Buying Silver Bullion Considerations

When buying anything, and silver bullion is no different, you need to keep in mind the concept of 'value'. How you determine value is different for each and every investor. Ask yourself several times why you are buying silver bullion in the first place. Anyone who buys silver bullion, especially for the first time, must keep this point in mind. Remember whether you're approaching silver bullion dealers from strictly an investment standpoint or you're a serious collector of silver bullion you'll be able to gauge value in your own special way; don't bother understanding what silver bullion value means to you and chances are you'll get gouged. So take your silver bullets and aim your sights at the bull's-eye because if you don't know your purpose for buying you'll probably miss the mark altogether.

It seems a clear, simple analogy would be beneficial at this point and what does the vast majority of us know about and have experience with in the modern era?

The answer is shopping for a car. Whether you're a first time buyer seeking your first ride, looking for a sedan for the family or collecting vintage British sport coupes out of personal interest as much as profit then you'll know what I'm talking about.

When you're deciding upon the best silver bullion you can buy, the selection process is very similar to that of choosing a car; what it comes down to is defining 'value' in your terms and identifying the factors that allow you to create that value when you buy silver bullion.

Some key factors to keep in mind creating your definition of silver bullion value:

1) Should I swim in the pool?

When buying silver bullion you can opt to take delivery or buy from a general pool. What this option equates to is that you don't physically see, touch and feel your silver ingots because you're buying a concept rather than a coin. The disadvantage from a collector's point of view is that the investor does not physically own his or her investment whereas from a general purchaser's perspective in terms of storage limitations the advantage once again is that they do not physically own their investment.

Look at it in terms of buying a car. Are you a salesperson interested in leasing a company car with functionality being as high up your list as appearance? You may want to have a variety of models at your disposal and have the flexibility to exchange and return them to the dealer. Or are you that serious collector of rare, vintage European roadsters who loves to store them in his/her garage and appreciate their uniqueness and aesthetic beauty.

2) Bars versus Coins.

When selecting which form of silver bullion to buy keep in mind it that you can buy in both bar and coin form. If you're looking at silver as a standard part of a steady investment strategy then bars may be the Japanese autos of the car buying world; as reliable and convenient as Honda and Toyota these consistent performers have ease and convenience of resale and come with certain expectations in regard to sell-on value and appreciation; the wise investor realizes that 1,000 oz bars must be redeemed in entirety, so when dealing with a few thousand ounces or less a combination of the smaller denominations are preferable.

Coins on the other hand are more of an adventure, while not as random as nuggets that really require a sophisticated eye, they become as much about the joy of ownership as a straight investment. When an impressive collection of silver coins is amassed by the owner and both structure and elegance are on display value is achieved on two levels however keep in mind the importance of selecting the right kind of coin; for example opinions differ over the merit of Nationally minted rounds, some people suggest that the special design and recognition increase their market demand while others argue that the extra expense is not justified in terms of greater resale value.

If you're the kind of person who might consider owning a classic European sports car maintained in 'mint' condition and might even drive it once in a while this option would definitely appeal to you.

3) Generic versus Recognized Mints.

When buying rounds the options are generic, semi-generic, well known minted and nationally minted. What it comes down to once again is sell-on value. In terms of buying a car it shouldn't be a problem to sell a quality pre-owned generic model back to the dealer and similarly most precious metal dealers will buy any minted silver without question. Coin dealers will take generic minted silver bullion off your hands no questions asked but everyone recognizes that just as cars from GM, Hyundai, Volvo, Acura, Lexus, and Mercedes Benz will be appraised differently that silver bullion will also be looked upon differently by both coin dealers and independent collectors alike depending on the fame and prestige of the source mint. Also for rare and unusual items in both the world of cars and coins realize that individual collectors with an eye to particular taste may be willing to a pay a premium for silver bullion ingot from respected, internationally recognized mints.

Usually it comes down to a trade off between lower fees and higher resale value since when buying semi-generic, widely known, and nationally minted silver bullion the dealer will charge a higher fee as the recognition factor of the mint increases respectively.   

Understanding Silver Bullion

With difficult economic times and fears over the governments handling of the money supply people once again turn to the traditional stores of wealth - Gold and Silver.

Buying Gold Bullion is out of the reach of most average investors due to its much higher price and than Silver. The current ratio at the time of this article is 1/70. Many feel this ratio is way out of balance given the ratio of naturally occurring is about 1/17.5. Should Silver return to this natural ratio anyone holding physical silver is likely to have a very good return on investment should they buy at today's price for silver.

The value of silver is mainly control by the world spot price for silver. What one needs to understand however is that the average person can buy silver at the spot price. The spot silver represents large contracts for quantities that the average punter couldn't afford to pay. Thus when people buy silver bullion they tend to buy it is smaller more easily transportable weights, normally 10oz bars, 20oz bars and 1/2 kilo and kilo bars. There are a variety of other weights available but the later tend to be the most popular. As the size of the bar increase the price per ounce of silver decreases. There are a number factors for this. One is that smelting a bullion bar requires the same amount of labour despite the size of the bar, in fact its probably more time consuming to create the smaller silver bars. Why then do people not buy the bigger bars and get more silver for their buck? The two main reasons are transportability and liquidity.

Transportability refers to the ease with which the silver bar can be move. A small 10 oz bar can be easily posted, carried in ones pocket and even used as a paper weight whereas a 1000 oz bar, whilst much cheaper per ounce of silver weighs 31.1 kilograms! Try carrying that around with you all day.

Liquidity refers to the ease of which you can sell the item. Because the smaller bars cost less in total cost they are easy to sell as the buyer does not have to come up with such a large sum to purchase the item.

Buyer recognise these factors and are willing to pay the premium.   

Where Can I Sell My Silver Bullion?

As more and more Americans are searching for ways to liquidate physical assets like precious metals, selling gold and silver bars, jewelry, and other pieces are practices getting more and more popular. Many conversations now include questions like, "Who buys gold and silver?" or "Who will buy my silver bullion?"

If you're one of the many individuals wondering "Where can I sell my silver bullion," there are a few things you should know about your alternatives. Some of the most popular ways to sell silver bars are outlined below.

Where Can I Sell My Silver Bullion: Local Shops
Oftentimes, silver bullions can be sold to local pawn shops or precious metals merchants, including jewelers. While this technique does save you from the trouble of shipping costs, it might not get you the best price. A sensible offer may be within 5 percent of the spot price, but there are sources that can offer you more.

Where Can I Sell My Silver Bullion: Online Auctions
Many people enjoy selling silver on eBay, as it occasionally results in a higher payout than what a local shop can offer. Nonetheless, the final price you will receive is largely unpredictable - and there's no guarantee that you'll be pleased with the amount. Plus, selling on eBay takes time; so, those who want fast cash for silver or gold should think twice before going this path.

Where Can I Sell My Silver Bullion: Other Resources
Selling your silver online is not a bad idea; it just takes some careful research to select the appropriate buyer for you. You may wish to look into online sources that are also metals refineries. A company that is a refinery is not a middleman; in other words, they have no need to pay a refiner, and therefore no need to take a cut out of the middle of your transaction in order to remain profitable.

There are several reputable sources you can look to, but it's best to find a silver purchaser that is upfront about the payouts it offers. For example, some cash for silver buyer divulge the current price of gold and silver on its website, as well as the payouts it is able to offer. A 100% satisfaction guarantee ensures that sellers can retain their items if they are dissatisfied with the money they got. "Who will purchase my silver bullion?" is a topic on the minds of many. Hopefully, the information presented here answered the question for you.