How to Buy Silver - 3 Easy Steps

How to Buy Silver - 3 Easy Steps

With over 50 years of being a professional wholesale silver investor and dealer, I have found it’s easy for a well informed silver buyer to quickly learn how to buy silver and get a good deal when adding silver to your portfolio. Buying silver investments for your precious metals portfolio is as easy as 1-2-3.

Step #1 - Buy The Right Silver Coins

Based on your length of ownership, we need to determine whether bullion silver coins or investment silver coins are the right fit for you.

Short term investors (Less than 3 years) : Bullion Silver Coins
Silver Bullion coins are primarily valued based on their silver content and the current market spot price of silver. The best and most popular silver bullion coins are:

  1. United States 1oz .999 Silver Eagle coins
  2. 1 ounce .999 Silver Trade Unit (Rounds)

These two silver products are the most actively traded silver bullion coins in the world and therefore have the best buy/sell spreads (lowest profit margin for silver dealers) of any silver bullion investment.

Long term investments (3 years and longer): Investment Silver Coins
Silver Investment coins are priced for both their silver content AND their market demand. Investment coins carry an additional premium based on such factors as the year, mint mark, coin condition or grade, and collector demand. Generally speaking, the higher the rarity factor (investor/collector demand) of an investment coin, the higher the premium, value, and potential long-term profit. The best silver coins for long term investing all have an excellent history of appreciation.

Top silver investment coin recommendations are:

  1. $1 Silver Morgan and $1 Silver Peace Dollar – Graded MS64 to MS67 by PCGS or NGC
    1. Coins are graded on a scale from 0-70 with 70 being Perfect condition. We recommend the Morgan and Peace Dollar coins graded between MS64-MS67 because they have the largest and most active markets compared to all other silver graded coins. Peace and Morgan Silver dollars range from $60 to $40,000 based on grade, year, etc. making them an excellent investment opportunity for any size budget or precious metals portfolio.
    2. PCGS (Professional Coin Grading Service) and NGC (Numismatic Guaranty Corporation) are independent third party coin grading companies that grade over 90% of all coins today. They are well respected and guarantee that the coin in their holder is true for that grade or your money back. Graded coins by PCGS or NGC command the highest premiums over coins graded by other grading companies, and non-graded coins.
  2. Brilliant Uncirculated (BU) Rolls of Morgan and Peace Dollars
    1. BU rolls contain 20 Morgan or 20 Peace Silver dollar coins. All 20 coins in the roll are from the same year and mintage. Years range from 1878 to 1925 and mintages are Philadelphia (P or blank), New Orleans (O), or San Francisco (S). BU rolls are reasonably priced between $550 to $1750 depending on the date and mintage.
    2. All 20 coins in a BU roll are ungraded. BU coins would generally grade in the MS60-MS63 range if submitted individually to PCGS or NGC for grading. Since grading BU coins is not cost-effective and would eat into your precious metal portfolio profits, we recommend leaving BU coins together as a BU roll and trading them as such. BU Silver Dollar rolls are highly popular with both collectors and investors and as such, there is a very active market for both Peace Dollar and Morgan Dollar BU rolls.

Step #2 - Know the Right Price to Pay

If your silver dealer does not, or will not, disclose his/her profit margins and buy/sell spreads, find another precious metals dealer immediately!

Bullion Coins
Wholesale market makers (who sell in large quantity) should have no more than a 50 cent per ounce buy/sell spread on a minimum sale of 100 ounces of silver bullion.

Example: If the current Spot Price of Silver is $15 an ounce, then the wholesale cost for .999 fine 1oz Silver Eagle bullion coins would be about $15.45 per coin (the .45 covers the cost of production of the coin). The dealer would then sell those coins to the investor (you) for $15.95 per coin which is a minor 0.50 cents more than the wholesale cost. That is the 0.50 cents per ounce buy/sell spread. Just like any financial investment there are always broker and/or transaction fees. With Silver the cost should only be a mere 0.50 cent per ounce spread. Plus, determining the spread on bullion coins is fairly simple since the market spot price is a matter of public record.

Investment Silver Coins
Wholesale market makers selling premium rare, collectible or investment quality silver coins such as the Silver Peace and Morgan Dollar coins should have approximately a 10% - 15% profit margin. Any higher than 10% -15% means you’re paying the salesman’s commission (commissioned salesmen are not wholesale market makers!) To determine if you are dealing with a wholesale market maker or not, ASK the dealer two questions:

  1. What is your profit margin on this coin or bullion item?
  2. Are you a Wholesale Market Maker or a Commissioned Retail Salesperson?

Buying silver bullion and investment coins from a dealer that is a Wholesale Market Maker is VERY important! (see Step 3 below).

Example:You find an 1888 Philadelphia Morgan Dollar graded MS64 by NGC, through a dealer and they are asking $275 for it. You remember reading this article and decide to do some quick research (please contact us if you need assistance) before making your purchase and discover that an 1888 Morgan Silver Dollar, graded MS64 by NGC, has a wholesale dealer value of only $64… obviously the dealer asking $275 has quite a bit more than a 10% - 15% profit margin!

Step #3 - Finding the Right Silver Dealer

The best silver dealer is a major Wholesale Market Maker with a minimum of ten years experience in the precious metals and investment coins business, a proven track record of building profitable precious metal portfolios and an excellent industry reputation in numismatics and investment strategies.

Seven criteria for selecting your Dealer:

  1. A member of the Professional Numismatic Association
    1. A private members-only association of reputable numismatic dealers that must be voted in by the membership to join. They must be well known and respected by the numismatic industry to even be considered for membership. I am proud to be on the Board of Directors of the Professional Numismatic Association.
  2. A minimum of ten years as a major market maker posting buy/sell prices for silver coins.
  3. An informative website --- ideally with an investment guide section on buying and selling precious metals including things like portfolio building tips, how to buy silver, how to find a reputable silver or bullion dealer, investment strategies, etc.
  4. No commissioned Salesmana. Important fact: If you’re dealing with an account executive, their commission is added to your sales price!!!
  5. The silver dealer must be willing to disclose the profit margin and buy/sell pricing.
  6. The ability to ship your silver order within 48 hours from receipt of good funds.
    1. It is important that you receive your silver coins and bullion products immediately and don’t allow the dealer to store them for you. This provides you, the coin buyer / silver investor, with better flexibility when you wish to sell your silver coins, bullion, or other precious metal investments.
  7. Knowledgeable and Available --- offer you current precious metal market spot prices on demand; complete and full disclosure; the ability to quickly and easily answer your questions about investing in silver, buying silver bullion, etc. by phone or email; and free silver investment and portfolio building consultations and investing strategies.

Choosing the right silver dealer requires investing your time BEFORE investing your money. Spend the time and give due diligence to checking out the silver dealer. Knowing the dealer is credible, knowledgeable, fair, and honest are of the utmost importance before you invest a single penny of your money in buying silver bullion, precious metals, or investment coins.

In our 50+ years as professional coin dealers, and having spent the past 15 years handling consumer protection issues for the American Numismatic Association (the largest coin organization in the United States) and California Coin and Bullion Merchant Association, We have learned a thing or two. One of the most crucial facts we have learned about buying silver is this… If a new investor or silver buyer knew the right questions to ask BEFORE making their initial silver purchase, approximately 90% of potential future problems would never materialize!

Please email or call us with your questions, or for more information on how to buy silver or build a precious metals investment portfolio. We look forward to speaking with you.

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