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The lowdown on buying and selling silver

For investors willing to take on more risk and possibly earn a greater profit, Christensen says there also are mining stocks to consider.

"Stocks of mining companies are going to be higher in risk because investors assume the risk of the company along with the price of the commodity," Christensen says.

That means that it's possible for the price of silver to go up and for your investment to lose money because the company is poorly run or unable to effectively exploit its silver mines.

But even if you've got the appetite for risk, investing in mining stocks may not be for every investor, says Christensen who points out that securities in those companies may not be as easy to trade as a share in an ETF.

Which method is right for you?

With so many ways to own silver, it's easy for the average investor to be confused about how he or she should approach the market. According to Zeches, the decision often comes down to a preference between physical possession and nonphysical forms of ownership. But other investors such as Hanlon insist nothing beats actual silver.

"I think everybody should own the real thing, meaning physical coins and bars," Hanlon says.

For Hanlon and others, physical silver or gold isn't just an investment; it's the ultimate hedge against economic uncertainty because both commodities also have been used as currency in the past. Given silver's historical role as a currency as well as its industrial uses, many believe no matter what happens with the economy, precious metals will hold their value.

But putting aside the particulars of investing in precious metals, Christensen recommends that investors think about silver and gold as they would any other investments. "As with any investment, each investor needs to decide what type of holding is right for them based on their needs (in terms of) growth, liquidity and risk tolerance," Christensen says.

Common mistakes

Many investment advisers tout the value of owning precious metals like silver, but investors who buy silver without doing their homework might be wasting their time and money, says Stephen Todd Walker, managing director of Oppenheimer & Co. in Philadelphia.

According to Walker, many investors foolishly squander their money by chasing the market, buying silver when it's high and selling when it's low.

"Investors tend to flock to safety when times are tough or when fear is in the air, which is why one sees so much interest in precious metals at the moment," Walker says. "But buying at record highs might not be prudent."

While investing in silver can be profitable, Christensen says it's a bad idea for investors to become fixated on precious metals in general or silver in particular.

"Precious metals should never be the sole focus of any investor's portfolio," Christensen says. "The sector remains highly volatile and should be considered a portfolio diversifier rather than the whole portfolio."

An invaluable hedge

While many investors view silver as a solid way to diversify a portfolio's asset allocation, some investors view silver and other precious metals as an invaluable hedge against an uncertain economic outlook.

"The reason an investor would want to invest in silver is because, like gold, it is money and a hedge against future Federal Reserve quantitative easing and the unsustainable spending by Congress," says Doug Eberhardt, author of "Buy Gold and Silver Safely."

But according to Eberhardt, the downside of silver is it tends to be more volatile than gold. Because of that volatility, Eberhardt recommends that those who invest in previous metals do so with a portfolio that has 75 percent gold and 25 percent silver.

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