How to Buy Physical Silver

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If you don't already know how to buy physical silver, you need to now before it's all gone...

Even with silver prices down for the year, sales of physical silver have hit record highs. The public has been buying a record amount of silver bullion coins from the U.S. Mint in the first half of 2013, with sales hitting 24.03 million ounces.

The acting director of the Mint, Richard Peterson, said that demand for such coins remains at an "unprecedented level." He expects record sales for the year overall.

If you want to buy silver bullion coins, act now.

If you want to explore other options, we have a list here of what you should consider. As you bulk up your asset protection strategy, there are a number of ways to include physical silver.

How to Buy Physical Silver

There are several available options for buying silver:

  • Official Government Bullion Coins - These coins are issued by a government mint such as the U.S. Mint and the Royal Canadian Mint. The coins are easy to store and can be turned instantly into cash anywhere in the world. These coins are very inexpensive, but do trade at a small premium over silver bullion prices.
  • Silver Bullion - This silver usually comes in the form of bars that are at least 99.9% pure. Bars may be as small as one ounce - really cheap right now. However, larger bars carry a smaller premium. They must be stored securely, and at time of sale, may need to be assayed.
  • Rounds or Medallions - This is a round piece of silver that closely resembles an actual coin. It may be issued by a government or a private mint. But it is not considered to be legal tender. Investors should buy these from only the most reputable silver refiners.
  • "Junk" Silver Coins - These are a favorite method of owning silver for Money Morning Global Resource Specialist Peter Krauth. So-called junk silver consists of coins, minted before 1965, and is usually sold in bags with at least $1,000 in face value. These bags contain roughly 715 ounces of silver and cost about $2,000. However, some dealers will sell smaller bags.

Some of the coins found in these bags include: Morgan dollars and Peace dollars; Liberty Head 'Barber', Walking Liberty, Franklin, and Kennedy half dollars; Liberty Head 'Barber', Standing Liberty, and Washington quarters; Liberty Head 'Barber', Winged Liberty Head 'Mercury', and Roosevelt dimes; and 'Wartime' Jefferson nickels.

There are also a couple of choices for investors who are more comfortable dealing with paper assets, but with an option to convert the paper into silver bullion. These include:

  • Certificates or Storage Accounts - With these accounts, the investor purchases silver, but does not hold it. The silver is held for the investor in a segregated vault account. The investor can, if he or she chooses, have the silver sent to them in a matter of a few days.
  • Exchange Traded Vehicle - A security, such as the Sprott Physical Silver Trust (NYSEArca: PSLV), is bought on an exchange like a stock. The silver held by the fund is held in a Canadian vault. There is a difference between this and other bullion-backed exchange products: it does give the investor the option of having the silver represented by the security sent out to them in the form of bullion on a monthly basis. There is a minimum for conversion, however, of 1,000 troy ounces.

Where to Buy Physical Silver

Choosing the type of physical silver investment to make is just step one. The second step is to find a reputable place to purchase your silver.

If an investor is interested in bullion coins, it is probably best to go directly to the national mints. The U.S. Mint and the Royal Canadian Mint are the most popular with U.S. investors.

But if investors are interested in other physical silver products, one must be sure to deal with companies that have a good reputation for honesty and customer service.

Money Morning's Krauth said investors should consider two companies: Asset Strategies International and American Precious Metals Exchange. Both firms offer a wide range of silver-related products.

The names of other reputable companies to deal with, and with a variety of silver products, can be found on the Silver Institute Website (www.silverinstitute.org). The list includes: A-Mark Precious Metals, Bank of Nova Scotia, Dillon Gage, Fidelitrade, Gainsville Coins, Johnson Matthey, Kitco, Midwest Bullion Exchange, Monex Deposit Company, MTB Bank and SilverSaver.

There is another option as to where to buy your silver that is a fairly recent development. You can now buy your silver directly from silver mining companies.

Several mining companies have begun selling silver directly to the public:

  • First Majestic Silver (NYSE: AG) is unique in that it is the only mining company that sells its own mined silver in bullion form. Investors can purchase half-ounce and one ounce coins, five ounce ingots and 50 ounce bars from its online store.
  • Pan American Silver (Nasdaq: PAAS) sells 0.999 fine silver bullion minted at the Northwest Territorial Mint. Its silver products include one, five and ten ounce silver bars along with half-ounce and one ounce silver rounds. The Northwest Territorial Mint also sells junk silver bags as small as one-tenth size with a face value of $100 (71.5 ounces of silver).
  • Great Panther Silver (NYSE MKT: GPL) sells one ounce coins and silver bars minted from 0.999 fine silver. The bars come in one, five and ten ounce sizes and are available through its online store.
  • Avino Silver & Gold Mines (NYSE MKT: ASM) sells 0.999 fine silver one ounce coins from its own online store.

Make Sure Your Silver Is Genuine

When you buy physical silver, you want the real McCoy, not some fake.

How do you make sure it is genuine? There are several ways to check:

  • Silver bars, rounds and coins make a ringing sound when struck. Fakes make more of a thudding sound.
  • Make sure to check the specifics. Check the exact weight with a gram-based scale. Also check the diameter and particularly the thickness of bars and coins to make sure they match the mint's specifications. The Northwest Mint says counterfeit bars are much thicker at 0.126 inches versus the Mint's 0.083 inches.
  • Finally, there is the nitric acid test. Silver is unaffected by nitric acid, while fake silver will usually begin fizzing when the acid hits it.

Now you are ready to invest into a metal that has proven its worth throughout the centuries.

Did you know precious metals expert Rick Rule is a huge fan of buying silver? Check out his advice and silver outlook he e: Is Now a Good Time to Buy Silver? Rick Rule Weighs In

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