Whether it’s your failing belief in the paper currency that is being printed up at warp speed, or your desire to invest in something that has seen a several hundred percent increase in just over the past 8 years, it’s first essential to understand how to buy silver the right way — without getting scammed by precious metals dealers.
It’s a sad reality, but wherever there is money to be made there will always be individuals ranking on the search engines and social media leading potential buyers into their own sales pitch. In almost all circumstances within the precious metals world, this is not favorable when it comes to your best interests in placing your finances. Personally, I am not being paid to write this article nor do I have any affiliations with any precious metals dealers. This guide was actually created out of necessity, after I found that there was a serious lack of layman-friendly silver buying guides that didn’t lead into an aggressive sales pitch.
Without further introduction, let’s get into how to buy silver the smart way without getting scammed.
How to Buy Silver | Not Losing Your Money
It’s the first and most essential step in buying silver. We will get specifically into which forms of silver you want to purchase, but it’s first crucial that you do not end up spending more than you need to on any form of silver. Whether it’s ten dollars or ten thousand,you do not need to get scammed into buying coins that are valuable only in the eyes of rare collectors. The idea here is that you want to purchase silver with the ultimate goal of selling or exchanging it with either a company or an individual at weight value of the silver.
You want a piece of silver that holds its value based on weight and metal content, not the potential interest of a coin collector in the wildly changing financial world of coin collecting.
Also read: Investing In Gold Without Getting Scammed
Buy .999 Fine Silver Valued by Weight — Not Collector Coins
Whether the economy plummets or you simply want to unload your silver for cash, you will need silver that is quite simply priced based on the weight of the precious metal. In case you’re very new to this, which is fine and this guide will benefit you immensely, silver coins and bars alike (as well as scrap and everything between) are priced based on weight. That is, before the additional premiums come in from the dealers. Whether it’s a 1-oz coin or a 1-oz bar, it’s the same amount in raw silver. As you can see, you do not want rare and highly expensive collector coins that have a value to special collectors as this depends purely on the demand of the collectors.
What you’re shooting for is pure silver, .999 fine silver. This is where the dealer comes in. You will hear about buying silver on Ebay or Craigslist — this is not for beginners. There are hordes of scammers waiting to make a buck on Ebay by selling fake silver, and they are getting away with it daily. After you’ve purchased silver from some reputable dealers and get a feel for the action, you can check Ebay — but nothing is 100% on such sites. A positive 90+ percent seller rating can be a good indication, but you never know.
That said, you can score some good deals on Ebay if you have money to play around with. If you only have a small amount to invest with, do not use Ebay.
Use APMEX or Equivalent to Avoid Fakes
If you are purchasing from a reputable dealer, you can be almost positively sure that the silver you’re getting isn’t fake. It’s becoming a concerning trend, precious metal dealers are being scammed and scamming customers alike into buying silver plated coins that are made from various scrap metals. The fact of the matter is you want to go with a dealer like American Precious Metals Exchange (APMEX), a dealer that again I have no affiliation with whatsoever but one that my precious metal dealer friends recommend and that I’ve used for years.
If for some reason you would prefer not to deal with APMEX, your next best choice would likely be Kitco. Kitco is not as large as APMEX, however it offers both the purchase and sale of precious metals on a global scale and is generally considered the next best option. Whatever you chose, the next step is determining what kind of silver (or silver stocks) you want to buy.
Coins, Bars, or Junk? Buying the Right Kind of Silver
So now you’re at the point where you need to know what kind of silver you actually want. This is the biggest question posed by consumers, and it’s the easiest to answer based on a few different things from the ability of the silver to be exchanged to whether or not you want a long-term or short term investment. The simple fact is that you’ll never be able to buy a coin ‘at spot’, which is the raw price of the silver. It’s virtually impossible as the dealer would lose money, and therefore everyone must pay a small ‘premium’ per sale — a figure that is ‘over spot’.
No matter what you’re buying, you will be dealing with spot prices, and it can make a difference in your purchase — especially in bulk orders. But the simplest way to break down each option along with the benefits and negatives is to list them separately, and then breakdown the results. We’ll discuss traditional spot prices for each one as well.
When getting into silver investment, you will likely hear the most about silver coins over bars and rounds (which actually are not coins). The first notable aspect about coins is that fact that silver coins are minted specifically by the federal government, which actually offers an official guarantee of both weight and silver purity for each coin from the mint. This allows for a simpler rate of exchange in an emergency situation as silver coins have a very high reputation when accompanied with the appropriate documentation (and you can even verify the integrity of a coin on the US government website), but it also means you’ll be paying a lot more over spot price for these government-guaranteed coins. When supplies increase, however, you can see a reduction in prices over spot.
In the United States, the American Silver Eagle is the only federally minted coin. When it comes to other nations like Canada and Austria, however, you have other options. The popular coins by country are as follows:
- United States – American Silver Eagle
- Canada – Canadian Maple Leaf, Canadian Silver Cougar
- Austria – Silver Philharmonic
But it does not matter which nation you reside in, as all of these coins can be traded internationally.
The bottom line: These federally-backed coins are great for trade, but they come at a higher price. You can score silver bars, rounds, and junk silver for cheaper and in larger quantities. If you have decent investment funds, purchase coins to compliment your overall bounty of silver to enhance your portfolio and have a highly trade-accessible coin. If you are low on funds, you may be better off opting for junk silver and silver bars.
Though silver rounds look like coins, the major difference is that they are created by private mints and not backed by the same government guarantee that coins enjoy. The trade off here is that they are less expensive than silver coins so you can get larger quantities for less (often way less over spot, in fact), but they’re not considered legal tender. This doesn’t mean that you can’t trade it to a metals dealer for cash or even do an independent transaction with another person, but legally you cannot pay for public or private debts with them.
The lack of government backing associated with rounds means they’re much harder to trade. What it comes down to, however, is that silver is silver — regardless of government approval. In a financial meltdown, the value of raw silver by weight in rounds verses government-backed coins is the same. The difference, however, is that coins may be seen as less of a risk due to the reputation. Methods exist, however, to verify the integrity of a coin such as weight testing and magnification.
The bottom line: This form of silver is like a coin but not backed by the federal government and not recognized as legal tender. That said, you can acquire more silver by weight than with coins due to the reduced price.
Silver bars are my personal favorite type of silver investment, but let’s take a look at the overall benefits and risks. Bars are really the best way to buy massive amounts of silver for very low over spot, and you can even get up to 1,000-oz bars and beyond. To put that into perspective, that’s a 68 pound bar of silver. When you purchase in such a large quantity, you also save a lot off the spot price with dealers like APMEX as they are getting a larger sale.
Of course silver bars are also available in much lower quantities, from 1-oz, 10-oz and 100-oz variations. As you can tell, this is all about raw silver weight that has the market price attached. Not backed by the government as coins, the goal here is to amass a supply of silver bars that can be traded at market price without much of a loss from pricey spot fees. If you have the space for your bars at higher volumes, these are great to store long-term.
Bottom line: Want a ton of silver for super low spot? Buying bulk means more cut off the spot fee, and bars can be purchased in quantities that are significantly less inexpensive than rounds or coins. For the same weight, coins would be exceptionally more expensive. As with rounds, the bars are not backed by the federal government. Despite the lack of government backing, bars are my favorite choice of silver investment as you can amass a large storage of silver for less than any other form outside of some junk silver and store it for long-term profit generation.
These are special edition versions of silver coins, examples being the Special American Eagle MS 70 Coin and others. What you have here are coins that are worth the exact same as silver, rounds, and bars when it comes to silver content (assuming they’re the same weight, obviously) but with an additional value that is determined by whether or not someone wants a special edition coin. Highly polished and attractive looking, proof coins are generally not for the precious metals investor who just wants to hold on to raw silver by weight for financial security or emergency use. These coins are targeted to the collector, and they are way more expensive with a hefty spot price due to this fact.
Bottom line: Unless you are a collector or looking to sell to collectors, proof coins are generally not for the precious metals investor. These ‘pretty’ coins are much more expensive than even silver coins and the collection value fluctuates. If you’re seeking silver to hold onto for emergency use or investment via the price of silver by weight, these are not for you.
Don’t let the name fool you, junk silver can actually be a very smart investment decision. Partly because it’s so frequently overlooked by amateur investors and partly because it’s somewhat simple to trade, junk silver is an excellent choice for those with low and high investment funds alike. Junk silver is simply the name given to coins that were minted before 1964, as these coins were actually made with 90% silver. The title of this metal form is misleading, which can be used to your advantage.
Since junk silver sounds like a ‘junk’ investment, it often throws people off. Because of this and other factors, it has the lowest additional spot price of virtually any physical silver. The key is actually finding it for sale. You can purchase junk silver on APMEX, but be wary of buying through Ebay or Craigslist. Due to the amount you can get for a low price, junk silver is cheaper than bars. While I wouldn’t spend 100% of your investment funds on junk silver, it’s great to purchase at least some to get a large amount of silver by volume for less.
Bottom line: Junk silver is not junk. In fact, it’s perfect for those with lower funds as the premium (spot addition) is the lowest in physical silver and you can stand to amass a large amount of silver for a relatively inexpensive price.
How Much to Buy
After reviewing the benefits and negatives of these coins, it should be somewhat apparent as to which will fit your overall approach. Based on the information of many successful trend forecasters and investors who I either follow or speak with myself such as Gerald Celente and others, I believe the best approach is first and foremost avoiding any items that have a higher spot price due to the potential value seen by coin collectors. That said, it’s also important to have something you can trade.
For these reasons, I recommend the first thing you purchase as a physical silver investment junk silver, due to the fact that it has the cheapest silver by volume price and can be traded in almost any scenario. Secondly, I would purchase bars — especially if you have a larger investment pool. A large silver bar carries a lot of financial power, and can be easily sold to precious metal dealers like APMEX for a reasonable price. I would then recommend the purchase of coins if you have adequate funds. Coins, while they are a bit over spot, are very easy to trade and are legal tender for private and public debts. You will immediately be losing out on the fair metal price by volume due to the higher spot, but this can also be made up for as silver prices increase.
Overall, you should at least have some silver in your investment portfolio. Silver has stood the test of time and the very word silver can be traced to the actual word for ‘money’. While gold has similar characteristics, silver is also currently far below the traditional ratio between silver and gold that has been seen throughout time. It is also far, far cheaper. I would recommend you examine some gold investment as well, but silver opens itself up to investors who do not have a lot of finances to play with while offering a greater percentage of potential increase than gold when comparing the ratios throughout history.