How to Buy Physical Silver

Demand for physical silver has soared due in part to strong industry and a desire for physical metals for investment portfolios.  But not all physical silver is created equally.  Investors need be careful to buy only physical metals that are worthy of investment, not collection.

Numismatic Metals

New investors in physical metals often make the mistake of purchasing numismatics, or those coins, bars, medallions, and ingots that are meant for collection rather than investment.  Generally, numismatics earn their value from their rarity, perceived value, or from their appeal as art.  Numismatic coins can often sell for multiples of the worth of the metals themselves, making them poor investments.

Investment Grade Silver

Choices in investment grade silver are plenty.  From junk bags of pre-1964 coinage to rounds and coins both foreign and domestic, there are a myriad of opportunities for the silver investor.  These silver products are better suited for investment because their value is derived directly from the amount of silver in the product.  For example, a 10oz bar will sell for 10x the current silver price whereas a rare American silver coin can sell for hundreds of times the value of its silver content.

Mind the Premium

Unlike exchange-traded funds or futures, physical metals do carry a premium over the current spot price.  This premium, usually 2-3%, helps cover the cost of transport, storage, and marketing of the metals itself where the futures exchanges don’t have as much overhead.  The premium isn’t all a lost cause since you’ll be able to recoup the premium upon sale of the silver, as all physical metals carry a premium over spot.  They have for the last century, and they will for the next.