Most people are aware of the practical uses of silver such as in jewellery, cookware and numerous industrial products, but like oil and gold, silver is an actively traded commodity which investors can use to speculate with. Like investing in any commodity or stock, investing in silver can be risky and your investment may go up or down. But silver is often seen as an essential element in any balanced portfolio and maybe more so now given recent inflationary pressures. Silver and gold are often looked at as safe havens and can be use as an effective hedge against inflation.

Trading silver contracts:
Its important to understand that commodity contracts are traded differently than those in the stock market. One silver contract gives the investor control over 5,000 troy ounces of the metal and the price of the traded contract moves in intervals of 5 cents, or $25 per contract.
There are mini accounts available too where the investor controls just 1,000 troy meaning a 1 cent movement in the ounce price equates to a $1 profit or loss.

Trade a silver ETF
An easier way to make an investment in silver, again without having to take physical delivery, is to trade an Exchange Traded Fund (ETF). ETF’s are actively traded on the markets and are bought much in the same way as you would buy a stock or share in a company. The price of an ETF follows the price of silver making it an easy and cost effective way to speculate on the silver market.

Through a spread betting account
You can also take a position in silver by using a spread betting firm. Spread betting firms effectively mimic the price of silver and allow you to ‘place a bet’ on whether you think the price of silver will go up or down. It also has the advantage of reduced taxation in some countries such as the UK, as any profits made from a bet are tax free. Spread betting is a leveraged investment meaning you only need to pay a small deposit of the overall bet. However, should the markets go against your bet, you would need to deposit additional funds in order to cover the margin payment and maintain the deposit.