Silver has long been used as money, just as have gold and other precious metals over the millennia. Silver is prized for its many industrial and medical uses too. Silver is held by many as a long-term hedge against inflation. Many people collect and stack silver and keep it for trading. A preferred vehicle to hold silver is a self-directed IRA that owns and holds silver as a form of “wealth insurance”. If you are interested in investing in silver you need to know where to start and how. Working with a top-tier and trustworthy silver dealer is very important. When you purchase silver you want to be sure of getting a quality product at a fair price. This article provides the information you need to get started.
Consider Your Silver Purchase
Before you actually get started with silver investing, the first thing you should do is determine what kind of silver you want to buy. There are three general ways of investing in silver. The first way is to buy the actual physical silver for yourself. This involves purchasing silver in various forms such as a bullion bar or coin. There’s also paper silver, which means you purchase the rights to silver that you don’t physically possess. This is a way to gain exposure to the price movements of the metal without actually holding it. The third method of getting exposure to silver is silver futures. A futures contract is a legally binding agreement for delivery of gold or silver in the future at an agreed-upon price. The contracts are standardized by a futures exchange as to quantity, quality, time and place of delivery. Hedgers use a futures contract as a way to manage price risk on an expected purchase or sale of the physical metal. Futures contracts provide speculators with a way to participate in the markets without any physical ownership of silver. The CME Group is the best place to see quotes for silver futures.
Find a Reputable Precious Metals Dealer
Finding a reputable dealer to buy silver from is perhaps one of the most important ways to purchase silver. Working with a reputable dealer can prevent a lot of the pain and overpricing that can occur if you instead work with a bad or untrustworthy dealer. Perhaps the best way to find a top-tier dealer is to read the silver dealer reviews and compare how they are rated by independent rating agencies and actual customers. You can see all the top-tier precious metals dealers by clicking here. It is important that you do your due diligence to find the best precious metals dealer for your needs. There are a few very good dealers and there are many not so good ones. This is your money, so you need to ensure you work with a top-tier dealer. Selecting a trustworthy dealer ensures you get the right product for your needs and at a fair price. Take the time to look over the dealers before you make a purchase. Find the dealer who is most reputable and trustworthy, and be sure to look at the customer reviews. Those customer reviews will tell you what to expect.
Determining the Market Price of Silver
Before you buy silver, be sure to check the spot price for a troy ounce. The troy ounce is the reference size that the spot price is based upon. Keeping this price in mind will help you make your silver product purchase at a fair price. Never pay more than a small premium above the current spot price when you buy silver bullion bars, coins or rounds. A “round” is the term used to describe silver coins that are not marked as having currency value. The rounds are made by refiners in many decorative designs but they are not marked as having a particular US currency value.
Another matter to consider before you actually buy silver is to make sure you understand the terms of your purchase. These terms can include the following:
* If you are buying paper silver, make sure you are clear who has physical possession of the silver itself and how you can benefit from a price move in silver.
* Avoid the purchase of numismatic coins. These collector coins are priced on factors such as rarity and condition, not the value of the metal they are made from. These coins are often sold for very high premiums over the value of the metal itself. Too many buyers overpay for these coins and make a very bad investment. Many dealers make tons of money selling overpriced numismatic “collector” coins. Buyers often pay way too much and make a very bad investment. It is probably better to avoid the purchase of numismatic or collector coins. Buy the bullion coins from the mints that are priced on the value of the metal itself. If you buy numismatic silver coins, remember that there is a difference between the raw value of the silver the coin is made from and the price of that collector coin. The numismatic coin is often not a very good way to own silver. Buy bullion bars or coins from the mints instead. Be very careful here, and do not allow yourself to be talked into buying numismatic coins by some slick salesman.
* Ask about fees. Some silver sellers, especially banks, often charge a premium fee for the sale of silver. This almost always results in the buyer being underwater for the purchase.
* Ask about buybacks. Some sellers will buy back silver and others won’t. It is important to understand that if you buy silver from a seller who won’t buy it back, you could suffer significant losses when you try to sell that silver to others. Likewise with a buyer who won’t honor fair market values when they buy.
Make Sure You Record the Cost Basis Information for Taxes
When you buy silver, make sure you get receipts for what you paid for your silver. This is so you can establish the cost basis of your purchase when you sell it. Without proof of this the IRS can cause some real problems when you sell to another buyer. Keep those purchase records in a safe place. Make copies too. This will save you from getting into a painful dispute with the IRS if there ever is a question about the purchase price of your silver.
How to Find and Buy Scrap Silver
Know How to Identify Silver. It should be unnecessary to say, but it bears repeating that you should always make sure you are buying real silver when you buy silver. For this reason you should know that real silver, whether it be jewelry or silverware, will be stamped with the numbers 800 or 925, or with a certification that the silver is sterling (ex. Sterling, Ster, or Stg). Further, flicking a silver coin or ring into the air will cause it to ring. You can also place a real silver object on a piece of ice, which will cause it to melt faster than under normal conditions. Click here to read more.
Ask Friends and Family. You might want to try asking friends or family if they have silver they would like to sell. Chances are good they will sell it to you at a very fair price. This is a good way to start building your silver store.
Place Ads. Placing an ad in a publication or an online source such as Craigslist might bring you silver sellers. But you have to be very careful of cheats and scammers.
Find Reputable Dealers. Just as is the case above, a reputable dealer will sell you silver or even direct you to other sources if they cannot fill your order. See this list for the top-tier precious metals dealers.
Look For Yourself. You can often find silver that is for sale at bargain prices online or in second hand shops. Look for it in broken jewelry, silverware, rings, and bracelets.
Check Your Pawn Shops. Pawn shops can be an excellent source of silver. But remember that pawn shops often charge a premium that might end up making your purchase underwater from the start.
Look For Silver in Unexpected Places. Silver is used as an ingredient in many things. These include cameras, circuit boards, photographic plates and other sources from which you can remove it. Many people make a good supplemental income by recovering silver and other precious metals from old electronic equipment.
Coins, Bars, and Rounds
Buying silver in different forms can be very tricky. For example, collector coins are valued not only on their silver content but also on their “numismatic” value, which includes provenance, quality, rarity and condition which all influence the price of these types of coins. As noted earlier, the numismatic or collector coin is often very overpriced and not a good investment for the buyer. If you want to buy silver coins, then buy bullion coins that are valued based upon their metal content. These include coins from the US Mint.
Silver bars are almost pure silver, which makes them excellent for investment. Te bars often trade at small premiums above the spot price. They are a form of silver that is very good for investment purposes. The 1 oz silver bar enjoys a liquid market.
ETFs, or Exchange Rated Funds, are a silver investment that is traded like stock. You can buy a silver ETF easily for your investment portfolio. Some of the most popular silver ETFs include: SIVR – ETFS Silver Trust, AGQ – ProShares Ultra Silver, SLV – iShares Silver Trust, USLV – VelocityShares 3x Long Silver, ETN – linked to the S&P GSCI Silver Index, and the ZSL – ProShares UltraShort Silver. To see more silver ETFs click here.
How To Get The Most For Your Money When Buying Silver
Mining Company Stock
If you want to invest in silver without buying the actual product, you can invest in a silver mining company. This can be very risky. If you own stock in a silver miner it can happen that even when the price of silver goes up, the price of the mining company’s stock goes down.
Self-Directed Silver IRA
One very popular method to own and hold silver is through a self-directed silver IRA. This is an IRA that is set-up with a custodian to own and hold physical silver. The IRA can also hold other precious metals such as gold, platinum or palladium, It is important to work with a top-tier precious metals dealer to set this up. If you can invest $10,000 or more in an IRA the top dealer to work with for a Silver IRA is Regal Assets.
Understand the Investment Risks
There are many ways to invest in silver, some better than others. Regardless of how you choose to invest in silver, make sure you understand the risks. As is the case with any investment, risk will always be present. Prices can rise or fall, and especially so over the short-term. Many investors in silver are buying now at what appears to be lower prices and holding for that time in the future when the price of silver leaps up above the long-term trend price. This is simply investing in an attempt to buy low and sell high. Don’t speculate with money you can’t afford to lose. After you know more about the silver markets and what you are doing – and have gained experience as a buyer and seller of silver – making a larger investment in silver can be an excellent method to protect your wealth over the long-term. There is always a time to sell. That is most clearly when the price has spiked above long term trends. Many people have set-up a self-directed IRA to buy and hold physical silver as a long-term play to preserve wealth. If the price of silver spikes up during some period of financial distress or uncertainty, that may be a great time to sell your IRA silver and enjoy the increase in wealth.
Buying silver is something many investors find fun and exciting to do. There are a number of links on this page to other sites to help you get started in whatever way suits your interests and needs. Check-out the links. Everything is here to help you.