By Peter Krauth
As precious metals go, silver may not have quite the same mystique as gold. But let's be honest: The "white metal" has its backers, too.

In fact, when Money Morning published its "How to Buy Gold" special report just a few weeks ago, one of the biggest questions that we received in response was: "When can you do the same for silver?"

That's just what we've done here. In this special report, we show you how to buy silver.

Although gold possesses the greatest allure of precious metals, silver has a longstanding tradition in many cultures - a tradition that in some cases reaches back thousands of years. Nearly 2,500 years ago, for instance, China was the first to use silver as money.

Here in the United States, silver alloys were still present in some of our everyday coins as recently as 40 years ago. Today, however, silver is no longer viewed that much as a monetary metal. But that's because about 40% of silver is used for industrial applications.

The physical silver market is small, with annual demand of slightly less than 900 million ounces. Silver prices are volatile - on the upside and the downside. It set a bull-to-date high of near $21 in early 2008. The global financial crisis tipped silver prices into a near-freefall: They declined by more than 50% to drop into the $9 range later that year.

Since that financial-crisis nadir, silver prices have more than doubled to reach nearly $19.40 an ounce.

An important metric to understand and watch is the silver-to-gold ratio. It tells you how many ounces of silver it takes to buy one of gold. Historically, that ratio is 16 to 1. On this basis alone, silver should be at $77 right now. That's a long way from $19.

But perhaps a more realistic level, at least in the short term, is the ratio of silver-to-gold since the start of this bull market back in 2000. That ratio has been about 50-55 ounces of silver for one of gold. With gold at $1,200, that implies a silver price of $22-$24 an ounce - a return of as much as 25% from current price levels.

How to Buy Silver
Like gold, silver investments can be made in a variety of forms. Let's take a look at some of the most popular forms. Physical Silver: Physical silver can be purchased in a variety of sizes and weights, which determines its price. Most typical are 1.0 ounce silver coins, like the Austrian Silver Philharmonic, the American Silver Eagle, and the Canadian Silver Maple.

Their prices vary slightly due to differences in silver purity, with the Silver Maple being the highest at 99.99% pure. You'll pay about a 16% premium over the silver price for coins due to the cost of fabricating them.

Another popular option is the 100-ounce silver bar, which commands a 5% premium over the spot price of silver, meaning the bar is currently selling for slightly more than $1,900.

These coins and bars are essentially bought for their silver content and not as collectibles. If you're looking to build a silver stash - either large or small - bullion dealers may be the easiest way for investors to do so. But do your homework first, and check them out before you buy. Also, avoid paying more than the premiums I noted above for either coins or bars.

Some investors wonder if they should buy smaller denominations, like 1/20th, 1/10th, ¼, or ½ ounce (gold) coins. The thinking goes like this: If ever these coins need to be used to transact and make payments, one would want to have smaller "amounts" to carry around. That's a valid rationale. Even so, keep in mind that you'll pay a premium to the actual silver content, since each individual coin has to be fabricated. I believe that, should we ever get to that point, you could just convert a one-ounce coin or bar into a number of smaller coins, and pay the premium, or perhaps receive whatever else is being used for transactions (a new currency?) in return.

A few dealers that have an established reputation are:
-Kitco.com: Premiums are fair and the selection is usually quite good. They have offices in both New York and Montreal.
-Asset Strategies International Inc: This dealer is located in Rockville, MD. Asset Strategies also offers gold storage options outside U.S. borders.
-Camino Coin LLC (caminocompany.com): Burlingame, CA.
-American Precious Metals Exchange (apmex.com): Oklahoma City, OK.
-The Tulving Co. (tulving.com): Newport Beach, CA
-Gainesville Coins (gainesvillecoins.com): Lutz, FL.
Exhange-Traded Funds (ETFs) and Certificates: Another option for silver ownership is through exchange-traded funds (ETFs) or certificates.

As I mentioned in the "How to Buy Gold" special report, ETFs are a convenient way to establish a claim on gold, and the same applies to silver. A simple way to acquire a claim on silver is to buy units of the iShares Silver Trust ETF (NYSE: SLV). With some $5.5 billion in assets, SLV is the world's largest silver-backed ETF, using JPMorgan Chase & Co. (NYSE: JPM) in London as its custodian. SLV shares, which represent approximately 1.0 silver ounce each, are easy to buy and sell through your brokerage account.

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