How to Buy Silver: The ultimate guide on investing in silver
Hey all; check this out. Nice info for Silver is such a good investment. It will help you sleep better too. This is an excerpt. To view the entire article, which includes suggestions on buying "Paper Silver/Gold", which I don't condone; go to: Hard Assets Alliance Article
CYA: SE:
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Jeff Clark
Senior Metals Analyst
January 6, 2016
Hard Assets Alliance
CYA: SE:
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Ready to buy some silver? Congratulations! You’re about to make a solid investment.
There are lots of advantages to owning silver, especially physical metal. And your timing is excellent as the silver price is at a six-year low, making it a low risk investment.
This article covers many topics: the two things to know about silver, its three advantages over gold, how much silver to buy, how to buy physical silver and where to buy it, how to buy silver ETFs and pool accounts, and the buy-and-store silver programs.
Let’s jump in…
Why is this important? Because the state of the global economy can
impact demand. Its price can be susceptible to economic booms—and economic busts.
Each of these popular companies is valued higher than the entire annual
supply of silver! Even Starbucks’ market cap is almost seven times
bigger than the silver market.
This makes the silver price volatile. That’s because it doesn’t take much money entering or exiting this market for the price to be impacted.
Cons: Demand for silver can be lower in a weak economy. And its volatility will cause the price to be more subdued than gold in bear markets.
Suitability: Silver is best suited for investors willing to live with its high volatility.
That’s what you get with silver! It is much more affordable for the average investor and will help maintain your standard of living as much as gold.
Cons: Silver requires greater storage space. You can store roughly $172,000 of gold in a small safe deposit box, but that same space will only allow you to store $2,300 of silver. Also, silver will eventually tarnish (pure gold does not). Coins and bars kept in a dry place with no exposure to the elements will delay that process.
Suitability: Silver is ideal for investors with small budgets and everyone who anticipates small financial needs in the future. Consider where you’ll store silver bullion and the cost to do so when making your decision.
Best for: All portfolios, especially beginning investors. This category has low risk and is easy to resell. This category should comprise the largest portion of an individual’s silver holdings.
There is a sub-category usually called “semi-numismatic” coins. These are 99.99% pure coins, but tend to be commemorative in nature, such as the Canadian Wildlife series or Australian Lunar series. They command higher premiums, which you may not recoup when you sell. Some investors buy these because they may appreciate more in value, but that is more of a speculation than an investment.
Best for: Coin collectors. Some of these coins will outperform regular bullion in an inflationary environment, but it is imperative you’re familiar with numismatics before buying since it is easy to overpay.
Best for: Diversifying a portfolio after accumulating sufficient sovereign coins. Cheap way to add ounces.
Best for: Barter in economic crisis scenarios. Some gas stations accepted junk silver during the 2008/2009 financial crisis.
Best for: Investors that want lower premiums. Bars are an ideal way to store large amounts of silver.
Cons: Silver requires greater storage space. You can store roughly $172,000 of gold in a small safe deposit box, but that same space will only allow you to store $2,300 of silver.
You must also locate a dealer (or other party) to buy your bullion (most reputable dealers will buy back their product, though not all). Silver bars over 100-ounce could require an assay to sell (large bars have been the target of some counterfeiters).
Suitability: Silver coins and bars are a hard asset you can hold in your hand and are ideal for most portfolios as they are not speculative and will be easy to resell.
Numismatics should be avoided unless one plans on becoming an informed coin collector. Rounds generally have lower premiums than sovereign coins, but may be more difficult to sell. Junk silver requires significantly more storage space than other silver products.
You can buy silver bullion either online or at your local shop. (You can also find silver bullion on eBay and at dealer shows, but I wouldn’t recommend those options until you have a couple purchases under your belt.)
Here’s a comparison of buying online vs. at a local shop:
Here’s a comparison of buying online vs. at a local shop:
Online Dealer:
Whichever way you go, here’s a quick checklist of what to look for…(You can find more options for bullion buying in our article, Where to Buy Gold Bars: The 6 Options with Pros and Cons.)
There are lots of advantages to owning silver, especially physical metal. And your timing is excellent as the silver price is at a six-year low, making it a low risk investment.
This article covers many topics: the two things to know about silver, its three advantages over gold, how much silver to buy, how to buy physical silver and where to buy it, how to buy silver ETFs and pool accounts, and the buy-and-store silver programs.
Let’s jump in…
Two Things to Know About Silver
Before you invest, you need to be aware of two attributes of silver…1) Silver has high industrial use
It’s so high, in fact, that…2) Silver is a tiny market
The total annual supply for silver is around 970 million ounces. At $14 per ounce, the “market cap” of the industry is $13.5 billion. That sounds like a lot of money, but it’s not…This makes the silver price volatile. That’s because it doesn’t take much money entering or exiting this market for the price to be impacted.
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Pros: Demand for silver can be higher in a strong
economy. Its high volatility will make investors a lot of money in a
bull market—even more than gold.Cons: Demand for silver can be lower in a weak economy. And its volatility will cause the price to be more subdued than gold in bear markets.
Suitability: Silver is best suited for investors willing to live with its high volatility.
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Silver’s Pros Compared to Gold
Silver has three advantages over gold that make it attractive…1) Silver is cheaper!
What if I said you could buy a hard asset at 1/75 the price of gold and it will protect you against inflation every bit as good as gold?That’s what you get with silver! It is much more affordable for the average investor and will help maintain your standard of living as much as gold.
2) More practical for everyday small purchases
It’s not just cheaper to buy, but it may be more practical when you need to sell. There may be times you don’t want to sell a full ounce of gold to meet a small financial need. Every gold investor should have some silver around for this very reason. It’s also ideal for gifting.3) Silver will likely outperform gold in a rising inflationary environment
Silver is just as much an inflation hedge as gold. However, it will better perform than gold in the face of rising inflation due to its higher volatility. Think of silver as gold on steroids.
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Pros: Silver is more affordable than gold and also
more practical to meet smaller financial needs if they arise. It will
also likely outperform gold in the next bull market.Cons: Silver requires greater storage space. You can store roughly $172,000 of gold in a small safe deposit box, but that same space will only allow you to store $2,300 of silver. Also, silver will eventually tarnish (pure gold does not). Coins and bars kept in a dry place with no exposure to the elements will delay that process.
Suitability: Silver is ideal for investors with small budgets and everyone who anticipates small financial needs in the future. Consider where you’ll store silver bullion and the cost to do so when making your decision.
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How Much Silver to Buy
Most brokers recommend that precious metals comprise 5¬–10% of an investment portfolio. Here are the guidelines each investor must consider…-
Include gold. In other words, don’t buy only silver
or only gold. A diversified portfolio will include both since they each
have their advantages and drawbacks.
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Avoid extremes. Don’t put all your money in silver,
which greatly increases your investment risk. Similarly, don’t buy just
one or two coins, as that won’t provide protection for your portfolio.
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Consider future inflation rates. The issue is not the current
inflation rate, but what it’s likely to be over the next two to five
years. The greater the risk of inflation, the more you should lean
toward a 10% allocation of assets into gold and silver.
How to Buy Physical Silver
There are lots of options! Each has its advantages and drawbacks, so let’s go over the choices for buying physical silver…Silver Bullion
This refers to coins produced by a government mint that also have legal tender value. They have 99.99% purity and are sometimes referred to as sovereign coins. The most popular are US Eagles, Canadian Maple Leafs, Australian Kangaroos, and Austrian Philharmonics.Best for: All portfolios, especially beginning investors. This category has low risk and is easy to resell. This category should comprise the largest portion of an individual’s silver holdings.
Silver Numismatics
This refers to rare coins or collector coins. Their value is based more on rarity or historical significance than silver content. These should only be purchased if you are a knowledgeable coin collector (or are willing to become one). “Proof” coins fall in the collector coin category.There is a sub-category usually called “semi-numismatic” coins. These are 99.99% pure coins, but tend to be commemorative in nature, such as the Canadian Wildlife series or Australian Lunar series. They command higher premiums, which you may not recoup when you sell. Some investors buy these because they may appreciate more in value, but that is more of a speculation than an investment.
Best for: Coin collectors. Some of these coins will outperform regular bullion in an inflationary environment, but it is imperative you’re familiar with numismatics before buying since it is easy to overpay.
Silver Rounds
These are bullion coins produced by private mints that have no legal tender value. A silver “Buffalo” coin is a round (whereas a gold Buffalo is a sovereign coin produced by the US Mint). Premiums are lower, and while they’re a great way to diversify, resale value will likely be lower.Best for: Diversifying a portfolio after accumulating sufficient sovereign coins. Cheap way to add ounces.
Junk Silver
These are pre-1964 silver coins that were circulated as currency. They’re basically old quarters, dimes, Franklin half dollars, and Morgan dollars. Their purity is generally 90%, though some can be as low as 35%. Premiums vary, but are generally lower than bullion coins, which means resale value is lower, too.Best for: Barter in economic crisis scenarios. Some gas stations accepted junk silver during the 2008/2009 financial crisis.
Silver Bars
Sizes vary, from one ounce to 400-ounce. Only buy hallmark bars, which means the bar was made by a reputable refinery such as Johnson Matthey, Argor-Heraeus, PAMP Suisse, or Valcambi.Best for: Investors that want lower premiums. Bars are an ideal way to store large amounts of silver.
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Pros: Physical silver is a hard asset that is
portable, private, and will last forever. And it is easy to
sell—virtually any dealer in the world will buy a government-issued
silver coin or bar. Consider the advantage that no matter where you live
or travel in the world, you will be able to sell physical silver for
cash!Cons: Silver requires greater storage space. You can store roughly $172,000 of gold in a small safe deposit box, but that same space will only allow you to store $2,300 of silver.
You must also locate a dealer (or other party) to buy your bullion (most reputable dealers will buy back their product, though not all). Silver bars over 100-ounce could require an assay to sell (large bars have been the target of some counterfeiters).
Suitability: Silver coins and bars are a hard asset you can hold in your hand and are ideal for most portfolios as they are not speculative and will be easy to resell.
Numismatics should be avoided unless one plans on becoming an informed coin collector. Rounds generally have lower premiums than sovereign coins, but may be more difficult to sell. Junk silver requires significantly more storage space than other silver products.
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Where to Buy Silver Bullion
Like any industry, silver has its share of crooks. The easiest and most effective way to avoid any problems is to buy from a reputable dealer.You can buy silver bullion either online or at your local shop. (You can also find silver bullion on eBay and at dealer shows, but I wouldn’t recommend those options until you have a couple purchases under your belt.)
Here’s a comparison of buying online vs. at a local shop:
Here’s a comparison of buying online vs. at a local shop:
Online Dealer:
- Can order online, but must trust dealer to deliver your product
- Total cost is likely cheaper even with shipping (they have lower overhead)
- Expanded hours, but product won’t ship until payment clears
Local Shop:
- No waiting; can take immediate possession. Face-to-face transaction.
- No shipping/insurance costs, though total cost may still be higher
- May have limited product choices and low liquidity for large buybacks
Whichever way you go, here’s a quick checklist of what to look for…(You can find more options for bullion buying in our article, Where to Buy Gold Bars: The 6 Options with Pros and Cons.)
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A trusted and established dealer. Check their Better Business Bureau
rating. Favor those that have decades of experience. Check how many
repeat customers they have; buyers wouldn’t return if their experience
was negative.
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An educational dealer. Avoid the dealer that is pushy or heavily promotes rare coins—those markups are higher.
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The size of the business. Small dealers may have
limited product selection or be unable to fill a large order. Small
dealers may also be unable to buy back a large sale. Be sure to ask
about delivery times; if they don’t ship within a day or two of your
payment clearing, that’s a red flag.
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A buyback policy. Ask the dealer if they’ll
repurchase what you buy. If they don’t have a policy in place, shop
elsewhere. This is another reason it’s important to do business with a
reputable dealer—you want them to be around when you need to sell.
Dealers with buyback policies also give prior customers their best
resale price.
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Accepted forms of payment. You can reduce your cost
by paying with a money order (or cash). Bank wires and credit cards come
with extra fees. Some dealers may take a personal check without a
surcharge, though they’ll wait until the check clears before shipping.
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