Saturday, August 22, 2009

Tips on Buying Silver

There are many different types of silver available so some tips on buying silver can be very useful.

Let us look at the various types of silver available.

Silver Etfs (Exchange Traded Funds)

Silver etfs are a popular way to buy silver. With a silver etf, the apparency is that one is buying silver. However one is not actually buying silver here but only buying units, the value of which are based upon the daily movement of the silver futures price and it is not possible to redeem that silver and take delivery. One can only 'cash in' one's units and receive the value in currency. There is even some question as to how much of silver etf is actually backed by silver. If, for example, the etf went belly up and it was found that the amount of silver used to back the etf was less than the units in the investors accounts, how would that affect the value of those units?

Investing in silver etfs is not actually investing in silver any more than investing in the stock or shares of silver mining companies.

Of course when one invests in silver mining companies one is really investing, not in silver, but the company itself. This can include any other mining activities the company is undertaking as well as the management a strategy, the ability of the management team to make wise decisions and so forth. So that is not actually investing in silver either.

Silver Coins
Investing in silver coins is the first type of silver investment there is. Here one can get pure silver coins to own. Such coins as American Silver Eagles or Canadian Silver Maple Leafs have always been very popular and considered safe coins to own. The main disadvantage with them is the high premium it takes to buy them. You can pay anywhere up to an extra fifty percent of the silver value to buy silver coins. Then there is the shipping, insurance and storage costs to consider. All these add to the costs of buying silver coins. Silver rounds are a better choice here.

Silver Rounds

Silver rounds are like silver coins except they are not legal tender. Where as an American Silver Eagle is legal tender with a face value of one dollar (far less than the silver content I might add), a silver round is simply a coin shaped piece of silver with a value equal to the silver content. One of the advantages of silver rounds over silver coins is the reduced cost of manufacture and so smaller premium for the investor. Again, one still has shipping, insurance and storage costs to take into consideration when looking at the overall cost of purchase.

Junk Silver
Junk silver coins, or early US silver legal tender coins are another good way of accumulating silver. Actually junk silver coins is not the proper name for them. Basically they are old silver coins that have no numismatic value but are valued for the silver content. They are legal tender in the country they are, or were, used, such as the US, Canada and Australia for example. The word junk really refers to their collectible value, not the silver value. You can buy them by the bag and usually consist of early dimes, quarters and half dollars. You can also buy junk silver coins by the roll. Many silver dealers sell them.

Scrap Silver
Scrap silver is another way of accumulating silver. Here you can often get silver at cost price. You do need to know a bit about silver and what price you should pay for scrap. Old broken jewelery is a good source. Sometimes old silver coins can turn up as scrap silver. In this case always check if the coin has any collector value because if it does, it can be a lot higher than the silver content. It pays to do some research into the area if you intend collecting or accumulating scrap silver.

Silver Bullion Bars

Silver bullion bars are a cheaper way of buying silver. The bars come in a range of sizes but are easier to manage financially than, say, gold bars, due to the lesser cost of silver by the ounce than gold. You can buy silver in one and fifteen kilo bars and the premium is much less than with the silver coins or silver rounds. Again one still has to take into consideration the shipping costs, which can be significant with the increased weight of bullion bars compared to coins or rounds. Also, again there is insurance and storage to consider.

A Smart Way to Buy Silver
A real smart way of investing in silver that obviates a lot of the premium and saves on shipping costs, insurance and storage is by using a system whereby the silver is purchased on your behalf and stored in a bank vault for you. There is, of course some premium and a storage fee but it is much less and one does not have the problem of maintaining security of the storage.

Gold Money is one such system and one can buy virtually any quantity of silver from just a gram or two up to as many ounces or grams as you want. This is ideal for an investor as one can then embark on a regular savings plan but with the ability to vary ones regular savings according to ones ability to save. One can also buy gold this way.

The silver is stored in a bank vault in either London or Zurich and fully insured. It is audited by an independent third party on a regular basis to ensure that the silver or gold in the vaults exactly matches the record of silver or gold in the clients accounts.

With the lower purchase and maintenance fees and less hassle handling and looking after ones silver, Gold Money is an ideal way to accumulate a silver nest egg and when it comes to tips on buying silver, this must surely take the biscuit.

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