How to Buy Silver

Like gold, silver investments can be made in a variety of forms. Let's take a look at some of the most popular forms.

Physical Silver: Physical silver can be purchased in a variety of sizes and weights, which determines its price. Most typical are 1.0 ounce silver coins, like the Austrian Silver Philharmonic, the American Silver Eagle, and the Canadian Silver Maple.

Their prices vary slightly due to differences in silver purity, with the Silver Maple being the highest at 99.99% pure. You'll pay about a 16% premium over the silver price for coins due to the cost of fabricating them.

Another popular option is the 100-ounce silver bar, which commands a 5% premium over the spot price of silver, meaning the bar is currently selling for slightly more than $1,900.

These coins and bars are essentially bought for their silver content and not as collectibles. If you're looking to build a silver stash - either large or small - bullion dealers may be the easiest way for investors to do so. But do your homework first, and check them out before you buy. Also, avoid paying more than the premiums I noted above for either coins or bars.

Some investors wonder if they should buy smaller denominations, like 1/20th, 1/10th, ¼, or ½ ounce (gold) coins. The thinking goes like this: If ever these coins need to be used to transact and make payments, one would want to have smaller "amounts" to carry around. That's a valid rationale. Even so, keep in mind that you'll pay a premium to the actual silver content, since each individual coin has to be fabricated. I believe that, should we ever get to that point, you could just convert a one-ounce coin or bar into a number of smaller coins, and pay the premium, or perhaps receive whatever else is being used for transactions (a new currency?) in return.

A few dealers that have an established reputation are:

Kitco.com: Premiums are fair and the selection is usually quite good. They have offices in both New York and Montreal.
Asset Strategies International Inc: This dealer is located in Rockville, MD. Asset Strategies also offers gold storage options outside U.S. borders.
Camino Coin LLC (caminocompany.com): Burlingame, CA.
American Precious Metals Exchange (apmex.com): Oklahoma City, OK.
The Tulving Co. (tulving.com): Newport Beach, CA
Gainesville Coins (gainesvillecoins.com): Lutz, FL.
Exhange-Traded Funds (ETFs) and Certificates: Another option for silver ownership is through exchange-traded funds (ETFs) or certificates.

As I mentioned in the "How to Buy Gold" special report, ETFs are a convenient way to establish a claim on gold, and the same applies to silver. A simple way to acquire a claim on silver is to buy units of the iShares Silver Trust ETF (NYSE: SLV). With some $5.5 billion in assets, SLV is the world's largest silver-backed ETF, using JPMorgan Chase & Co. (NYSE: JPM) in London as its custodian. SLV shares, which represent approximately 1.0 silver ounce each, are easy to buy and sell through your brokerage account.

You can also acquire "paper silver" through Perth Mint Certificates(PMC). Vault-protected and insured, PMC offers the only government-backed bullion storage program on an allocated or unallocated basis [this means stored separately for you (allocated), or stored along with everyone else's (unallocated)].

In an "allocated" situation, your coins or bars are removed from the mint's operating inventory, and placed in the Perth Mint Depository vault with your own account number. Allocated metals are not part of the mint's balance sheet, so you will pay storage fees. The government of the state of Western Australia guarantees the certificate.

Minimums are USD $10,000 for your initial PMC purchase, with subsequent purchases at the USD $5,000 minimum level. If you hold your coins, bars, and bullion on an unallocated basis, they can be converted into specific coins or bars and you can then take delivery, if you wish. The Perth Mint Certificate program is a solid way to gain international diversification for your silver holdings. For more information, check out Perthmint.com (note that Kitco and Asset Strategies also offer PMCs).