Buying silver online is extremely easy, but there are several ways to do it: either in the form of bullion or an exchange-traded fund (EFT). While there are other ways of investing in silver, these are by far the most common and accessible. Below, I will cover the advantages and disadvantages of each method.
How to Buy Silver Bullion
Silver bullion refers to investment-grade silver, practically completely pure silver that is been pre-measured, weighed, and certified.
When it comes to silver, it is recommended that you either buy silver coins or bars from a reputable silver brand. The reason for this that these are pre-certified to be real silver and are easily exchanged and sold.
Given fear of fakes or fraud, other types of bullion are not as easy to sell. Fake coins on the other hand are not easy to make (and are illegal), so coins are typically safe. The reason you want to invest in either coins or reputable bullion is ease of exchange; it is harder to prove “off brand” silver is real – and people don’t want to pay for something that is not real!
As a result, most people typically looking to get bullion buy silver online or from a local retailer. However, before you run out and buy bullion, there are some very important things you need to know. Find out more in our article on Investing in Silver Coins.
Is Buying Silver Online a Good Idea?
In my opinion buying bullion silver online for investment purposes is not a good idea. The reason for this is that when you buy bullion, you usually pay a few percentage mark-up which the dealer keeps to cover their fees and make a small profit.
Additionally, shipping and insurance costs can be very expensive. For example, if you bought 100 oz of investment-grade silver, you would need a very expensive shipping and insurance policy, which could drastically eat into any profits you might realize from the investment.
So, if you pay 5% over the spot price to an online retailer and then pay a few percentage in shipping fees, then have to take the silver somewhere to sell it to “cash it in”, and in the end the price of silver would have to rise drastically for you to make any sort of profit.
How to Buy Silver – Warning About Coins
Just like buying silver online can make it hard to turn a profit, you also have to be equally careful when buying silver coins. In the USA, the standard for this is the American Silver Eagle.
When buying these coins, you never want to get “proof” (i.e. perfect condition) to use as bullion. The reason for this is that they have a collecting value and typically track at about 10-15% higher than the spot value of silver. This is because coin collectors like to own these as not just an investment but also as a collectible.
The problem is, collectors typically do not buy many of these coins at the same time but rather only one or just a handful. As a result, if you pay “collectors price” for your proof coins, it can be really hard to sell large quantities of these coins.
How to Buy Silver – Exchange Traded Funds
I think the easiest way to buy silver online or in general for the general investor is in the form of an exchange-traded fund (ETF). The most popular ETF is the iShares-managed SLV fund on the New York Stock Exchange.
You can open up a free account on a brokerage site and then purchase shares of SLV stock, each share being the equivalent of 1 troy ounce of silver (at least at the time of this writing – be sure to check before buying).
The managing group (iShares) holds the silver you purchase on an independent site, so you do not have to worry about insuring or protecting your silver investment. You can then easily sell it to buyers all over the world just like you would sell any stock.
For more information on buying and selling stock, see our section on how to invest in the stock market.
The fee an ETF manager takes is very small compared to the price of shipping, insuring, and storing your own silver. While an ETF does not always track 100% with the price of silver, it is very close, and as a result it certainly is more convenient than buying silver bullion to store in your house or a bank.
How to Buy Silver Conclusion
While technically you can buy silver online or through a dealer, bullion is not convenient for the average investor. Shipping, storing, and insurance costs often eat into any profits you might make. A Silver ETF which you can purchase through any stock-broker is a much more economical option, especially for a shorter-term investment.
Just remember that when owning your own silver, if you want to actually convert it to dollars you have to find a willing buyer. Most dealers sell a few percentage points over the spot and buy a few percentage points under the spot, meaning silver has to gain large quantities of value for you to make any money directly off bullion. You can learn how to invest and make the best decisions in the world, but physical silver is only worth what someone is willing to pay.
The only real advantage of physically owning silver is in the case of some doomsday scenario or massive economic collapse. In this case it would be beneficial to own your own metals, but for the person looking to earn a small return by buying silver now and then selling it later, an ETF makes a lot more sense.