When buying anything, and silver bullion is no different, you need to keep in mind the concept of ‘value’. How you determine value is different for each and every investor. Ask yourself several times why you are buying silver bullion in the first place. Anyone who buys silver bullion, especially for the first time, must keep this point in mind. Remember whether you’re approaching silver bullion dealers from strictly an investment standpoint or you’re a serious collector of silver bullion you’ll be able to gauge value in your own special way; don’t bother understanding what silver bullion value means to you and chances are you’ll get gouged. So take your silver bullets and aim your sights at the bull’s-eye because if you don’t know your purpose for buying you’ll probably miss the mark altogether.
It seems a clear, simple analogy would be beneficial at this point and what does the vast majority of us know about and have experience with in the modern era?
The answer is shopping for a car. Whether you’re a first time buyer seeking your first ride, looking for a sedan for the family or collecting vintage British sport coupes out of personal interest as much as profit then you’ll know what I’m talking about.
When you’re deciding upon the best silver bullion you can buy, the selection process is very similar to that of choosing a car; what it comes down to is defining ‘value’ in your terms and identifying the factors that allow you to create that value when you buy silver bullion.
Some key factors to keep in mind creating your definition of silver bullion value:
1) Should I swim in the pool?
When buying silver bullion you can opt to take delivery or buy from a general pool. What this option equates to is that you don’t physically see, touch and feel your silver ingots because you’re buying a concept rather than a coin. The disadvantage from a collector’s point of view is that the investor does not physically own his or her investment whereas from a general purchaser’s perspective in terms of storage limitations the advantage once again is that they do not physically own their investment.
Look at it in terms of buying a car. Are you a salesperson interested in leasing a company car with functionality being as high up your list as appearance? You may want to have a variety of models at your disposal and have the flexibility to exchange and return them to the dealer. Or are you that serious collector of rare, vintage European roadsters who loves to store them in his/her garage and appreciate their uniqueness and aesthetic beauty.
2) Bars versus Coins.
When selecting which form of silver bullion to buy keep in mind it that you can buy in both bar and coin form. If you’re looking at silver as a standard part of a steady investment strategy then bars may be the Japanese autos of the car buying world; as reliable and convenient as Honda and Toyota these consistent performers have ease and convenience of resale and come with certain expectations in regard to sell-on value and appreciation; the wise investor realizes that 1,000 oz bars must be redeemed in entirety, so when dealing with a few thousand ounces or less a combination of the smaller denominations are preferable.
Coins on the other hand are more of an adventure, while not as random as nuggets that really require a sophisticated eye, they become as much about the joy of ownership as a straight investment. When an impressive collection of silver coins is amassed by the owner and both structure and elegance are on display value is achieved on two levels however keep in mind the importance of selecting the right kind of coin; for example opinions differ over the merit of Nationally minted rounds, some people suggest that the special design and recognition increase their market demand while others argue that the extra expense is not justified in terms of greater resale value. If you’re the kind of person who might consider owning a classic European sports car maintained in ‘mint’ condition and might even drive it once in a while this option would definitely appeal to you.
3) Generic versus Recognized Mints.
When buying rounds the options are generic, semi-generic, well known minted and nationally minted. What it comes down to once again is sell-on value. In terms of buying a car it shouldn’t be a problem to sell a quality pre-owned generic model back to the dealer and similarly most precious metal dealers will buy any minted silver without question. Coin dealers will take generic minted silver bullion off your hands no questions asked but everyone recognizes that just as cars from GM, Hyundai, Volvo, Acura, Lexus, and Mercedes Benz will be appraised differently that silver bullion will also be looked upon differently by both coin dealers and independent collectors alike depending on the fame and prestige of the source mint. Also for rare and unusual items in both the world of cars and coins realize that individual collectors with an eye to particular taste may be willing to a pay a premium for silver bullion ingot from respected, internationally recognized mints. Usually it comes down to a trade off between lower fees and higher resale value since when buying semi-generic, widely known, and nationally minted silver bullion the dealer will charge a higher fee as the recognition factor of the mint increases respectively.