I’ve always been curious about this stuff. Walk me through a few things though. You purchase it for 12% above value hence you need it to rise in order to break even. Can you then liquidate it at market value or are you going to be selling for below market value at the time of sale?
When you buy Bullion such as Silver it most commonly comes as
1 Troy ounce coins (minted by Govt mints such as US, British etc),
1 oz Rounds ( look like Coins but are minted by private mints so are not allowed to call themselvs coins), or
Bars ( various sizes from 1 oz to a couple kilos.
When you buy, you pay spot price (aka melt price, the price for the raw material that a large smelting enterprise or mint would pay)
PLUS a markup (after all for minting, guarding and distributing this, they have to get operating costs, plus a profit).
The markup is greatest with Coins, but so is the acceptability on the market when you sell.
Every potential buyer knows what a Silver Eagle is for example.
Second come Rounds, a little less markup but a bit less acceptance from the public
Finally bars have the least amount of markup over spot. Here you get the most silver for your money, but since most bars are larger they are harder to sell .
When you sell you be lucky to get spot price for anything. Except for well known coins, like Silver Eagles of Canadian Maples leafs, for which you might get a bit over spot, but not nearly as much as the original mark-up.
(Most of my Silver is in Canadian maple leafs: Much less markup than Silver Eagles, but still very good name and acceptability)
So why would anyone do this?
a) there is potential for spot to rise so much that the haircut you take, vis-a-vis the original markup, no longer matters as much
b) To own something that will always have intrisic value, as a hedge against inflation or currency collapse.
After all your USD Bank accounts are really just electrons inside someone elses computer.
For rounds and coins, 1 oz is the most common, but other sizes exist.
The system is parallel in Gold, except everything is much more expensive.
Recently the %age markup for physical silver has significantly outpaced the markup for Gold Bullion.
A Krugerrand (best known One ounce Gold Coin) may be $3100 USD now (1 troy ounce of gold, mixed with a little Copper and platinum to make it a bit harder, but still contains a full oz of Gold) and the spot price for Gold maybe 3000 USD/ ounce now.
So by percentage the mark up is much less in Gold.
Which is why i stopped buying Silver (I already have a lot of it) and switched to Gold.
The price of entry for Gold is so high though and the resulting $3000 coin so small, it is much less satisfying than to have a almost a 80 (ish) coins of silver for the same price ; which are each larger to boot.
Also in a general economic collapse, its easier to pay for a tank of gas with a couple of coins of Silver than with any amount of Gold.
A couple of tips:
ONLY buy from reputable sellers like JMBullion
NEVER sell , when you do need to sell, to pawnshops, at least the small ones. They will nearly ALWAYS try to rape you.
Know what you have and dont let them gaslight you.
I once had one offer me 50% of spot! (laughter)
Large serious jewelers or better yet if there is a bullion whole saler in your town you can get his interested if you sell a larger amount say a minimum of 200 oz of silver (be prepared to show a receipt of ownership).
The day the pawnshop offered me 50% of spot, I had my whole seller offer me spot minus 1 USD/ ounce, which amounted to 95% of spotprice.
This was for a sale of 200 one Oz Rounds (Buffaloe Silvers if I recall)
Which was fair, since they were "only" rounds and I had paid less markup to get them and I actually still made some small profit since spot had rise about 4 dollars since i had bought them and markups for Rounds were small back then.
Also if you buy from a legit large place like JMBullion, they will buy it back years later at the given market rate of the day (which can mean a profit or a loss)
