Demand for physical silver began its surge in March of last year. Investors poured into the bullion markets, rattled by COVID and the economic carnage wrought by the bureaucratic response, Federal Reserve bankers gone wild, and multi-trillion-dollar federal deficits.
The #SilverSqueeze effort which began in January brought a whole new wave of buyers.
Demand overwhelmed the capacity of mints and refiners to produce coins, rounds, and bars for retail. Ask premiums soared – and Money Metals Exchange dramatically increased the prices it pays to customers willing to sell back their items (few are!).
Premiums will only normalize once mints can catch up – or buying activity subsides. That time could still be months away.
If you want physical silver and it is important to you to have direct personal possession of the metal, there is no way around the higher premiums – although silver bars and rounds are the most reasonable.
There may also be some delays in getting delivery, particularly for those ordering from some of Money Metals’ competitors.
If you are willing to consider secure storage for your metal, there are two options for buying silver for far lower premiums. The trick is in end-running the bottleneck in manufacturing capacity for smaller coins, bars, and rounds.
The first option is 1000-ounce silver bars placed in fully segregated storage. Of course, not all silver buyers are planning to purchase or sell in 1,000-ounce increments. But those who are can currently save at least $2.50 per ounce in premiums.
Placing orders for these large commercial bars must be done over the phone at 1-800-800-1865 because each bar has a different weight – they range from 900 to 1,100 ounces each.
The second option is Vault Silver. Customers may acquire as few as 40 allocated ounces within a large, segregated silver holding for Vault Silver customers – holdings that are comprised of low-premium commercial-sized bars. Customers obtain direct ownership of the silver through their Money Metals Depository storage account.
Vault Silver customers also have three options: They can sell their Vault Silver ounces at any time and receive U.S. dollars; they can exchange their Vault Silver ounces for any other product available at MoneyMetals.com; or they can also take direct personal possession of the large commercial silver bars (if they have holdings of sufficient size to do so).
Bars purchased are off the exchange and off-limits for the crooked COMEX and bullion bankers to leverage and rehypothecate.
Buyers can get significantly more ounces of silver compared to coins. Consider a $10,000 investment in silver American Eagles versus Vault Silver…
Based on spot silver at $27.50/oz the Silver Eagles are priced at $39.19/oz. Vault Silver is priced at $29.70/oz. $10,000 will get 255 Eagles. But, if you choose Vault Silver you will get 336 ounces. That amounts to 32% more silver for the same money.
Buying either 1,000 oz bars or Vault Silver now and exchanging for another product, after premiums normalize, is also a strategy that makes enormous sense.
Silver American Eagles could have been purchased for less than $3.00/oz premium in previous years. If the U.S. Mint's production of those coins ever catches up with demand, premiums could someday return to those levels.
Secure storage isn’t going to appeal to everyone. And every metals investor should, in our opinion, take possession of at least some of their metal.
Having physical silver on hand means holding an asset with zero counterparty risk and total privacy. It represents portable wealth that will be valuable in any situation that may arise.
Storing means giving up a degree of control and paying storage fees – in return for lower silver costs, better physical security, and insurance coverage. The cost for storage varies depending upon which product is chosen, but, through Money Metals Depository, it’s in the range of half of one percent per year.
Buyers must decide what is most important to them, but at least there are some options for avoiding high silver premiums.
About the Author:
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.
