Silver is a precious metal that has long been used in currencies and in a wide range of profitable uses. Like gold, it is bought in large quantities by investors who wish to trade in commodities or use it as a shield against economic uncertainties. If you want to get into the silver trading game and don't know where to start, here is a brief summary of instructions on the essential things you need to know.
Steps
Method 1 of 5: Preliminary Steps
Step 1. Consider what kind of silver you want to buy
You can buy both physical silver, including silver pieces and bullion, and paper silver, which entitles you to purchase physical silver without owning it personally, and silver futures, which are a way to invest in value. future that is thought to acquire silver.
If you want to get your hands on real and tangible silver, pay attention to the baits and techniques in which sellers offer silver papers certifying the conversion into physical silver stored elsewhere
Step 2. Find a reputable seller
To avoid scams and other inconvenient buying situations, find a trusted seller. Probably the safest way to get in touch with these traders is to consult the list of recommended sellers on the US Mint website. By typing "US Mint coin dealer database" on your favorite search engine, you should link to the US Mint website page, where you can search for national and local sellers controlled by the US Mint.
Step 3. Evaluate the market value per ounce
In financial markets, the troy ounce indicates the price of a precious metal per ounce of raw material. Look for the current value of silver to make sure that the seller is not increasing the price more than what the market expects.
Step 4. Negotiate the conditions of the silver trade
In any silver sale, there are often specific conditions that need to be negotiated between the seller and the buyer. Without considering these aspects, it is possible that a short sale will occur when you purchase physical silver from these types of suppliers.
- If you don't disdain silver papers, you need to understand how the seller keeps the physical silver corresponding to the precious metal converted into paper. For example, some buyers have reported that commercial banks offer paper whose value is guaranteed by the bank itself by virtue of the existence of physical silver, but when they requested to convert the silver papers into physical silver, they encountered delays and rather discouraging obstacles..
- Study some numismatics and the rough market values related to silver. Some sellers offer silver coins as physical silver. In this type of transaction, it is imperative for the buyer to understand how numismatic or monetary value can affect his purchases. Without going too far into this critical detail, it can happen that you pay an exorbitant amount for your money in silver.
- Ask about the surcharge. Some sellers, such as banks, charge the sale of silver with additional costs. It means that a buyer can make a purchase with a lower value than the nominal value at the time of the agreement. Ask the seller to stick to a fair transaction value for silver, so you can recognize the gain if the price of silver rises.
- Ask about repurchase. Some sellers buy back the physical silver they sell to you and not to others. Remember that, without a repurchase agreement, you risk having losses when you try to sell silver and you cannot find a buyer who respects the objective market value based on the original sale price and current market conditions.
Step 5. Obtain information relating to the cost basis for taxation
Another important step in the purchase of silver or any other precious metal is to obtain the documentation of the sale and the cost of the silver. This way, you can declare your cost basis when you sell silver in the future to make your profit. Without this information, the IRS (the United States Revenue Agency) could cause problems with the sale of gold when you sell it to another buyer.
Method 2 of 5: Buying Silver Pieces
Step 1. Learn how to identify real silver
Silver jewelry or silverware, when real, bear a mark with the number 800 or 925 or an initial that guarantees that the silver is of a good alloy (eg. Ster, Sterling, Stg). If you can't find an identification mark on silver, below you will find three specific experiments, although not conclusive, that you can do when trying to distinguish real silver from fake silver.
- Real silver coins. You can either throw the coin in the air or lightly tap it with another coin to produce a sound. The sound you should hear is a high-pitched, bell-like rattle. If you throw in the air a 1932-1964 quarter (90% silver) and a post 1965 quarter (90% copper), you will immediately feel the difference.
- Real silver melts the ice. Put an ice cube on a piece or a silver coin and you will observe that the cube will melt faster than it would if it were simply left at room temperature. Silver quickly melts ice because it has a very high thermal conductivity.
- Real silver is not magnetic. Get a neodymium magnet. Place the silver bar at 45 ° and slide the neodymium magnet down. On real silver, the magnet will slowly slide towards the bottom of the bar. On silver-free materials it will either stick to the top of the bar or slide down very quickly.
Step 2. Ask friends and family
Many people break or damage silver jewelry that they would be happy to sell for a reasonable price. Some may even give you something for free
Step 3. Post Ads
You can use Craigslist, your local newspaper or even your local radio station to let people know that you are interested in buying silver pieces.
Step 4. Find reputable merchants
Ask around before pouncing on the first deal you see (online testimonials don't matter). If a deal sounds too good to be true, it probably is. The US Mint's list of recommended vendors is always a good place to start.
Step 5. Find your sources
Check out online auctions, garage sales, flea markets, thrift stores, and contract shops. Online auctions typically have higher prices, but reputable auctions will also have ways to verify that what you are buying is actually silver. That said, it is often possible to find hidden treasures among huge amounts of items and in baskets containing mixed items from second-hand shops - and purchase them for a small fraction of their value.
In particular, look for thick rings, broken jewelry, and silverware
Step 6. Get to know the pawnbrokers in your area
While pawn shops aren't necessarily the first place you'll want to go to find silver, knowing the owners can provide you with a ton of valuable information and possibly contacts. If you're lucky, you'll find a pawn shop that doesn't have the resources or the will to do business with silver scraps, but who can put you in touch with potential sellers.
Step 7. Look for silver in unexpected places
In addition to jewelry, it can be found in printed circuit boards, electronic equipment, cell phones, photographic plates, and old cameras. Look for disused parts of electronics to take apart at thrift stores and waste collection points, or whenever a school or office is updating its equipment.
Step 8. Disassemble the silver
Remove the components that are not silver and collect all the pieces that are in sealable containers.
Note that some jewels will be worth more if they are intact rather than disassembled
Method 3 of 5: Buy Silver Coins, Bars or Discs
Step 1. Consider investing in silver coins
The value of a silver coin depends both on the presence of silver contained within it and on its numismatic value. In most cases, the numismatic value of the coin is the main factor that determines the value. In terms of price, it means that the characteristics of a coin - origin, quality, etc. - have a greater importance for collectors than the actual value of the silver contained. For this reason, many investors are on their guard when they have to invest in silver coins and the owner is not at all proficient in numismatics.
Since silver coins can be collected, their prices can be very volatile. In fact, they can change greatly based on market needs, often for reasons that have nothing to do with the price of silver. If you are planning to invest in silver coins, be prepared for this before embarking on your journey
Step 2. Try investing in silver bars
Silver bars are nearly pure silver bars, just like seen in the movies. Due to their particular nature, they are often traded at higher prices than the market for silver. You can find silver bars at major banks or sellers of precious metals in bullion or bars.
- Bullion and silver bars actually sleep the same thing. Bullion coins are made from metals, intended to imprint their value in the coin itself instead of being used commercially. Therefore, it is possible to buy silver coins if you are not attached to the idea of owning silver bars or ingots.
- Silver bars come in different shapes and weights. 1-ounce, 5-ounce, 10-ounce, 100-ounce, and 1,000-ounce bars are standard, although there are some manufacturers who design even lighter bars. What you need to know when it comes to weight is this: the smaller the bar, the higher the premium you pay. If you want to save on your purchases, buy bars wholesale!
Step 3. Consider investing in silver discs
The silver discs are a cross between a bar and a coin. Like bars and ingots, they have no numismatic value. Like coins, they keep the same circular shape and usually contain a troy ounce of silver (1/12 pound). When purchased from a private manufacturer, they can be printed with a custom design.
Method 4 of 5: Buying Silver Without Physically Owning It
Step 1. Consider investing in an ETF
An exchange-traded fund or ETF is a stock that tracks an index or commodity (such as silver), but trades like a stock. While ETFs are similar to index funds, there is often no commission associated with buying or selling ETFs, unlike index funds.
- It is important to remember that when you choose to invest in an ETF, you are not actually buying physical silver or even having the right to redeem it for silver. Normally, you are just making a bet that the price of silver will go up.
- If you are convinced that the price of silver is about to go down or you just want to be sure, you can also sell ETFs short.
- ETFs also benefit from a high level of liquidity, which means they can be quickly redeemed without affecting their substantial value.
Step 2. Also consider investing in a mining company with higher investment risks
If you wish, you can invest in mining as well as collect amounts of physical silver or invest in ETFs. If you are closely following a mining company or are looking to the upside of the industry as a whole, this may be an option. Consider the following caveats when investing in this field:
- The share price of a mining company can go down although the price of the raw material can go up. Even if silver is breaking everything, you risk losing money if the mining company you invested in is mismanaged or is having a tough quarter. Investing in mining companies is risky.
- However, greater risk potentially carries greater rewards. If you can take a high risk or if you have a strong appetite for this type of investment, investing in operations related to the mining sector can pay off very profitable.
Method 5 of 5: Making the Most of Your Silver
Step 1. Know that owning physical silver is probably more beneficial than owning a non-physical security
Physical silver, such as coins, bars, ingots or discs, has been and is used both as a currency and in industrial production. This makes it more versatile than silver convertible securities, although not necessarily more liquid. If you are planning to invest in silver, start with the precious metal before venturing into other more complex forms of ownership.
Step 2. Use silver as a hedge against economic uncertainty
In a time of economic uncertainty and slow growth, silver is an excellent defense. A hedge is a strategy that reduces the risk of losses when the market fluctuates, usually by investing in positions that offset each other. Silver is a good hedge against currency depreciation and inflation as well. This is because if the value of the coin ever plummets, precious metals such as gold and silver remain relatively stable, if not even increase in value.
Step 3. Don't buy in hope and don't sell in fear
Many silver and gold buyers are preparing to invest in exactly the wrong way: they buy when they see the price rise and sell it off when they see it falling. Do not violate the first investment principle: buy low and sell high.
- Try thinking the other way around. Instead of buying when everyone else is fearful and the price of silver is high, buy when everyone is happy and the price of silver has fallen or is going through a period of crisis.
- Take a look at historical silver price charts. For the past 30 years during normal economic times, the lowest price of silver hovered around $ 5 per ounce. If you can afford to wait until silver reaches this value, use it as a benchmark and invest later. When economic times are uncertain and the price of silver rises, dispose of it for a sizeable profit or keep it as a hedge against currency depreciation.
Step 4. Learn that the silver market is very volatile
If you are not ready for a roller coaster ride when you invest in silver, perhaps the latter is not the right investment for you. Of course, if you happen to buy it when it hits bottom, most of the volatility will be good volatility. But even then, expect tortuous fluctuations, drops and price changes based on consumer (spending) intentions and changes in monetary policies.
