Subscribers often ask me about buying physical silver. It’s something I do think is important as part of a well-built silver investment portfolio.
So, I reached out to a top-level expert to provide some guidance.
Barry Stuppler is the founder and President of Mint State Gold, a precious metals dealer in California. Stuppler is a 50+ year veteran of the precious metals and rare coin industry. Highly respected and recognized in the sector, Stuppler is a past President of the American Numismatic Association with 30,000 members (2007-09) and was appointed to the California State Quarter Commission by Governor Gray Davis in 2003.
His list of credentials is long, making him an undeniable authority on this subject. You can read more here: https://en.wikipedia.org/wiki/Barry_Stuppler
Barry was kind enough to provide his thoughts and insights to my readers on what physical silver investments make the most sense and why at this time.
So, this month, I have a special contribution article from Barry on his top choices in buying physical silver.
What Silver buyers should know before buying physical silver
By Barry Stuppler July 28th 2022
With the silver price around $20 per ounce, it is truly the investment of the century. The Silver-to-Gold Ratio is currently over 90-to-1. Anything over 60-to-1 is an extraordinary value.
What are your primary choices when buying popular physical bullion silver?
American .999 1oz Silver Eagles
Canadian .9999 1oz Silver Maple Leafs
.999 Silver 1oz Buffalo Trade Units
90% Circulated Silver U.S. Pre-1965 Silver Dimes, Quarters and Half Dollars
100 oz .999 Silver Bars
Right now, the key factors for silver investors to look at before buying are Premium and Spread.
Premium – Is the price over the spot silver value that has run dramatically higher in the past year. The increase in demand and the shortages of physical product
have driven up premiums on many of the popular silver investment items. Dealer premiums can change daily, based upon the dealer’s inventory levels and size of the sale or purchase.
Spread - Is the difference between the bid/ask prices dealers buy and sell for. The more popular the silver product is, normally the tighter the spread. Why is the spread important? You need to overcome the spread before making a profit.
Remember both premiums and dealer spreads are based on U.S. Dollars and change daily. Both also can tighten based on the quantity of the purchase.
The following five silver items are in order of least favorite to my best choice:
100 oz .999 Silver Bars
Most newcomers to silver investing normally start by asking about silver bars. They may have the lowest premium but have many problems. Most dealers are concerned about authenticity of silver bars (many counterfeit bars have come from China). For that reason, many dealers don’t pay much when you sell a 100- ounce silver bar nor hold that much in inventory of them as most get melted.
Also, dealers that are willing to buy them insist on having the bars assayed before buying. If you want bars, insist on 100-ounce Engelhard, Johnson Matthey or Royal Canadian Mint (RCM), with numbers and certification, and keep your bill of sale. The dealer bid/ask spread is wide because of low popularity.
Recommendation – Avoid if you are making purchases under $500,000.
If you are a large silver investor (over $500,000), I suggest 1,000 ounce .999 bars certified and stored/insured at a licensed COMEX depository.
90% U.S. Pre-1965 Silver Dimes, Quarters or Half Dollars
Bags of $100 face value normally run about $2,000. Considering the bag contents, 71 ½ ounces of pure silver, that’s $28 per ounce, or $8 over the spot price for 90% junk silver coins. Also, history has shown us the premium on 90% U.S. coins drops as the price of silver moves higher. The dealer bid/ask spread is wide because of low popularity.
Recommendation – Avoid purchasing and sell/trade them at the current high premium immediately for our #1 selection below
American .999 1oz Silver Eagles
One of the most popular silver bullion products with investors, causing the premium to be driven up to $13 per ounce over spot. You could have purchased silver eagles for $5 over spot in 2021. When supply issues are handled by many of the world’s leading mints, they will be back up to full capacity and premiums will definitely drop.
Recommendation - If you wish to purchase U.S. Silver Eagles, I recommend buying them in original mint tubes of 20. Minimum 100 coins or more as the spread is $4 per ounce.
Canadian .9999 Silver 1oz Maple Leaf
A very popular government minted silver bullion coin. Four 9’s fine and minted in excellent quantities for investors. The premium is half that of the American Silver Eagles around $6.50 over the spot price. In lots of 100 coins or more, the spread is only $2.50.
Recommendation – Good item. Premium is half that of the American Silver Eagles. In lots of 100 coins are more the spread is around $1-2 better than American Silver Eagles.
CANADIAN RESIDENTS:
Make this your first choice, because of the popularity in Canada. Just convert the premium and spread into Canadian Dollars.
.999 Silver 1oz Buffalo Trade Units
The most popular silver bullion investment coin currently being offered. The premium is fairly low, around $4.50-$6 over the spot silver price, and the spread is the tightest of all the popular Silver Bullion Items. These actively trade in boxes of 500 with dealers and investors. A number of private mints issue 1oz Silver Trade, (i.e. Golden State, Sunshine, SilverTowne). The buffalo design is by far the most popular.
Recommendation – BEST AND TOP CHOICE FOR SILVER BULLION INVESTORS
(UNDER $500,000). As it has the tightest spreads and lowest premium. JUST MAKE SURE YOU PURCHASE THE BUFFALO DESIGN (PHOTOGRAPHED ABOVE). MANY OTHER PRIVATE MINT DESIGNS HAVE HUGE PITFALLS!
One major issue to consider when buying precious metals is SALES TAX.
26 U.S. states have some form of sales tax exemptions. However, eBay and Amazon charge sales tax on precious metals. I recommend purchasing directly from an established coin/bullion dealer to avoid paying state sales tax.
Lastly, many silver/gold bullion items are counterfeited and sold On-Line, Swap meets and in newspaper ads at bargain prices. Please, only buy precious metals from a credible Coin/bullion dealership, and please spend the time needed to check them out.
Please email any questions to Barry@Stuppler.com
Barry Stuppler
President MintStateGold.com
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