Silver Investing For Beginners

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When you start thinking of investing in silver, there are a lot of things that make it seem overwhelming. Even just looking at buying silver you have many different options. There are coins of all shapes and sizes, foreign coins, Silver Bullion in bars anywhere from 5oz to 1000oz, even silver bullets. There are also different silver grades, different percentages, and a ton of different terms that people will throw out expecting you to know what they’re talking about. We’ll try and clarify some of these things for you, as well as explain the pros and cons of each different form of investment.

People who collect and store silver for investment are called stackers. You’ll hear many stackers talk about how many “rounds” they have. A round is a one ounce .999 fine piece about the size of a silver dollar. Silver is also sold in ingots, bars, or bullion; all of these terms are used interchangeably for bars that are at least 99.5% pure. Another way to purchase is in junk coins. These are coins that are 90% silver or less, and are essentially a way to carry small denominations for easy liquidation, rather than in large bars.

When you’re speaking of buying to invest, the price that a dealer is willing to sell to you is called the ask price. This is usually a small percentage over the actual estimated price at the time. When you’re attempting to sell to a dealer, the bid price is the amount that they are willing to pay you for your silver. This is also a few percentages lower than the market price, to ensure a profit for the dealer even if they were to sell for scrap value. You’re also likely to hear people refer to the “spot price”; this is just a way of saying the cash price that is immediately exchanged.

When speaking of silver’s possibility for being a good investment, you’ll hear the terms “bull market” and “bear market”. These are simple, if someone says that there is currently a bull market, they believe that the price will rise. If someone says that there is currently a bear market, they believe that the price will fall. Currently, we are considered to be in the end stages of a bear market, although some are gambling on the price falling even further over the next few years. Universally, due to market prices declining over the past 3 years, it is considered that we have been in a bear market, although when that market will end is up to you to decide as an investor.

One last point I want to touch on is investing in coins rather than bullion. To a beginning investor that has little interest in coin collecting, also called numismatics, it’s hard to figure out why someone would pay over spot price for a coin that is mostly silver. The reason is that these coins will hold a numismatic value, or value to rare coin collectors, regardless of the value of silver. To some, these can seem like an attractive way to diversify their investments.