How To Buy Silver

This is pretty easy in America. The easiest way is to purchase SLV shares in your online brokerage account. SLV is the IShares Exchange Traded Fund (ETF). The SLV ETF's mission is to track the spot price of silver. The share price of SLV is designed to represent 10 troy ounces of silver. Now, a lot of scams have been going on in silver, where "paper" silver doesn't actually exist. By buying SLV you're taking it on faith that they actually do hold the silver bullion in vaults somewhere, and they're not actually holding silver IOU's.

The equivalent exchange traded fund for gold is GLD, but it's not associated with the IShares group. GLD is an older ETF. They publish daily audits of their gold bullion holdings. These list the serial numbers and descriptions of every gold bar they have in their vaults. This gives one a nice sense of security.

Nothing's the same as actually holding your own silver yourself, mind you. Then you have no doubts whether the silver actually exists. The SLV ETF currently doesn't publish their inventory serial numbers. I spoke to a representative of the ETF several weeks ago, and was told they were going to make available their inventory listings of silver bars within several weeks. I called again yesterday, and a different person said the process was in the works and the timeline was to have it operational before the new year.

So you have to make the decision yourself. If the SLV ETF actually does hold silver as their prospectus mandates, you own silver if you own SLV. The advantage here is it is very easy to move money in and out of SLV. It's just like trading a stock. You submit buy and sell orders and that's all there is to it. This lets you buy on the downswing and sell on the upswing, if that's what you want to do. Moreover, the spread between buy and sell price is very small, essentially negligeable. What that means is if you buy some SLV, then sell it immediately thereafter, you can get the same price for it, and the only cost to you is the transaction fees ($9.99 each for E-Trade).

Actually owning physical silver is more troublesome. It's less liquid.When you take possession, you need to actually put it somewhere. It's pretty heavy when you get a lot of it. Also you pay more when you buy than you can get back when you sell. The spread is measured in 10's of cents per troy ounce.

You can purchase physical silver online. I have heard that this is a good place to order from: http://www.golddealer.com/ and once they have funds and accept your order, it is shipped out that very day. I do not recommend www.goldline.com, they take 2-3 weeks before they ship. But source I trust most says http://www.tulving.com/goldbull.html#silver is a good place to buy from. In all these places you wire money or send a check, once the check clears or the wire is in their hands, you place your order (locking in the price) and they ship it to you. Some have free shipping but you need to order 500 troy ounces minimum. Others have a flat rate $25 shipping fee. It's all shipped with insurance so it's supposedly safe. I'm still waiting to receive my www.goldline.com shipment, supposedly it's going out Monday.

If you want to buy silver face to face, you can find local dealers online by entering your zip code here: http://coininfo.com/index.php?op=searchDealers.

It's important to know what the spot price of silver means. There is a worldwide trade in silver. The current buy and sell prices are known as the spot price. You can find the spot price all over the place, for example here: http://www.kitco.com/market/.

What to buy? Personally, I like 99.9% pure silver. I like to have some American Silver Eagles, they are minted by the US, have "One Dollar" stamped on them, are attractive, and contain 1 troy ounce of 99.9% pure silver. However these come at a premium, typically $1.75 over spot. And you can sell them for around $.50 over spot price. But if you need to exchange silver for stuff like food, and gas, these will be immediately recognizable as "The Real Deal". They're convenient.

For bulk I like the 100 ounce 99.9% pure bars. Englehard cast a lot of these, among other suppliers. These are very easy to stack and don't take up much volume. The buy/sell spread on these is much smaller per ounce than for the American Silver Eagles. And the spread appears to be centered around the spot price. You buy for a bit over spot, and sell for a bit under spot.

There are generic silver rounds. These are about identical in size to the American Silver Eagles, but they're minted by anyone. They're also 99.9% pure. And they're cheaper, say $.40 to $.60 over spot price.

I think you can negotiate if you're face to face with a local coin dealer or a swap meet. It never hurts to try. I paid the asking price when I bought silver face to face the first time, because it was lower than I'd paid at www.goldline.com. $1.60 over spot for American Silver Eagles vs. $1.75 at Goldline. And bars were $.50 over spot -- all these are per troy ounce.

You can also get US circulated coins in dime, quarter and half dollar denominations, provided they were minted before 1966 or somewhere about there. They can have 90% or 40% silver, I'm not sure which. I haven't bought any of these yet. These are supposed to be good for day to day purchases like for a loaf of bread. One ounce of silver is a lot of silver. That might represent a typical day's wage, or even several days wages at some point. Historically silver has had that kind of value in relation to human labor.

Jason Hommel is much more knowledgeable about buying silver than I am, here is a report he put together here.