by Jeff Clark (Gold & Silver Specialist)
Buying silver bars is a shrewd investment decision. Silver bars come with lower premiums than coins, are easier to store, and will rise a greater percentage in price than gold bars.
But what exactly should you buy? And where? This guide will answer all of your questions about the best ways to buy silver bars.
Why? Premiums are lower because coins have more intricate designs and thus greater labor and machining costs. Coins may be prettier, but you pay extra for that appeal.
Here is the current difference in premium (what you pay over the spot price of silver) between silver Eagle coins and top brand silver bars. You can see that bars are decidedly cheaper. Their premiums are half or even a third of what you’ll pay for Eagle coins.
Silver premiums change regularly. Table shows March of 2017.
Space is a consideration when it comes to storing your silver bullion, especially as you accumulate more and more ounces. A silver bar takes up less space than the same number of ounces of coins. Here’s what that difference looks like.
Buying silver bars instead of coins doesn’t compromise any of the core advantages of owning physical silver: they’re portable, private, liquid, and will last forever (assuming you store them correctly, since silver does tarnish).
One of your first decisions when buying silver bars is what size to purchase. Silver bars come in different sizes and weights. The majority range from 1-ounce to 100-ounces, which is the suitable for most investors. Bars are produced as heavy as 1,000 ounces, which is what banks, exchanges, and ETFs usually buy.
As the table above shows, the bigger the bar, the smaller the premium. That’s because for the most part, it costs the refiner just as much to produce a silver kilo bar as a 1-ounce bar.
But that doesn’t necessarily mean you should buy the biggest bar you can afford. Here are the problems that can creep up with large silver bars. Big bars…
• Can’t be divided up once you own them. If you buy a 1,000-ounce bar, you’ll someday have to sell the whole thing—which you may not want to do. Smaller bars will be more practical to sell for the small needs you may have in the future. In fact, this is one of silver’s advantages over gold, so take advantage of it!
• Have fewer potential buyers. Not many investors can afford to buy a 1,000-ounce bar. If you have 10-,50-, and 100-ounce bars, you have a greater pool of customers and thus will be able to sell more quickly and easily.
• Come with higher counterfeiting risk. Most of the counterfeit bars that have surfaced are with very large bars. Counterfeiters prefer them because they’re worth a lot more.
• Could require an assay to sell. Any silver bar over 100-ounces could require an assay, which adds extra expense, is inconvenient, and will delay your payout. Also, if you take personal delivery of a 1,000-ounce silver bar, almost any dealer will require an assay before they buy it. You can avoid this hassle by focusing on 100-ounce bars or lower.
On the other hand, I recommend you avoid silver bars smaller than one ounce, as the premiums really spike. Lastly, remember to consider the reporting requirements that can come with large silver sales.
As you begin to shop, you’ll quickly find out that there are a lot of different refiners in the silver market. The main guideline here is to buy silver bars that are made by a reputable refiner. So what’s a reputable brand?
To begin with, all reputable refiners will have proper stamping. You should see this information on any silver bar you consider buying:
• Content or weight (how much silver the bar has—for example, 10 ounces)
• Purity (how pure the bar is—for example, .9999 purity)
• Refinery (you want to see the manufacturer’s name stamped on the bar)
• Serial number (every silver bar should have a unique number printed on it)
There are some private mints in the world that don’t include all of this information, which could mean it’s not a pure silver bar or has low quality. You can avoid these problems and assure that your silver is real by buying a bar with proper stamping.
Without these markings, a silver bar will likely be harder to sell. A buyer may demand an assay. Or they may not be willing to buy it at all.
Here's a list of the most reputable mints in the world, including both sovereign (government) and private mints.
Another good indication you’re buying a quality bar is if it’s eligible for IRAs. That signifies it is a reputable brand and meets quality standards. There are silver bars that are ineligible for IRA that are high quality too, so don’t automatically assume it’s lower quality if it’s not IRA eligible.
If you buy established industry hallmark bars, you have set yourself up to easily sell your bars for a fair price when the time comes. Conversely, if you buy silver bars from suppliers that are not well known, the quality of the bars might be questioned. You want to avoid any delays in selling, or be forced to sell them for less than what they’re worth.
The easiest way to avoid getting ripped off is to buy a well-known and established brand.
Silver bars can be bought in numerous places…
The best strategy here is to buy your silver bars from a reputable dealer. A trustworthy dealer provides sound education, helps you avoid pitfalls, and most importantly, sells high-quality products.
How do you know if you’re dealing with a reputable bullion seller? Look for these things…
• Strong Better Business Bureau or Trustpilot rating. Give preference to those with lots of experience. Check for repeat customers—buyers wouldn’t return if they had a negative experience. By the way, if you see the Better Business Bureau or Trustpilot logo on the dealer’s website, don't assume it's legitimate… search for the company on the rater’s website, since logos can be copied.
• An educational dealer or website.The biggest tipoff you’re dealing with a “salesy” dealer is if they promote only the most expensive products—for example, if they try to steer you away from silver bars and into rare coins, which have higher markups. Trust your gut here… if the dealer doesn’t feel right, there’s plenty more to choose from. A good example is GoldSilver’s commitment to education through our popular YouTube series, “The Hidden Secrets of Money.”
• Larger dealers. Look for dealers that have strong volumes, because they will have greater flexibility. A small dealer, in contrast, may have limited product selection or be unable to fill a large buy or sell order. Be sure to ask about delivery times, too; it’s a red flag if they don’t ship within 24-48 hours of your payment clearing.
• Multiple forms of payment. Most dealers will accept a check or money order (or cash, if you buy from a local shop). Bank wires and credit cards come with extra costs, though the convenience is hard to beat. Some dealers now offer PayPal, Bitcoin and other digital means. Regardless of payment keep in mind that online dealers will wait until your payment clears before they ship your order.
• An online store. Once you’ve identified some reputable dealers, consider the advantages of online ordering vs. a brick-and-mortar store: it’s quick and easy, can be done any time of day, and allows you to lock in your market price at the precise time you want to buy. And believe it or not, many online dealers are cheaper than your local shop even after paying for shipping, since their overhead is generally much lower.
If you’re new, try comparing three dealers. Be sure to compare total cost—commission, credit card or bank wire fees, and shipping and insurance. And keep in mind that cost isn’t the only factor when buying silver bars: ease of ordering, delivery promptness, customer service, and buyback policies are all important to consider in where you shop.
One effective method for first-timers is to buy from two different dealers, so you can compare service, delivery, and cost. It also provides you with two vetted sources for future purchases.
Silver bars are one of mankind’s most definitive forms of money—they’re a tangible asset, are highly liquid, and will protect your portfolio from various financial crises. Owning silver bullion at this point in history is not only very prudent, but will return a huge profit in the next bull market.