With this in mind, FE Trustnet asked industry experts for their preferred method of investing in the precious metal.
Tim Cockerill (pictured), head of collectives research at Rowan Dartington, understands the increased excitement around silver and advises investors who want to gain direct exposure to concentrate on exchange traded funds (ETFs).
"I think the most sensible way to access physical silver is through ETFs – it would be very difficult to access it directly any other way," he said. "The silver market is much tighter for investors to gain exposure to, because there is less supply out there. My preferred route would be through ETFS Physical Silver."
"It is interesting, because in terms of physical assets, investors usually go for gold to protect them; although it is more volatile I can certainly see the case for investing in silver."
ETFS Physical Silver
According to FE Analytics, the four crown-rated ETFS Physical Silver fund has a total expense ratio (TER) of 0.49 per cent. As its name suggests, it is physically backed by the precious metal, in the HSBC bank in the USA.
The $827.5m vehicle has closely tracked the silver spot price over a long period. Since its launch in 2007, it has returned 215.98 per cent while the S&P GCSI Silver Spot index has returned 237.10 per cent.
Performance of fund vs index since July 2007
Source: FE Analytics
ETFS also runs ETFS Silver, which is not physically backed.
Townsend Lansing, head of regulatory affairs at ETFS, explained the difference between the two funds: "The physical silver fund gains exposure to the silver spot price and is physically backed by the precious metal."
"This is the most common entrant point, but there is the silver fund which trades on silver futures."
"It does not track the spot price, but what the future price should be. A simple analogy is with corn – you cannot hold corn because it rots, but in order to track the price you trade its future price; this idea is used for the silver fund."
ETFS Silver has underperformed against its physically backed counterpart: over five years the fund has returned 164.75 per cent compared with 192.56 per cent from ETFS Physical Silver.
The fund has a TER of 0.54 per cent and $66.1m in assets under management (AUM).
Smith & Williamson Global Gold and Resources
Danny Cox, head of advice at Hargreaves Lansdown, understands the merits of holding an ETF but says that using an open-ended fund is a less risky method of investing in silver.
"One of the ways is through Smith and Williamson Global Gold and Resources, which also gives you exposure to other precious metals," he commented.
"With ETFs you gain exposure to the pure commodity, but investors have to accept the volatility that comes with it as it is used as an industrial product. A fund is a much more diversified way of gaining exposure to silver."
According to FE data, Smith & Williamson Global Gold and Resources has 25 per cent of its assets in silver and other precious metals.
The £75.2m fund, which was launched in 2004, is co-headed by Robert Lyon and Ani Markova.
Since launch, it has returned 220.10 per cent – more than any other gold-focused portfolio. However, its small to mid cap focus means that it is more volatile than the majority of its rivals.
Global Gold and Resources has a TER of 1.85 per cent and a minimum investment of £1,000.
BlackRock Gold and General
Juliet Schooling Latter, head of research at Chelsea Financial Services, also likes the diversified approach to investing in silver. She too believes that the precious metal could witness a surge in performance.
"Silver certainly looks like it’s got the potential to rise quite strongly and it has more uses than gold," she said.
"I like the BlackRock Gold and General fund, which has 13.7 per cent in silver."
The £2.8bn fund is headed up by FE Alpha Manager Evy Hambro.
Over a five-year period it has returned 32.57 per cent, compared with 44.91 per cent from the Smith & Williamson fund.
Performance of funds over 5-yrs
Source: FE Analytics
However, the BlackRock fund has been considerably less volatile.
BlackRock Gold and General has a minimum investment of £500 and a TER of 1.94 per cent.