The Cheapest Places to Buy Silver in Canada

In challenged macroeconomic circumstances, investors often seek the use of precious metals such as silver and gold as downside protection measures. By offering tangible value, these precious metals are considered strong alternatives to conventional equity and fixed income investments where value can fluctuate significantly based on market sentiment. 

In particular, silver is considered a good defensive measure. A notable example of this investor philosophy played out in late March and April of 2023. Post the collapse of the Silicon Valley Bank, markets were sent into a panic as investors worried about the long-term stability of the global financial system. During this period, silver prices rose rapidly as investors sought out ‘safe haven’ investments to park their money in and weather the volatility. 

Physical silver as an investment

Similar to gold, silver also has an inverse relationship with the dollar. When the value of the dollar appreciates, silver prices tend to fall. Weakness in the dollar causes silver prices to rise. 

A healthy economy will have moderate levels of inflation each year. However, inflation erodes the value of currencies over time. As such, silver is an effective hedge against inflation as it is generally seen as a reliable store of value. Over long periods of time, silver prices have remained resilient despite the dollar losing buying power each year due to inflation. There are a few reasons for this characteristic.

The most important factor is that silver has an inherent intrinsic value as a precious metal and as a component in industrial processes and products including automobile production, silver oxide batteries, solar panels, and medical devices. That means that even through periods of economic recession or uncertainty, silver as a commodity remains valuable due to its consistent demand as a raw material.

Silver is also considered a relatively liquid asset. Compared to other tangible assets like real estate, silver can be converted to cash easily through a sale. That makes it an ideal choice for an investor that is looking to hedge against inflation without tying up their funds in a non-liquid investment.

In Canada, there are a few ways that you can buy silver, as presented below.

1. Buy physical silver from Canadian banks

One of the easiest ways to buy silver is to buy physical quantities. In Canada, the major banks are the primary retailers of silver bullion. Similar to gold, silver purchases are exempt from GST and HST.

At TD Bank, you have the option of buying silver either as silver coins or silver bars and rounds. This silver can be purchased at a TD branch or online. If the purchase is made online, the maximum daily purchase within a 24-hour period is $2,999.99 for non-TD customers and $9,999.99 for TD customers. Alternatively, silver can also be purchased at TD Foreign Exchange Centers which have a selection of silver coins and bars available onsite.

CIBC also offers similar capabilities for the purchase of silver. With a minimum investment of 1 oz., CIBC offers physical silver bullion bars and coins. Bars are available in the following denominations: 1 oz., 10 oz., 50 oz., 100 oz., 1000 oz., and 1 kg. Silver coins are all 1 oz. Within a 24-hour period, customers can purchase up to $9,500 worth of silver online. For purchases greater than $9,500, customers have to buy the silver in the physical CIBC branch.

2. Silver bars and coins from the Royal Canadian Mint 

Physical silver can also be purchased from the Royal Canadian Mint. The Mint produces silver coins with 99.99% purity that range from $24.95 for a ¼ oz. coin up to $2,888.88 for a pure silver coin weighing 1 kilogram. Coins from the Mint reflect major themes and famous personalities in Canadian history including Elsie McGill, National Indigenous Peoples Day, King Charles III, Queen Elizabeth II, Alexander Graham Bell, Truth and Reconciliation, and Oscar Peterson. 

All silver coins dated 2018 or later also come with MINTSHIELD^TM protection. As silver coins age, there is often a tendency for white spots to appear on the surface. While these do not impact the value of the coin, they do have consequences for its visual and aesthetic appeal. The MINTSHIELD^TM technology protects the coins against these white spots.

3. Buy physical silver from a specialized retailer

In Canada, there are dozens of specialized retailers that can deliver silver bullion in the shape of bars and coins directly to your door. Some of these retailers offer additional benefits such as discounted vault storage if the purchase of the silver is made directly through the retailer. Examples of specialized retailers include Delta Harbour Assets, Silver Gold Bull and AU Bullion Canada.

It should be noted though that there are a lot of scammers posing as specialized precious metals retailers. When buying silver from outside of the Canadian banks or the Mint, exercise extreme caution and do your due diligence to ensure that the retailer you are buying from is licensed, legitimate and has a track record of customer trust.

Considerations of holding physical silver

While the purchase of physical silver has several advantages as detailed above, there are also some considerations that need to be made when taking delivery of physical silver.

Precious metals – whether they be gold, silver, platinum, copper or any other commodity – all need to be stored safely and securely. If you buy a large quantity, it is risky to place it in your house. If you decide to keep it in the house, it is wise to obtain insurance on the silver to prevent major losses in the event of a theft, fire, natural disaster, or other such event.

Alternatively, you can place the silver in a safe deposit box at one of the major banks. Depending on the size of the box, pricing can range from $40 to $500 per year. This cost of storage and security should also be factored into the price of the physical silver. Additionally, keeping it in a bank safety deposit box reduces the accessibility of the silver. For instance, if you need the silver in an emergency and the bank is closed for a statutory holiday, it can be difficult to monetize your investment at short notice.

The other consideration to make is in regards to the liquidity of silver as an asset. While precious metals certainly offer greater liquidity than other tangible assets, they are not as easily transactable as stocks, bonds and ETFs. To sell silver, you would need to go to a bank branch or other specialized retailer, present the original receipt, and offer proof that the silver is in good condition.

How to buy silver… without the physical storage responsibilities

If you want to avoid having delivery of a physical commodity, there are other ways that you can gain exposure to silver in your portfolio, as presented below.

Silver certificates

In place of owning the silver inventory, you can buy a certificate that essentially lets you own the silver without having to take possession of physical bullion, bars or coins. The Canadian banks will facilitate the purchase of certificates directly through investment accounts that you hold with their brokerage. At the time of purchase, a title deed is issued in your name and can be resold at market value at any time.

ETRs

The Canadian Silver Reserves Exchange-Traded Receipt (ETR) offers investors an opportunity to buy silver in a cost-effective, convenient way. The ETR essentially entitles the investor to a pre-defined amount of silver from the Royal Canadian Mint. In other words, the ETR enables access to silver that is guaranteed by the federal government.

How to buy silver on the stock market

Silver mining stocks

Instead of buying silver commodities directly, you can gain exposure to the asset by investing in public companies that mine silver. The earnings of silver miners are directly tied to the price of silver. With all else being equal, profitability would rise faster than silver commodity prices in a rising price environment as the company’s fixed costs are covered at a quicker rate. Silver miners can also grow production over time and thereby improve profitability over a longer time period. 

However, it should be noted that buying stocks of a single silver miner is inherently riskier than buying the commodity. While the commodity has tangible physical value, the average mining company has a range of internal and external risks that can detrimentally impact its operations and ability to generate revenues and cash flows. Put simply, if a miner cannot sustain its own business, there is little to no benefit to owning the stock even in a rising silver price environment. 

Some examples of silver mining companies in Canada include Pan American Silver Corp., First Majestic Silver Corp., and MAG Silver Corp.

ETFs

One way to de-risk the individual risks of a single company investment is through ETFs. Through ETFs, you can gain exposure to either the underlying price of silver or to a basket of silver mining stocks. 

If the ETF you buy is tracking the underlying price of silver, your return would effectively be any rise or fall in the price of silver minus the ETF’s management expense ratio (MER). Alternatively, buying ETFs that track the performance of silver miners can provide you with some level of protection against a particular miner doing poorly. However, an industry-wide risk such as a decline in the price of silver can negatively impact all companies tracked within the ETF.

Silver futures

Silver futures are contracts between a buyer and seller in which physical silver is agreed to be delivered to the buyer at a pre-determined fixed price at a specific date in the future. However, most silver futures traders are typically not looking for physical delivery and use cash to settle their positions prior to the expiry date.

The primary advantages of silver futures are that they enable the use of leverage in the contracts. As such, traders can make a lot of money very quickly by scaling up their position if the market works in their favour. However, there is also potential for large losses if the market moves against the trader.

Futures trading should be done almost exclusively by sophisticated investors.

Top brokers to invest in silver in Canada

In Canada, there are several online brokers you can use to add silver exposure to your portfolio either through the purchase of the physical commodity, stocks, or ETFs. Depending on your unique needs and constraints, each of them can offer specific merits that complement your investment style. It is best to compare the features and pricing of different brokerages before selecting one. Some of the most popular brokers in Canada include:

Qtrade

While Qtrade does not allow for the trade of the physical silver commodity, you can gain exposure to silver by buying the stocks of silver mining companies and/or ETFs that track silver and silver miners. Qtrade’s platform enables access to all ETFs listed on the Canadian and US exchanges. Trading commissions on Qtrade are as follows:

• Stocks: $8.75 for all accounts and $6.95 for investors with larger accounts who trade more frequently
• ETFs: Same structure as stocks with the exception of 100 commission-free ETFs listed on their website

Wealthsimple

With Wealthsimple’s platform, you can buy stocks of silver mining companies or trade silver-focused ETFs traded on the TSX, NYSE, NASDAQ, NEO and CSE. 

All stocks and ETFs are offered on a zero-commission basis and the platform offers additional capabilities such as dividend reinvestment, fractional shares, and stock lending.

Questrade

Questrade is one of the few Canadian online brokers that allows you to buy and sell physical precious metals including silver in your personal or registered investment accounts including RRSP, TFSA, TIF and RESP. However, storage responsibility of these physical commodities lies on the investor. As with other brokerages, investors can also buy stocks of silver mining companies or ETFs focused on silver. Pricing is as follows:

• Stocks: $4.95 per trade for the Fixed plan and 1 cent per share for the Variable plan up to a maximum of $6.95
• ETFs: Free