Having silver bullion in your portfolio is a smart move.
That’s because the next precious metals bull market is long overdue. When the metals market turns around—and it will—silver will likely outperform gold. Given silver’s current low price, the profits could be enormous.
All silver products will benefit when the silver price heads higher. But in order to maximize your profit, you must buy and sell at the best price… and be able to do so when you need to.
This guide covers all the places where the average investor can buy silver bullion. Before you decide where to buy, you must first decide what to buy.
So let’s start by looking at which form of physical silver is better for an investment…
Should I Buy Silver Bars or Coins?
Owning physical silver has many advantages over paper substitutes. It’s a hard asset that is private, portable, ever-lasting, and carries no counterparty or default risk.
The question is whether you should buy silver bars or coins? Here’s a quick look at the pros and cons for each:
|Bars||Lower premiums than coins. The larger the bar, the lower the premium. Ideal for large holdings. Bars may have greater availability during a crisis.||Bars over 100 ounces could require an assay to sell. Less attractive than coins.|
|Coins||Coin designs add visual appeal. May be more attractive to potential buyers. Will not require an assay to sell.||Carry higher premiums than bars (may recoup some of the premium when you sell).|
Regardless of the size of your holdings, all investors should own some one-ounce silver bullion coins…
➢ One-ounce coins give you the ability to meet small financial needs when they arise, and avoid having to sell a large, multi-ounce bar.
The same is true for one-ounce bars, though coins are generally easier to sell.
I recommend that you hold both bars and coins. By doing so, you will capture the premium savings on bars, and you build a ready stash of coins for small needs.
|An Important Alert About Coins|
Don’t get talked into buying a “collectible” or “limited edition” product. You want bullion coins—Eagles, Maple Leafs, Philharmonics, etc.—not a collectible item a dealer promises is a better deal or will supposedly appreciate more.
Reports of investors being ripped off by coin promoters are common. The story is always the same: being conned into overpaying for a collectible product that never delivered the promised return.
Here’s your go-to guide with the pros and cons of each option…
Buying Silver Bullion from a Local Dealer
Buying from a local bullion dealer has its own pros and cons. The obvious advantage is that you can check the product in person before buying. The downside is that shopping at brick-and-mortar shops is pricier. Plus, product availability is limited.
If you insist on buying from a local dealer, google the term “silver dealer” or “gold dealer” along with your city name. Another handy way to find a nearby silver dealer is using this US Mint dealer locator.
You can also buy silver bullion at certain banks. But in most cases, premiums at banks are among the highest.
How to choose the best local dealer
- Look for a local dealer who is more educational than pushy. Avoid any bullion shop that tries to sell you on collectibles or numismatic coins. These types of products are not a good store of value—but they do come with higher premiums, so dealers are inclined to sell them.
- Check bullion prices and compare them with what other reputable dealers offer. If you are making a comparison between local and online dealers, be sure to factor in shipping and insurance fees.
- Choose a dealer that has a good buyback policy.
- Usually, it’s best to buy from a larger reputable dealer. Small dealers tend to have higher premiums. Also, they may not be able to fill a larger order.
|No wait time for delivery||All-in costs are higher|
|No shipping or insurance fees||May not fulfill larger orders|
|Transaction in person||Limited bullion product range|
Online Silver Bullion Dealers
Buying silver bullion from an online dealer comes with an obvious risk. You must pay first, and then trust the dealer to deliver. However, if you stick to reputable dealers, you’ll be safe.
The biggest upside to buying your bullion online is that it is cheaper than your local storefront—even with shipping and insurance fees. Another big advantage is that some online dealers can provide you a buy-and-store program so you don’t have to worry about storage yourself.
When selecting an online bullion dealer, check silver bullion prices. If you are buying for delivery, add in shipping and insurance fees (you may have to contact the dealer to get information about these charges). A delivery timeframe should be stated or agreed on before you place an order.
If you prefer to buy and store with the dealer, look for storage fees and terms. Make sure your bullion is fully allocated to you and you can take delivery of it at any time.
A dealer that doesn’t show prices isn’t necessarily bad, but you should give greater weight to transparent dealers.
Pros and cons of buying from an online dealer
|Ease of online ordering||Can’t take immediate possession|
|Costs are likely to be lower||Shipping and insurance fees|
|Buy-and-store programs||Product ships only after payment|
How to choose the best online dealer
Compare silver bullion prices from a few dealers. A low premium is important, but it’s not the only criterion. Here’s a checklist of things to consider before placing an order:
- What is the timeframe of delivery?
- What is the total cost including delivery, insurance, storage etc.?
- Is the dealer trustworthy? Is the dealer trying to sell you on collectibles or numismatic coins?
- Does it provide a buy-and-store program? If so, is silver bullion fully allocated to you?
Are Dealers on TV Trustworthy?
You should avoid TV dealers altogether. These dealers pay big fees for advertising and celebrity endorsements, which they later recoup by selling bullion with higher premiums.
Should You Buy Silver Bullion from eBay?
Some precious metals investors swear by eBay. Sometimes you can find silver bars and coins that cost less on eBay than at a bullion shop. On the other hand, shopping on eBay comes with inherent risk of purchasing counterfeit products.
Even if you don’t buy on eBay, one handy feature you could utilize is the Advanced Search tool. Simply enter the product name (e.g., one-ounce silver Eagle) and check sold listings. The search results will give you an idea of what a competitive market price for that product is.
Note that most eBay buyers are seasoned precious metals investors. They know exactly what they need and can distinguish a good deal from a scam. If you are just getting into precious metals, don’t buy from eBay.
How to choose the best eBay dealer and avoid fraud
As always on eBay, buy from dealers who have a 100% approval (or close to it) rating. Also, check comments and feedback that sellers’ customers have left. Shady dealers exist on eBay, but they don’t last long.
The good news is that eBay has a buyer protection program that returns your money in case you don’t get what you ordered. Even still, exercise common sense and proceed with caution.
One of the most common red flags is a bullion product that sells below the spot price. There’s no way any dealer would sell you the product at a loss without hidden intensions. If it’s unreasonably cheap, it’s most likely fake.
Pros and cons of buying on eBay
|Free shipping is likely||Must wait for delivery|
|May find better price than local bullion shop||Best for only experienced buyers|
Fractional Ownership/Pool Accounts for Silver Bullion
A pool account is where your investment into silver bullion is “pooled” with other investors. Ownership is typically in a large bar, so together with other investors you own a “fraction” of that bar.
These programs tend to be convenient and cheap. Storage is also inexpensive and, in some cases, free.
The main drawback is that the silver is not allocated to you, which introduces counterparty risk. Delivery is also usually expensive and, in most cases, unavailable.
How to choose the best pool account
Some of the more popular pool accounts are Kitco, Perth Mint, and Everbank.
Select a company that is reputable and financially strong. Confirm the bullion is not held on the company’s balance sheet. A bankruptcy would, at a minimum, tie up your bullion during a lengthy legal process. In a worst-case scenario, bullion could be used to meet the claims of creditors.
Also, confirm that the company holds allocated metal in its pool accounts. It should possess the exact amount of bullion that customers have bought. Holding a paper substitute for physical gold is unacceptable, as the company might be unable to meet customer liquidation demands.
You’re about to own one of mankind’s most enduring assets, one that has withstood history’s worst troubles.
Silver is a physical asset that acts as an inexpensive insurance against all types of crises. Buying now is a low-risk/high-reward investment.