking channels. The money has also reportedly been stored by Chinese authorities seeking to establish a reserve to secure the future of China's solar energy industry.
Money: speculation or investment?
Along with these factors, it is important that you understand the difference between speculation and investing, as well as short and long term investing. The very nature of markets is that they react quickly to short-term factors like those mentioned above. Speculators and end users, such as jewelry makers, find it important to watch these rapid changes.
However, most long-term investors are more interested in evaluating trends than these factors indicate. The key to this long-term view of investing in silver is to take advantage of the protection it offers, take advantage of bargains when possible, and be assured that the value of silver holdings will increase significantly. in the years to come.
Remember: Many factors can influence the price of gold. However, studying these various factors is especially important for long-term investors. If you want to trade silver for the short term, technical analysis will probably be sufficient to make your trading decisions.
2021 Forecast for Silver
Expert forecasts for money
We have compiled silver price forecasts from a number of precious metals analysts and consultants.
The table below shows silver price forecasts from various commodity analysts and banks for 2021.
Most industry analysts predict the price of silver will rise this year, although five predict it will remain below $ 30.
The average of all these analysts is in the low range of 32 dollars .
But as you can see, this range is quite wide. And this is an important factor to take into account when predicting where the price might go ... silver can be very volatile at times, due to the small size of its market and the fact that it doesn't take a lot of money. cash in or out to have a big impact on the price. Thus, fluctuations - both upward and downward - can be larger than those of most other assets, including gold. This fact should be taken into account when considering how much the price can go up or down.
Technical Forecasts for Silver
Since its marked low towards $ 1 per ounce in the face of the covid-19 pandemic in March 2020, Silver has been on an uptrend. We can indeed draw on the daily chart an uptrend line, as seen on the chart above.
As this line is currently located around $ 25, this means that the chart trend will immediately remain positive as long as the silver does not fall below this threshold. If there is a breakout below $ 25, another strong support is found at $ 22. Below this threshold, we can consider that the current upward trend has turned downward.
On the upside, we can spot significant resistance around $ 30. A break above this threshold could allow the psychological threshold of $ 40 to be targeted fairly quickly .
Conclusion: Should we buy silver in 2021?
The particular economic context we are facing in 2021 should definitely stimulate the price of silver, as you will understand by discovering the criteria that influence money. In addition, we have observed that several renowned experts are of the same opinion, with enthusiastic forecasts for 2021 and beyond.
So silver does appear to be a good investment for 2021 . But it is also a great trading tool. Indeed, the large daily variations of money offer traders trading opportunities every day.
In addition, with brokers such as eToro that allow trading via CFDs, you will be able to buy money with leverage, and even bet on downward movements of money.
Let's end this guide by answering the most frequently asked questions about silver trading and investing.
Disclaimer: Every trading operation has a risk. We cannot offer any guarantee of profit. All content on our website is for informational purposes only and does not constitute a recommendation to buy or sell. This applies to assets as well as products, services and other investments. The opinions communicated on this page do not constitute investment advice and independent financial advice should be sought where possible.