The Most Commonly Purchased Types Of Physical Silver

So you’re on one of these silver bullion websites. The first thing you notice is a bombardment of different silver products. You see all the flashy lights of a nonstop 24/7 commercial of shiny stuff. All the bells and whistles. Everything but the kitchen sink. Maybe a kitchen sink too, if you’re willing to buy it. What do you decide to spend your limited hard earned money on when there are seemingly unlimited offers to choose from? How do you know the difference between a good deal and a gimmick? And there are plenty of gimmicks trying to make an easy buck off of you.

Let’s take a look at the different categories of physical silver products readily available for purchase. I divide them into 4 categories:
Sovereign Coins
Generic Bars and Rounds
Proofs and Antiques
Collectibles

There’s a 5th category, which is constitutional silver. Its pros and cons will be discussed separately.

Let’s look at each of the first 4 categories in detail.

Before You Buy, Know These Key Terms

As a beginner silver investor, the first thing to do is get familiarized with a few key basic terms.

There are coins, and then there are rounds. These are two very different items and will be discussed in detail. The primary distinction is that a coin is minted by a sovereign government and can be used as legal tender with a cash value printed on the coin, such as a quarter or a nickel. When it comes to silver, the coin’s cash value is always ridiculously low compared to the actual metal content, purposely done to keep them from actually being spent in public. As a side note, ever notice how light in weight a newer penny is compared to an older penny? As cheap as they are, the government still loses money minting them.

Don’t spend this at the dollar store!

A round is created by a private mint and unlike a coin, does not have any cash value attached to them and cannot be spent in public.

A coin or round has an obverse side, which is the front and often referred to as “heads”. The reverse side is the back and often referred to as “tails”. It may not always be easy to tell which side is actually the obverse or the reverse.

Quick! How many sides does a coin have? If the answer was 3, that would be correct. The third side is the edge of the coin or round. Although it could be technically argued that the edge is “not a side”, common practice says that it is. Most coins and rounds have a reeded edge, which are the little grooves all around the coin.

Left: reeded edge. Right: smooth edge

Ag is the symbol for Silver on the Periodic Table of elements.

img_4151-ag

Silver is weighted in troy ounces. A troy ounce is different from a regular ounce also known as an Avoirdupois ounce. A good rule of thumb would be that troy ounces are used for precious metals, while regular Avoirdupois ounces are used for food items such as sugar, peanut butter, or potato chips.

The difference is 1 Troy Ounce is heavier and weighs approximately 31.1 grams, while 1 Avoirdupois Ounce weighs around 28.35 grams.

Most silver purity I’ve come across will have a coin say something like “.999 Fine”, meaning that the coin is made up of 99.9% silver content. There may also be something to the effect of .9999 or 999.9 which are just different ways of saying 99.99% silver content.

img_4152-troy-oz

The spot price of silver is simply the current market price, which is live and constantly fluctuating. Silver is traded 23 hours a day from 6pm Eastern time on Sunday through 5pm Eastern time on Friday. Trading is closed daily from 5pm Eastern time to 6pm Eastern time. Since the spot price is constantly fluctuating, when shopping for silver items the prices of the items will constantly be changing as well. A nice advantage of browsing physical silver items during non trading hours (mainly the weekend) is that the price won’t be moving but purchases can still be made. This cannot be done on the paper silver market, at least not as far as I’m aware of.

Unfortunately, physical silver is not sold by anyone at spot price. There is a premium or additional cost added to the spot price. So when it says “as low as $2.49 over spot!”, this means the cost of the spot price of 1 troy ounce plus the additional $2.49 per item. So if the current spot price of silver is $17, this coin would cost $17 + $2.49 or $19.49 per coin.

Be aware that when it says “as low as”, it means that in order to get the best price, a large quantity of the same item would have to be purchased. So the real price for buying just 1 coin in this example could start at something like spot price plus a premium of $3.49 instead of “as low as $2.49”. On occasion certain items will say “any quantity for only $2.49 over spot!” In this instance, the price of 1 coin or 10 or 100 will be the same per item. Wallet size won’t matter when it says “any quantity”.

Something that comes up repeatedly is seeing the words Brilliant Uncirculated or BU. This refers to a coin or round that has been minted but has never gone into circulation in public. Once a coin goes into public, the handling of the coin or the rubbing of coins in pockets or dropping them into parking meters will over time degrade the quality of the coin. The coin can lose its shine or luster, and the details of the coin’s design can fade and flatten. Keeping coins and rounds in Brilliant Uncirculated condition helps maintain their value.

Let’s look at a few tips before buying.

How To Invest In Silver – Getting Started

So you’ve decided that you would like to invest in silver. Now the question is, where do you start?

Well there’s multiple ways to do it. So the first thing to decide is whether you want to invest in “paper” silver, or physical silver. Let’s take a look at the differences, as well as the advantages of each.

PAPER SILVER
The most popular options for “paper” silver are:
1) a silver Exchange Traded Fund (or ETF) which closely but not perfectly tracks the movement of the price of silver
2) the publicly traded stock of a company that mines or digs up and produces the silver
3) an ETF or mutual fund made up of several different silver mining stocks

Anything outside of this scope is typically only dealt with by professional paper traders and PHD’s sitting in front of Excel spreadsheets 20 hours a day. I am no professional, but you are certainly welcome to consult one, and you should definitely do your own due diligence.

"October: this is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February." - Mark Twain

“October: this is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

If you’ve decided that you would like to invest in paper silver, and you’ve researched the different stocks or ETF’s or mutual funds that you want to own, the next step would be to open a brokerage account. You can do this through an online discount brokerage company like ETrade, TDAmeritrade or Schwab.

Advantages Of Paper Silver
1) If you are trading strictly for the up and down movement of the *spot price* of silver, it would be faster to buy and sell on paper than it would be to buy the physical metal and then sell it later
2) There would be no markup above the spot price as when buying and taking possession of physical silver.
3) There would be no need to worry about how to store the physical metals that you are taking possession of.
4) You’re trading for the value of silver in general, there’s no need to dig through the different types of physical silver and look at all the different artwork to decide what you want to buy.