Silver often plays second fiddle to gold when it comes to precious metals. That makes some sense since silver is a much cheaper metal -- its price is just not as captivating. However, like gold, it is considered a store of wealth and has historically been used as a form of currency. So, if you're looking for a precious metal, don't overlook silver stocks and investments. That said, it's pretty easy to find a gold-focused stock, but a lot harder to find one that is focused on silver. Here are a few of the best options for adding silver to your portfolio, including my top pick, Wheaton Precious Metals (NYSE: WPM).   

Some background

Silver is unique from gold in that roughly half of demand stems from industrial purposes, like electronics, photography, and photovoltaics. The rest of silver demand comes from jewelry, bullion, and silverware. Demand for bullion and jewelry is far more reliant on the vagaries of consumer and investor sentiment than industrial demand. That gives silver a stronger demand base then gold, where jewelry, bullion, and central banks account for around 90% of demand.   

A hand holding a silver bar

Image source: Getty Images.

Silver's low price relative to gold also makes it more accessible in many ways. Silver has recently been trading hands at around $16 to $17 an ounce compared to gold, which costs more than $1,275 an ounce. This, of course, is part of the reason silver gets used more in industrial applications and why gold is used more as a store of wealth -- you simply need less of the metal to create big dollar figures.   

That said, supply and demand are the main determinants of silver prices. And the main source of silver is silver miners, which dig the metal out of the ground. Most miners don't focus exclusively on silver, but you don't have to buy a miner to get exposure to silver. Here are three ways to buy silver, one of which I think is the hands-down winner.

Some ways to invest

The first way to get silver into your portfolio is through a direct investment in bullion. If you want to prepare for a situation in which fiat currencies are no longer being used (the zombie apocalypse scenario, if you will), then buying silver coins is the best option. In fact, owning some silver in this way isn't a bad idea, just in case. But transaction costs and storage issues make it a less-than-ideal way to get material exposure to the precious metal.

A far better option is to buy a silver exchange traded fund like iShares Silver ETF (SLV -2.04%). This ETF's main asset is, as you might expect, silver bullion. The 0.50% expense ratio is relatively modest, as well, when you consider that buying silver directly would involve commissions and, likely, a safe deposit box at a bank. It's also a lot easier to sell an ETF than to quickly liquidate a stash of silver coins. There are other ETFs that provide leveraged exposure to the metal, like ProShares UltraShort Silver and ProShares Ultra Silver, but most should probably stay away from leveraged ETFs -- the inherent risks of leverage are just too high for all but the most aggressive and active investors.    

A map of First Majestic Silver's mine operations

First Majestic's portfolio of assets. Image source: First Majestic Silver Corp. 

The next option for silver is to buy a miner, like First Majestic Silver Corp (AG -8.08%). This is one of the most direct ways to get exposure to the metal through a miner because First Majestic gets roughly 70% of its revenues from the metal. Most other miners with silver exposure are more heavily focused on gold, including SSR Mining (SSRM), which recently changed its name from Silver Standard Resources to highlight its shifting focus toward gold. Silver is only about 20% of SSR's production. Coeur Mining (CDE -4.35%), meanwhile, counts silver as about a third of production -- down from 60% in 2010.   

In other words, if you're looking for a silver miner, First Majestic is a focused choice. 2017 is expected to be a rough year production wise, with a drop off from 2016. However, the company has two projects in development that it expects to materially increase production over the next two to four years. And it's been working hard to get costs down, with cash costs and all-in sustaining costs each declining by nearly 40% between 2014 and 2016. The new mines will likely push costs higher in the near term, but that will probably be a temporary issue.   

If owning just one miner has you worried, you could also buy iShares MSCI Silver Miners Index ETF. The expense ratio is a scant 0.39%, making it a pretty cheap way to get broad silver mining diversification. The only problem is that when you look at the list of names in the ETF, you quickly see that it includes companies like SSR and Coeur, which we already know are more gold miners than silver miners. So a mining ETF is an option, but perhaps not the best way to get direct exposure to silver.   

The better way to go

There's something interesting about the holdings in iShares MSCI SIlver Miners Index ETF. The top name, at a massive 25% of assets, is Wheaton Precious Metals Corp. Here's the thing: Wheaton isn't a miner -- it's a streaming company. That means it provides cash up front to miners for the right to buy silver and gold in the future at reduced rates. Tt currently pays around $4 an ounce for silver and $400 an ounce for gold, both well below recent spot prices.   

A visual overview of the streaming business model

A quick overview of how streaming works. Image source: Wheaton Precious Metals. 

Miners go to companies like Wheaton when getting cash from banks and capital markets is prohibitively expensive. They use the money to fund mining projects and expansions or to just reduce leverage. Wheaton likes these deals because they lock in low prices and, thus, wide margins. Those margins remain wide even during commodity downturns that push miners' margins into the red.

The reason is pretty simple: A miner has to deal with all of the headaches of running a mine. Mining costs, like salaries, don't adjust as quickly as commodity prices. Wheaton's costs, meanwhile, are contractually locked in at low levels, giving it a lot more breathing room. In fact, commodity downturns are actually a great time for Wheaton to build its business. That's because miners are likely to be desperate for cash and willing to ink streaming deals. Wheaton's top and bottom lines will vary along with the price of silver, just like a miner, but Wheaton's ability to grow in a downturn gives it something of a countercyclical feel.

A map showing Wheaton Precious Metals' global portfolio of investments

Wheaton's portfolio of investments. Image source: Wheaton Precious Metals. 

Another reason to like Wheaton over a miner like First Majestic is diversification. First Majestic has six mines and two mine projects in its portfolio. Wheaton Precious Metals has investments in 20 operating mines and eight development projects. In fact, it's probably more appropriate to think of it as a specialty finance company, with a portfolio of mining investments, that gets paid in silver and gold.   

There is one drawback: Silver is expected to account for around 55% of its production over the next few years. That means you'll get less exposure to silver than you would via an investment in First Majestic. However, I believe the benefits of Wheaton's business model outweigh this issue and make it the best option for investors seeking exposure to silver.   

Plenty of ways to go

In the end, there are plenty of ways to get exposure to silver. You can buy coins, silver-linked ETFs, silver miners, ETFs that track silver miners, or a streaming company like Wheaton Precious Metals. You have to pick the option that's right for you, but I think Wheaton is the best of the bunch. Its diversification, high margins in good years and bad, and ability to use commodity downturns to grow its business set it apart in important ways. If you want to own a silver stock, I suggest you do a deep dive on Wheaton Precious Metals today.