How to Buy Silver
Investments, as we know it, take on a lot of variety. The most obvious that we know are in the form of cash – more specifically, banknotes. Investments can actually be any tangible assets that may yield a return or profit over a period of time. They are volatile, meaning their value can become unstable over time and may vary depending on internal or external changes within a market in a specific location.
Houses, automobiles, and areas of lands are all considered investments. The same goes for currency, bank savings, jewelries, gold bars and coins, and silver bullion and coins – they are forms of investments, too.
What are Investments?
Investments can be a lot of things. For businesses, it is something that helps define their liquidity and worth. It positively reinforces their ability to acquire loans and credit. Investments also enable businesses to expand capital worth by way of interest income from entrusting these investments in banks and financial institutions to manage and increase their value further.
For individuals and families, the form of investment many are familiar with is through savings account and currency kept in the bank to earn interest. It could also be a real property that is leased, or a business, or some other similar positions.
Silver and the Silver Standard
For the last four millennia, people have been investing in silver. Silver, which has been used as a form of currency and money, flourished so widely during the Silver Standard era – a time which started during the fall of the Byzantine Empire in the 16th century and which ended in the 19th century. The Silver Standard was used for any economic activity during that time. It made use of a fixed silver weight and was used in relation to gold. The prevalent gold standard was practiced widely during the 16th century. Silver, on the other hand, was used as a relative measure to gold – the ratio being 151/2 is for 1 – 15 ½ silver units for a piece of gold.
Silver came to be widely used when it was first discovered to be abundant in the 16th century. This was after Spanish explorers of the New World came to recognize its possible value in the emerging economic trade. It was used as a monetary unit for more than three hundred years, ending in the 19th century, when China and Hong Kong eventually abandoned the Silver Standard in 1935.
Gold and Silver as a Form of Investment
Because gold and silver are precious metals, they can also be used as an investment. These metals are used as a monetary unit and a store of value. It was during the decline of the Silver Standard when silver no longer became a legal tender in many developed economies all throughout the world. At present, gold is still being used as a form of value for any economic standard.
Silver, meanwhile, is still minted by other countries. They are turned into bullion, rounds and coins, and are still regarded with a nominal face value. Collector coins like the American Silver Eagle and the Canadian Silver Maple Leaf are continuously minted each year and have a nominal face value of $5 to $20 per ounce. In the state of Utah, silver is still used as a legal tender, and can be used to pay off liabilities and debt.
At present, industrial applications are the major market of silver. It accounts for 40% of the total market share. Jewelries, bullion and coins are still minted from silver. The silver industry is presently valued to be at 530,000 tonnes.
The Price of Silver
Valuation of silver, as a commodity, is dictated by the law of supply and demand. To some extent, silver pricing is also dependent on speculation – the practice of dealing with risky financial transactions. And because of these factors, the value of silver changes every so often. This volatility makes silver somewhat lower in terms of market liquidity. Another factor that affects its price is the use for industries and store value that drives fluctuations.
In the 19th century, silver was valued at $1.29 / troy ounce. In 1940, about a century after, it was priced at $0.64/ Oz t. The decline in value was because of the fall of the Silver Standard. Fast-forward to 2011, silver was priced at an all-time high of $35.12/ Oz t.
At 2012, silver was valued at $31.15/ Oz t. This seemingly leap of price greatly explain how silver is a volatile commodity. It can reach a lesser amount depending on supply and demand, and yet prices can greatly jump by several hundred percentages.
If one wishes to invest in silver, the most appropriate form is through a silver bar. There are silver bar or bullions in Switzerland, which can be purchased at banks; some can even be bought over the counter.
Different weight variations of these bars are available. Some can be purchased at 100 Oz t, 1000 Oz t (. 999 fine), and one-kilogram (32.15 Oz t) bars are also available. There are also other weight variations other than these, and they usually cost less because of the risks involved in the making and trading of such types.
Silver coins are usually minted in 99.99 % or 99.93 % pure. However, there are also varieties that are made with 90% component. Most of these silver coins are collectors or commemorative items, and are mainly clad with a nominal face value. When used for trading, these values depend on the condition of the coin, and also when it was minted, and the company that manufactured them.
Silver makes for a promising form of investment. Businesses use them as a form of trading product, and individuals collect them as commemorative coins with face value. Silver are convenient to store in safety boxes and banks. They are still used as a form of currency and legal tender in some places; and they can also be turned into jewelry items of value. Silver is a precious metal that has been used for business and trading for the last hundreds of years. It is only practical that people should start considering silver as another investment option. However, there are precautions to take before buying them. Because these are precious metals, there are certain risks in the trading of such commodities.
Things to Remember in Buying Silver
Precious metal dealers can be lurking, especially on the internet which can entice people into their sweet-sounding sales pitch. There have been instances in the past where certain individuals – and even traders – have been scammed by these modern-day and online pirates. Certainly, you would not want to see your hard-earned money go to some schmuck whose only intention is to rip people by channeling into their vulnerability. Here are some very important things to remember in buying silver:
ü Purchase Silver Only by Weight Value at.999 Fine. Precious metals are priced according to their weight. Silver bars or coins, regardless of their weight variation, are valued according to their nominal face value. This simply means that a one-kilogram silver would yield the same raw silver with a one-ounce coin. Opt for pure silver that is valued at.999 fine. When the time comes that you would want to convert your silver into cash, or when the currency goes on a nosedive, the money you will get out of it will only be dependent on the quality of silver you have. Get one that has the higher valuation, weight and.999 fine.
ü If Possible, Do not Opt for Collector Coins. Most often, these collector coins are extremely expensive. If you are buying these kinds of investment for future trading purposes, it may not do you any good. It is expensive to purchase and may not have the same valuation for some time. It only becomes more valuable depending on the demand by collectors in the market. Unless, of course, you are purchasing because you are a collector yourself. If that is the case, you can go ahead and do just that.
ü Go to APMEX or Similar Agencies to Ensure You are Getting Genuine Silver. There can be a number of scammers in the silver trade who sell fake silver to unsuspecting buyers. Always get them from reliable ones. Be wary also because there are even scammers among precious metal traders. If you are a newbie in the silver trade, go to APMEX (American Precious Metal Exchange) or a reliable dealer so you are certain that the silver you are purchasing is indeed of value and not some melted metal that is plated with silver on the outside. You may also want to check Kitco. Considered to be the next option after APMEX, it offers buying and selling options to customers all throughout the world.
ü If You are Buying Silver from Online Traders, Check for the Company’s Background. Check their registration papers, if you can. Also, inquire about information pertaining to silver inventory as well as in storage or shipping stocks. And since you’re at it, ask for delivery time and mode of delivery. You may also want to check online reputation from other traders and previous clients of such online store.
ü Before Buying Silver – Weather, Bar, Coin or Rounds – Check with Other t
Traders First, if They Offer Competitive Rates. If all your traders can be accessed online, that would be great. Check which of them offers the great deal most beneficial to your needs. Silver trading online may not always be reliable because you do not get to inspect the goods before you can purchase them. Unlike stores or silver shops that has an actual physical address, and where it gives you the time and opportunity to check the silver itself, online traders give you not much liberty for an actual and close scrutiny of the item. Unless, the trader lives nearby and arranges for a meet-up before you make your purchase.
ü Decide First if You Want Silver Bullion, Silver Coin or Silver Rounds. It is important to know if your purchasing is based on the need to put in some investments in the form of silver bars or bullions. Or you may also be purchasing silver coins to be used as a legal currency. Once you have decided what to buy, ensure also how these precious metals are to be kept and where they are to be kept. Of course, you would not want to keep these investments lying unsafe in your room.
ü Compare Dealer Prices at the Time of Purchase. This step guarantees that you get the right value for your silver. Silver is usually priced at a premium that is above the spot price. To do this, you must know the current spot price for silver in the market; this is in per ounce. Deduct the current spot price for silver from the total cost of purchase (delivery cost, credit card fee or remittance fee if sending through courier, quantity discount, if there is, and other similar charges and cost). The sum will be the true premium over spot.
ü Watch out for Price Differences When Using a Credit Card. If you are buying silver using your credit card, be sure to check first with dealers who process spot cash payments. It may be possible that credit card purchased-silver offers you a lower price, but the premium of the silver is low. Or it could also be that when you purchased the silver using credit card, you save more than paying dollars in cash. Just make sure to see and compare options. Importantly, look at options that offer higher premium for your silver.
Silver is indeed a great investment alternative to take. Businesses and individuals have a long history with silver investments. It may be a volatile commodity to have but this is precisely why traders continuously offer them in the market. The many advantages that owning silver have greatly defined these element’s contributions and worth in the trading and the global economy. It is valued highly for its industrial and aesthetic use, and can even be used as a currency in some countries. It has in-store value, trading capacity and nominal face value. Of course, it should be. It is, after all, a precious metal.