My Trip to the Local Bullion Shop

Silver has staged a nice rebound over the past week, and is currently trading around $86.70 per ounce.

Let’s pull up a 1-year chart.

A textbook parabolic move up to nearly $120, followed by a correction that dipped all the way to $72.

I believe the bottom is in. We may trade in a range between $75-90 for a while. A consolidation period would be healthy.

But we may break out and search for new highs in the near future.

Silver’s looking good here. I don’t know whether it’ll take a month, or a year. Maybe longer. But in the long run, we’re headed to new highs.

Today, let’s cover a few tips on the best ways to invest in physical silver.

Adventures at Local Shops

Two weeks ago a friend invited me to go to a local bullion and coin shop.

Yes. The answer is always yes.

I’m always curious to talk with owners and managers about their business. It’s a fascinating time in the precious metals market. Prices have risen significantly over the past year, so many people have been selling their old jewelry, coins, and miscellaneous items.

It’s gotten so crazy that metal refiners have stopped accepting most scrap. Most will only take pure 99.9% metal.

Because refiners are backed up, many shops aren’t buying scrap silver either. So if you’re persistent, there are deals to be found out there.

We went to the American Bullion Center in Timonium, Maryland. This shop was no disappointment.

The inside of the store smelled like ancient hardwood floors, coffee, and books.

My friend was in the market for physical silver bars, and Rick, the owner of this shop, had a decent selection.

As we walked in, Rick was talking to a friend at the counter about the sorry state of local schools. We nodded appreciatively when he glanced our way.

At the time, silver was trading right around $85/oz. And the owner sold my friend the silver bars pictured below for $85 per ounce. That’s the “spot” price, which is pretty darn good.

Typically, shops charge a premium on top of the spot price. Right now on most big online sites, the premium ranges from $5/oz for large bars to $12/oz for American Eagle coins.

A beautiful 1oz American Eagle silver coin

But if you get lucky, you might find a local shop with too much inventory. And in that case, there’s room to bargain.

My advice is to call around to locally-owned bullion/coin shops. That’s where you might be able to find great deals. Just be prepared to pay cash at many of them.

If you’re lucky, you might find a local shop like the one we did. The owner was a character. I noticed a copy of The Communist Manifesto on his shelf, and could instantly tell this was part of his “study the enemy” collection. Not a personal favorite.

People in the precious metals business tend to be entertaining characters. Most got into it for similar reasons. Distrust of government and dislike of fiat money.

Rick told me that sales are tapering off after the run above $100. Now people want to sell him industrial silver, some of it contaminated with nasty metals like cadmium. Obviously, he’s not interested.

But he said buying of silver bullion has been picking back up in the past few weeks.

One final note on local shopping: pawn shops are typically the worst place to buy. Steer clear.

Finding Online Bullion Deals

If you strike out finding local deals, there’s always the online option.

SD Bullion offers the best online prices I’ve found, and free shipping on most orders (note – we have no relationship with SD Bullion and are not being compensated for this mention!).

A few friends have ordered from SD, and all had good experiences (despite some delays during the height of the mania recently). Apmex is another reputable online coin and bullion shop.

Just be sure you compare prices and make sure you’re getting a good deal.

You’ll need to send a wire or a check to get the best price at online dealers. If you use a credit card, it’ll cost more.

If you’re a member of Costco, that’s also a great option. However, they have very limited choices and strictly limit the number of bars you can buy.

Choices, Choices

No matter where you buy, 1 oz 99.9% silver coins from government mints are the most expensive option. But they sure are beautiful. My favorites are American Eagles and Canadian Maple Leafs.

With silver bars, you get more metal for your money. Bars come in 1 oz, 5 oz, 100 oz, 1,000 oz, and 1 kilogram sizes. The larger the bar, the better the deal.

Typically the cheapest way to buy physical silver is old U.S. coins. From 1892 to 1965, American quarters and dimes were 90% silver and 10% copper.

By now, almost all these coins have been removed from circulation by collectors. But you can buy them in bulk online or at many coin shops.

These coins are called “junk silver”, but there’s really nothing junky about them. They’re meaningful historical pieces with real value due to the high silver content.

A single pre-1965 U.S. quarter is worth about $15 today due to its silver content alone.

Like I said, this “junk” silver gives you the most bang for your buck right now. So shop around, toss out some offers, and see what kind of deals you can get. Just make sure all the coins you get are all pre-1965.

And make sure you’re dealing with reputable people. Apparently there is some fake silver going around. Hit it with a magnet, and if it responds, that’s got iron in it, which is no good. There are also acid tests that can be done to determine if metal is gold or silver, and these test materials are cheap.

Many coin and bullion shops will have a detection device that scans the metal and can determine what type it is.

Like I said, be sure you’re dealing with reputable people. Look up the shop on Google and make sure the reviews check out. Or you can simply opt to buy at online shops with good reputations, like the ones we mentioned above.