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When it comes to investing in precious metals, silver is an excellent choice. Not only is it more affordable than gold, but it also has a wide range of industrial applications, which guarantees its demand.
However, finding the cheapest place to buy silver online can be challenging due to the number of options available.
This article aims to provide an in-depth review of where to buy silver at the most reasonable prices, including factors that influence silver prices, the differences between silver bullion and numismatic coins, our top pick for silver dealers, and how to avoid scams.
Understanding the Price of Silver: Spot Price vs Melt Price
When investing in silver, understanding how it’s priced is crucial. Two key concepts to grasp in this context are the “spot price” and the “melt price” of silver.
The spot price of silver is the current market price at which one ounce of silver can be bought or sold for immediate delivery.
The spot price is always changing, similar to the stock market or foreign exchange rates, due to factors such as supply and demand, geopolitical events, market speculation, and economic indicators.
To elaborate, if mining companies slow down production due to falling silver prices, it can lead to a decrease in supply. If the demand stays constant, this scarcity can cause silver prices to rise. Similarly, geopolitical tensions or economic instability can push investors towards “safe-haven” assets like silver, increasing its demand and subsequently its price.
The spot price is a base price. It does not include additional costs such as minting costs, dealer premiums, shipping, and handling fees, or insurance. These extras are often added on top of the spot price, especially when buying physical silver.
The melt price, or melt value, refers to the basic intrinsic value of a silver item. It’s calculated by multiplying the weight of the silver piece (usually in troy ounces) by the current spot price of silver. For example, if the spot price of silver is $25 per ounce, a 10-ounce silver bar would have a melt price of $250.
The melt price represents the bare minimum that a silver item is worth, disregarding any numismatic or collectible value it might have.
If you were to sell a silver item for scrap, you would likely receive around its melt value, as the buyer would simply be interested in the silver content, not any aesthetic or historical value the piece might hold.
It’s important to note that while the melt price provides a baseline, most silver items are sold for more than their melt value. This is because dealers need to cover their operating costs and make a profit.
Therefore, when buying silver, you’ll typically pay more than the melt price, with the difference being the dealer’s premium.
Why Understanding Spot and Melt Price Matters
Understanding the difference between spot and melt price is essential for any silver investor. The spot price gives you a real-time understanding of the silver market’s performance, helping you make informed buying or selling decisions. The melt price, on the other hand, gives you an understanding of the bare minimum value of your silver investment.
Being aware of these prices allows you to make sure you’re not overpaying when buying silver and that you’re getting a fair price when selling. It also enables you to accurately assess the worth of your silver holdings at any given time. Remember, knowledge is power in the world of investing, and understanding silver pricing is a significant part of that knowledge.
Buying Silver Bullion vs Numismatic Coins and Their Price Difference
When deciding to invest in silver online, you’re typically presented with two main options: silver bullion and numismatic coins.
Each type has its unique qualities, benefits, and drawbacks. Understanding the differences between these can aid you in making the best investment choice according to your individual needs and goals.
Silver bullion is a term used for silver that is valued purely based on its silver content. It’s often purchased for investment purposes as a hedge against inflation or a method of wealth preservation. Silver bullion comes in various forms, including bars, rounds, and coins.
Bullion bars and rounds are produced by private mints, while bullion coins are made by government mints and carry a nominal face value. However, the market value of bullion coins is generally much higher due to their silver content and the premium added by dealers.
The price of silver bullion is primarily influenced by the spot price of silver. When you buy bullion, you’re essentially buying a certain weight of pure or nearly pure silver. The bullion’s value will increase or decrease with the spot price of silver, making it a more direct investment in the silver market.
Numismatic coins, also known as collectible coins, have value that extends beyond their silver content. These coins are often sought after by collectors due to their historical significance, rarity, condition, or unique features.
Numismatic coins are typically older coins that are no longer in production, although some modern coins can also have numismatic value due to limited mintages or special designs.
The value of these coins is determined not just by the spot price of silver but also by the factors mentioned above.
As a result, numismatic coins often sell for a premium above their melt value.
This premium can be substantial for rare or highly sought-after coins.
However, buying and selling numismatic coins profitably requires a deep understanding of the collectibles market, which may not be suitable for novice investors.
The primary price difference between silver bullion and numismatic coins lies in how they’re valued. Bullion is valued based on its silver content and the current spot price of silver, plus a small premium to cover dealer costs and profit. On the other hand, numismatic coins are valued based on their collectible and historical value in addition to their silver content. This often results in numismatic coins being more expensive than bullion of the same weight.
However, it’s important to note that while numismatic coins can command higher prices, they can also be more challenging to sell, particularly at their premium value. The market for numismatic coins is more specialized, and finding a buyer willing to pay the full premium can take time.
Choosing Between Bullion and Numismatic Coins
The choice between investing in silver bullion or numismatic coins depends largely on your investment goals. If you’re interested in the intrinsic value of silver and want an investment that closely tracks the silver market, bullion is likely the best choice. It’s straightforward, easy to buy and sell, and doesn’t require specialized knowledge to understand its value.
If you’re interested in coin collecting, enjoy studying history, or are willing to spend time learning about the numismatic market, numismatic coins could be an exciting and potentially profitable investment. However, remember that the numismatic market can be volatile, and the value of a collectible coin can be subjective.
In summary, both silver bullion and numismatic coins can be good investments, but they serve different purposes and are suitable for different types of investors. Understanding your own investment goals and risk tolerance is crucial in deciding which type of silver to buy.
Recommended Silver Dealers: Why Goldco is Our Top Pick
There are numerous online platforms to buy silver, but our top recommendation is Goldco. Goldco has built a solid reputation for providing high-quality silver products at competitive prices. Their customer service is exceptional, with knowledgeable and friendly representatives ready to assist.
One of Goldco’s significant advantages is their transparent pricing. They provide up-to-date spot prices and clearly list any associated costs, like dealer premiums and shipping fees. This transparency ensures that you always know exactly what you’re paying for.
Moreover, Goldco offers a wide selection of silver bullion and numismatic coins, catering to both investors and collectors. They also provide precious metal IRAs, allowing you to invest in silver for your retirement.
Finally, Goldco has robust security measures in place to protect your purchase, including insured shipping and optional secure storage. This commitment to customer safety makes them a reliable choice for purchasing silver online.
How to Avoid Buying Fake Silver or Getting Scammed
Unfortunately, scams and counterfeits are a reality in the precious metals market. Here are some tips to avoid falling prey to such practices:
- Always buy from reputable dealers: Look for dealers with positive reviews, transparent pricing, and a history in the industry.
- Verify the dealer’s credentials: Check if they are members of recognized industry associations, such as the American Numismatic Association (ANA) or the Industry Council for Tangible Assets (ICTA).
- Test the silver: If possible, carry out tests to confirm the authenticity of the silver. Some simple tests include the magnet test (real silver is not magnetic) and the ‘ping’ test (silver emits a resonant ‘ping’ when struck).
- Seek professional help: If you’re unsure about a piece’s authenticity, consider getting it appraised by a professional numismatist or a testing lab.
- Be cautious of prices that seem too good to be true: If a dealer is selling silver significantly below the current spot price, it’s a red flag. Remember, if it sounds too good to be true, it probably is.
Final Tips to Consider About Getting the Best Price on Your Silver Purchase
- Watch the market: Silver prices fluctuate throughout the day. By keeping a close eye on the market, you can aim to buy when prices are lower.
- Buy in bulk: Many dealers offer volume discounts. The more you buy, the lower the price per ounce.
- Avoid unnecessary extras: While options like collectible coins or fancy packaging might be tempting, they often come with additional costs. If you’re primarily interested in the silver itself, stick to straightforward bullion products.
- Consider storage costs: If you’re buying a large amount of silver, you’ll need a safe place to store it. Some online dealers offer storage services, but these come at a cost. Include this in your calculations when comparing prices.
Investing in silver is an excellent way to diversify your portfolio and protect against inflation.
However, getting the best price requires a solid understanding of silver pricing, the different types of silver products available, and where to buy them.
While there are numerous online dealers, our top pick is Goldco due to their competitive prices, extensive selection, and exceptional customer service.
Avoiding scams and counterfeit silver is crucial in this industry. Always buy from reputable dealers, verify their credentials, and don’t be afraid to seek professional help if you’re unsure about a product’s authenticity.
Finally, keep an eye on the market, consider buying in bulk, avoid unnecessary extras, and factor in storage costs to ensure you’re getting the best possible price for your silver investment.
With these tips in mind, you’re well on your way to a successful silver investment journey.