Learn About Buying Silver at Spot and What Spot Versus Premium Means
Silver is one of the most commonly traded Precious Metals in the world. The London Bullion Market Association alone reported an average of 359.3 million ounces worth of Silver traded per day in 2018, for an average of $5.2 billion per day in transactions.
Much of that is between high-level traders, though, and some aren’t actually physical metal changing hands. It may be an option for a future purchase, a contract with a set end date that can be traded. There are other methods of Precious Metals investment and trading that are available too.
But what if you want to buy some Silver at its spot price? How would you go about that?
Spot Price vs. Premium
The spot price is the actual market price of the metal at the time it is purchased. Spot prices change instantaneously as the market changes and can be distinguished by futures prices easily because futures prices are for future delivery, not immediate delivery.
Just about any Silver you buy will have some premium on it, though. The premium is the markup on that Precious Metal. There are several different premium sources, including the markup from the vendor for their costs of procuring and selling it and making a small profit margin. It also includes the markup from the refiner for their work in refining and casting the metal. In the case of coins, it may also include labor for the design and costs of striking the coin. You might also count broker fees in the case of less tangible financial instruments designed around Precious Metals.
Buying Silver at Spot Price
So, how do you buy Silver at spot price?
The short answer is…you normally can’t. There will always be a premium involved for vendor costs, refinement costs, shipping, handling and more. For the past few years, customers have been able to get silver at spot price by shopping our site on Black Friday. For 2022, we had thousands of ounces of silver rounds available at spot price, but given the rarity of such an incentive we sold out quickly. The popularity of silver at spot deals is very high, but it’s not something we can guarantee every year. The best advice we can give is to check back regularly leading up to Black Friday and other major holidays for great deals.
Apart from mega sales like Black Friday, what you can do is minimize the premium that you pay. There are a few rules for minimizing premium costs.
First, in general, the larger the quantity you buy, the lower the premium. That’s even more applicable for larger sizes. A kilo bar will have a much lower premium than an ounce bar because of the lower amount of work involved.
Premiums are also lower for simpler forms. A bar will often cost less than an equivalent round, which will cost less than a coin. Coins often have a numismatic premium attached, however small.
The condition can also play a role. A coin that’s scuffed and beaten up will have a lower premium than one with a high level of detail and minimal wear. This isn’t as applicable to bars, as they usually have no premium for their design.
Lower premiums are not always good. Sometimes a dealer will lower the price because they’re cutting corners on the back end. Lower premiums may mean shipping delays or lower security. If you want to lower premiums safely, follow the rules above. You can also keep an eye out for sales when vendors try to clear back stock and make room for new products. This will let you get a better product for a lower price.
We also see a lot of websites selling silver or gold under the spot price. In every instance we have examined, that product has turned out to be silver-plated or gold-plated. Forums are rife with stories of scammers passing off replica products as real. If you are willing to brave the secondary market to get silver or gold at a slight discount, we recommend purchasing an XRF scanner and learning how to use it. It won’t protect you from everything, but it should help guard against some of the common scams when an unknown person starts advertising silver at spot.
Learn more about the Silver spot price.