The spot price of silver is the current market value of one troy ounce of the metal. In other words, it is the intrinsic value of a one ounce silver round. This price is in constant flux, and is widely published. Some sellers adjust their sale price using up-to-the-minute spot prices, while others adjust the price once per day.
Dealers’ prices include the spot price of the metal, as well as a markup to account for the cost of minting and selling the bullion. When buying silver, always consider the current spot price of the metal, and the mark-up (or ‘premium’) paid to the dealer on top of this amount. This is often expressed as a per-ounce premium. To understand the premium, compare the current spot price of silver to the total cost of an ounce of silver bullion. The difference is the premium charged by the dealer.
Due to this premium, it is rarely possible to purchase silver bullion at or below the current spot price. For most investors, the goal is to get as close to the spot price as possible. There are several methods for purchasing silver bullion at or near the current spot price:
Invest in Generic Rounds
Some types of silver bullion, such as the American Silver Eagle coin, carry high premiums over the spot price of silver. The same is true of silver rounds from particularly desirable mints. By buying generic rounds, which carry a simple and straightforward design, and may not be marked with the name of the mint, you can avoid the premiums associated with collectible silver products.
Buy in Bulk
To obtain near-spot pricing, purchase in the largest quantity you can afford. By doing so, you may be able to qualify for the dealer’s bulk quantity discount. Many of these discounts apply to orders of at least one full tube – or 20 silver rounds – at a time, and can result in near-spot pricing for generic rounds.
Even when buying the same quantity of the same rounds, prices and premiums can vary dramatically from dealer to dealer. Do not assume that all silver dealers offer similar pricing. Even though the spot price of silver is widely published, some dealers charge substantially higher premiums than others. By shopping around, you may be able to find a seller offering prices closer to the spot price of silver. If you are looking for spot or near-spot pricing, buying online is definitely an option to consider, as online dealers tend to offer the most competitive prices and the lowest premiums. To get the best price for silver, it is crucial to compare dealer prices at the time of purchase, since they are constantly changing.
Read The Details
When comparing premiums between different dealers, it is important to read the details. Some dealers charge an additional fee for credit card transactions. Shipping fees, too, can add a substantial amount to the transaction cost, making your near-spot rounds significantly more expensive. Be sure to shop total price. The dealer with the lowest initial “per ounce” premium over spot may not have the lowest total cost.