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A Guide for Investing in Physical Silver

Thinking about investing in physical silver? This guide will tell you everything you need to know!

If you pay attention to financial news, you will hear all about how people are investing more in physical assets. One of these types of assets is silver. Much like gold, silver is one of those valuable precious metals that is worth considering making an investment in. There are many things to factor in when deciding to buy physical silver. This is why we put together this guide on everything you need to know about investing in physical silver.

Investing in Physical Silver – Overview

While some people might be invest in stocks, mining futures, exchange-traded funds, or other non-physical versions of the metal, buying physical silver has many benefits. Silver is in high demand across many different industries and has been steadily increasing in value over the past few years. This makes it a much better hedge against inflation than it previously was. Plus, adding physical silver to your portfolio can be great for diversification purposes.

If you are serious about making the most of your money now and for the future, consider investing in physical silver. While you can get exposure to silver through other financial assets like ETFs, or precious metal mining company stock, investing in physical silver may be more beneficial. Before you do this, here are some things you need to know about.

What is a Troy Ounce?

Many physical bars of gold and silver are measured by something called a Troy ounce. A Troy ounce is a unit of measurement consisting of 31.1034768 grams, to be specific. Using the Troy ounce scale is fairly unique to precious metals. For reference, a normal ounce is 28.35 grams. So, a Troy ounce is around 1.09 times the weight of a normal ounce.

The Troy weight system is unique, popping up initially around the middle ages. Since then, it’s been used as a scale for measuring precious metals such as silver and gold. The name supposedly derives from Troyes, France. Since 1828, the US Mint has used troy ounce as a standard for regulating coins.

Coins, Bars, and Bouillon

Silver is one of those precious metals that has many uses in different types of manufacturing. It’s value as a metal for both industrial concerns and in jewelry is exceptionally high. Coins and jewelry are certainly one way to acquire silver for your investment. But you may want to look into getting some silver bullion or a 5 oz silver bar instead.

Silver bars are really cool, have exceptional quality, an elegant design, and decent weight. Just like gold, silver bars come in different purities such as .999 (fine) and .9999 (pure).

Coins can be a great option, too. Coins will usually have imprints and be made with the same high quality and attention to detail as bars. Bullion coins have specific values and might be viable as legal tender. Commemorative coins are specially designed to be collectible and can be investments. Investing in rare and unique silver coins can not only be a great investment, but also a fun hobby!

Storage Considerations

When you buy precious metals—especially if you’re acquiring larger quantities of them—storage becomes increasingly important. After all, you need a safe and secure place to store your silver!

For optimal storage, find a cool dry place that is typically secluded from other areas. Don’t store your coins or bars near anything that could potentially damage it, such as an abrasive substance or something that will cause it undue weathering.

Finally, consider getting a special airtight container for your investment. For bars, a locked cabinet, lockbox, or safe is a great option. For coins, a commemorative folder or safe storage container is probably a better bet.

Also, what ever you do, do not try to clean any silver bars, bouillon, or coins your self. Many people make this mistake and destroy the value of their investments.

Tax Considerations

If you are thinking about investing in physical silver, you need to be aware of the tax implications. There are two consistent definite things that come up with any kind of investing: return on investment and taxes. Precious metals are no different.

It’s important to understand taxes when it comes to investing and silver is no exception. Every state has different tax rates on the purchase of silver. But selling it is another matter entirely.

Per the IRS, there is a capital gains tax on the profitable sale of any asset, including silver. There’s also a collectibles tax of 28% on some types of silver collectibles. Understanding taxes and how they affect your buying/selling of silver is critical. Be sure to conduct your due diligence as you continue investing. Your accountant or any other licensed CPA should be able to provide any help or answer questions about taxes as well.

In some cases, you can even hold precious metals like silver in a qualified retirement account such as an IRA. The rules can be vague, so before you purchase silver coins with funds from an IRA, check with your accountant or financial advisor.

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Buying and Selling

So, you decided to buy some silver. Great! Now it’s time to figure out how you go about buying and selling it. To begin with, seek out reputable mints that are high quality, exceptional, and trustworthy. Reputation and expertise are important.

How are you going to acquire and receive the silver itself? When it comes time to sell, make sure you understand where to sell them, how to sell them, and what the actual price per ounce of the metal is at the time. This will help you avoid fraud or other issues related to buying and selling silver. There are many ways to legally sell silver, so do your homework, find the best deals, and happy investing!

Investing in Physical Silver – Summary

Investing in physical silver can be a great decision. Not only does silver act as a hedge against inflation, but you can make a hobby out of this. If investing in physical silver is something you are interested in, be sure to do your research. Only buy silver from reputable dealers, and know the value before you sell it.

For more articles like this, check out the investing section of the site.

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