Why is silver sold SO HIGH over spot in the UK?

[FutureStacker]

Hello,

I have been looking at silver on and off for years, but never taken the plunge and bought any.

I've always noticed, and it seems to have got far worse now, how much over spot price physical silver is sold for.

Right now the price is hovering around roughly £19 an Oz - but from places such as The Royal Mint, the cheapest 1 oz bar is £28. From Bullionbypost, the cheapest 2 Oz silver round is £72 when you're buying a single one - which works out to twice the spot price.

How does anyone buy physical silver when you're getting such a bad deal? I'd understand £2-3 over spot, but 50% over spot? It's crazy! 

I'd love any input and advice.

Thank you!

[ChrisSilver]

The production cost as a % of the silver in the item is higher on smaller items than larger, so this is why smaller sized silver items tend to have a higher cost per oz vs larger items. 

There is also VAT in the UK on silver unfortunately.

[FutureStacker]

6 minutes ago, ChrisSilver said:

The production cost as a % of the silver in the item is higher on smaller items than larger, so this is why smaller sized silver items tend to have a higher cost per oz vs larger items. 

There is also VAT in the UK on silver unfortunately.

Hello, thank you for your response,

You mention that the production cost is factored in - does this mean that if you buy a 1 oz silver coin for example £28, when the spot price is £19, imagine that you want to immediately sell it, does that mean you get back £19 (spot price) or when you come to sell, do you get back spot price plus the extra value of production?

VAT at 20% means that £5.60 of it is tax, meaning £3.40 is over spot. When you sell, is any of this recovered, or do you literally get the £19?

 

 

With regards to VAT - I have seen mentioned on this forum that people will import gold from Germany or other EU countries to avoid VAT. When I have looked on some German websites however, their silver seems similarly expensive. Where can people order from that in the example above, would mean they are buying an ounce for £22-23 when the spot price is around £19?

 

Thank you so much for your time!

[FlorinCollector]

This is why a lot of people in the UK are no longer stacking silver.

[Robda1986]

Physical silver has a high premium. Generally. Manufactured costs. Vat. p&p. dealer profit. Bigger bars and coins tend to be cheaper per oz and buying from trusted sellers on here generally works out a heck of a lot cheaper I.e kilo bars sell on here between 700-800 and you won't find dealers selling at spot plus 20%

[metallica73]

22 minutes ago, FutureStacker said:

example £28, when the spot price is £19, imagine that you want to immediately sell it, does that mean you get back £19 (spot price) or when you come to sell, do you get back spot price plus the extra value of production?

VAT at 20% means that £5.60 of it is tax, meaning £3.40 is over spot. When you sell, is any of this recovered, or do you literally

 

Depends on who you sell to,  if its a refinery, or a we buy gold/silver place then you will be lucky to get spot.  You can get the majority of that premium back when re-selling to individuals but in the latter case it is harder to liquidate bigger amounts at once.

[FutureStacker]

27 minutes ago, FlorinCollector said:

This is why a lot of people in the UK are no longer stacking silver.

Is there a way to make it worth it in the UK? 

I am 23 and have been looking online on and off at gold and silver since I was 12/13. I'd get really into it for a couple of months, forget for a year, get interested for another month, etc. 

I'm now in a position for the first time where I'm about to be able to afford to invest in silver, and I feel quite upset at the thought of it not being economically viable/worth it.

 

Thank you 

[SilverJacks]

1 hour ago, FutureStacker said:

How does anyone buy physical silver when you're getting such a bad deal? I'd understand £2-3 over spot, but 50% over spot? It's crazy! 

A lot of people are buying silver right now. It's popular. Demand is very high and their are supply issues also. So the dealers, by supply and demand, have upped the premium considerably. 

There's also conspiracy talk of supressed market value, with silver actually being worth much more than spot price. I for one believe that is true but that's another matter that I would rather not engage full blown debate in, as it challenges peoples world views. 

 

57 minutes ago, FutureStacker said:

imagine that you want to immediately sell it, does that mean you get back £19 (spot price) or when you come to sell, do you get back spot price plus the extra value of production?

Dealers will be happy to buy back from you if it's worth their while. You should only sell back to them if you have to. Otherwise, sell privately to gain most, if not all of its actual market value, as opposed to mere spot price.

 

53 minutes ago, FutureStacker said:

With regards to VAT - I have seen mentioned on this forum that people will import gold from Germany or other EU countries to avoid VAT. When I have looked on some German websites however, their silver seems similarly expensive. Where can people order from that in the example above, would mean they are buying an ounce for £22-23 when the spot price is around £19?

You can't avoid VAT when bringing silver in to UK (unless you smuggle). There are ways of avoiding VAT when delivering to E.U countries but that ended on 1st January for us. You can only buy VAT free by private purchase or pre-owned silver from dealers that run the margin scheme.

 

8 minutes ago, FutureStacker said:

I'm now in a position for the first time where I'm about to be able to afford to invest in silver, and I feel quite upset at the thought of it not being economically viable/worth it.

Nobody knows for sure which way future prices will go. You could wake up tomorrow and it tanks, or "shoots to the moon". Todays market value might look cheap when compared to the future value. Might look steep also, or exactly the same. I'm quite sure it's one of those three...

 

I'm not the most experienced member on the forum. Others may agree or disagree, in part or entirety, with what I say. 

[SilverJacks]

 

[stackerp5]

Although premiums are high right now, you'll still get better deals in the forum than you would from any bullion dealer.

I myself, for example, have listed 2oz GCT free silver rounds for £58 posted (shameless plug? yes!) - but proof that you'll find best deals on here. You can look at more reputable sellers than myself such as @ilovesilverireallydoand @arshimo2012have some great deals from time to time. If you have a premium membership you can see their posts first as they tend to go quick!

@argentiumastrumhas been offering silver at reasonable premiums too

 

[dikefalos]

How much VAT you have in UK? We have 19% on silver bullion products, but i still see much better deals of UK silver in germany. For example the 2 OZ Completer. You can find it for 55 to 60€, around 50£. You guys have to pay almost 10£ more per OZ. Why? You always had such significend higher premiums, or just after Brexit?  

[LawrenceChard]

13 minutes ago, dikefalos said:

How much VAT you have in UK? We have 19% on silver bullion products, but i still see much better deals of UK silver in germany. For example the 2 OZ Completer. You can find it for 55 to 60€, around 50£. You guys have to pay almost 10£ more per OZ. Why? You always had such significend higher premiums, or just after Brexit?  

Current UK standard VAT rate is 20%.

You should try asking the Royal Mint why UK silver coins are so expensive (a) in general, (b) in the UK.

The RM are unlikely to give you an answer, but they do have a monopoly in the UK, (producing UK coins and CGT exempt coins) and I strongly suspect they deploy anti-competitive tactics for the UK market, which would not work outside the UK, as they need to compete with many other mints.

 

[Shep]

1 hour ago, FutureStacker said:

Is there a way to make it worth it in the UK? 

I am 23 and have been looking online on and off at gold and silver since I was 12/13. I'd get really into it for a couple of months, forget for a year, get interested for another month, etc. 

I'm now in a position for the first time where I'm about to be able to afford to invest in silver, and I feel quite upset at the thought of it not being economically viable/worth it.

 

Thank you 

Don’t feel upset about it, if you want it buy it 🤷‍♂️. If you’re buying to build a stack and not as a collector, bullion silver just doesn’t make great sense in the U.K. at the moment.

If you’re buying to collect as a hobby then that’s fine but if you’re expecting silver to preserve wealth I think at the moment gold is a better option (for many of the reasons explored above). Yes you might have to save up more and would have less coins coming in each month but ultimately it’ll probably do more for you long term.

I don’t know about others but every time a read a topic about gold or silver bullion that involves the word “invest” it makes me cringe a little bit. I think it’s a slightly misleading to think about bullion PMs in this way, especially if new to the world of stacking. Typically an investment grows and actively makes money. As we all know, bullion PMs typically just preserve the value of that fiat money which you bought in with, and at the moment in the U.K. I would argue gold would do a better/less risky job of that for you.

@FutureStacker Just for my own curiosity, why does it specifically have to be silver for you? Is it that you like it more or is it that the price per Oz is more attractive to you than that of gold? 

[Bigmarc]

2 hours ago, FutureStacker said:

With regards to VAT - I have seen mentioned on this forum that people will import gold from Germany or other EU countries to avoid VAT. When I have looked on some German websites however, their silver seems similarly expensive. Where can people order from that in the example above, would mean they are buying an ounce for £22-23 when the spot price is around £19?

I was working in Germany at around the time the spot price was £12.50 per ounce. I remember buying at a bullion shop for around £16.00 per ounce (17.50 euros). On my return at the London coin fair I picked up various bits at a average of £16 per ounce. At the time that was around 30% premium. Recently I have sold the a few of these bits on the forum for £25 per Oz. That's a 56% profit regardless of the talk of premium's. I believe that it's all to do with supply chain issues. Even if I go to Screwfix and try to order some copper pipe they are limiting to the amount each customer can buy, and as for how much they charge over spot? Probably more than silver bullion. 

At the end of the day all depends on the reasons for doing it. If you want to get in to the silver market just go for a vaulted position (kinisis, revolute or bullion dealer). I "think" all backed by physical. If you wanna play the spot game, go for junk coins, if you like shiny things that are attractive to the buyer then bullion all the way. 

[GBStacking]

The premiums were always going to jump once we came out the EU and couldn't import silver Vat free\at a reduced rate from there, however premiums also went up a lot at the same time and have been very slow to settle back down, if they have moved at all with some dealers. I have subsequently changed my strategy to a far more gold focused one as i simply don't see silver as viable with the mark ups at the moment. However if you are wanting silver as, even with the premiums, its still easier to get the cash together to buy a few ounces rather than 1 gram of gold (trust me, what ever you think it looks like, a 1 gram bar of gold is smaller than that! the silver will be much more satisfying to hold) somewhere like the selling pages on here would be the best place to buy it from. There is a good supply of interesting items and the premiums are about as good as you are going to find unless you get really lucky on somewhere like eBay (i would never recommend this for a new collector\stacker though).

[Pete]

I am assuming you are entering the precious metals club more as a hobby, curiosity or interest rather than a serious investment.
If the latter then my wisdom and age would advise you to stay well away and get yourself mortgage free, pension pot established and all your ducks in order so if you suddenly lost your income or interest rates rise you are not forced on to the street. The "youngsters" today are in a bubble and if it bursts .....

So back to PMs
Gold has the lowest spread between buy and sell so if you bought gold at 5% over spot you could worse case probably get 97% back in an emergency.
However gold is expensive and the price does change up and down so if you bought at a peak it could be a very long time before you breakeven when selling.
Problem is no-one, and I repeat NO-ONE knows the future price of gold and regardless of your research this is a risk that goes both ways.

Buying small bits of gold is paying a high premium plus percentage wise often expensive shipping so you need to always factor the total cost of your purchase.
Perhaps the best deal is to look for a full sovereign with shipping included - often fair prices and definitely easy to sell.

As for silver - "investors" in silver tend to hold contracts or have their silver in a bonded store meaning they have not been charged 20% VAT.
The majority of forum members prefer to hold their silver in their hand so unfortunately there is no way around paying 20% VAT buying from business sellers.

Buying and selling on this forum, eBay, Facebook etc means usually lower prices than buying from dealers, VAT is not relevant with private sales.
Due to current demand for PMs and the active market, silver does seem expensive compared to spot or melt value and not just due to the added 20% VAT.
A rule of thumb today is to expect to pay £28 - 30 per ounce for coins but you will find sellers, on this forum for example, selling at less.
To take advantage of the best deals you need to upgrade your membership to premium.

As for paying these high looking prices the way to look at this is - I buy a coin for £30 when spot is £19 so I feel that is a high price.
But if I wanted to sell I would hope to receive £30 so not really being out of pocket.
The margin built into silver remains with the coin or bar - for bullion - but can be different for numismatic & collectibles but prices fluctuate both ways also.
If you buy from a dealer who charges £30 plus VAT you will pay £36 and if you sold back next day you might get £29 or less.
You will have had to pay in addition postage both ways and that could amount to up to say £10 depending on the seller's choice of posting.

On the forum you may find a seller asking £28 for a one ounce silver coin plus shipping that might be say £3.00.
If you decided to sell this coin next day from receipt the chances are you would be able to find a buyer who would pay £28 plus cost of postage so you will have already lost 10% of your initial investment.

Lot's to think about but this forum is packed with useful information and many who started just like you, so benefit from their experience and not from Youtube or adverts on TV or shiny leaflets issued by the bigger dealers.

 

 

 

[TeaTime]

And yet no-one complains when they buy a tin of baked beans when the 'spot price' of beans is a quarter of the finished product.

I think the biggest hurdle for collectors of silver to get over is the ubiquitous use of 'spot price'. In reality the advertised rate that we see everywhere for silver is almost meaningless. The real value of silver is what real people will pay for real product.

If a silver coin or bar is regularly selling for £100 then that is what it's worth irrespective of what the stock market predicts silver to be worth. Most sellers / dealers use the advertised spot price as a starting point, not a written in stone 'that's what it's worth' price...

 

[Bigmarc]

A pint of beer is 95% water. Imagine having to pay £4 a pint coming out of your tap.

[Shep]

11 minutes ago, TeaTime said:

And yet no-one complains when they buy a tin of baked beans when the 'spot price' of beans is a quarter of the finished product.

Haha I like your analogy and I see your point but the issue stands that in the U.K. if you need to sell your stack quickly for a milestone purchase, emergency, whatever, you’re going to need to sell to a dealer and you’re going to get absolutely smoked.

Yes I agree you can sell piecemeal to individuals and pass on the VAT premium. If you truly need to get out of your stack it’s going to be difficult to do that and not take a pounding at the same time.

Edited July 14, 2021 by Shep

[GoldStandardPartyUK]

I reject the premise of the question. One can buy silver at spot when buying the right kind. 

999 shiny bullion is the worst

Damaged kilo bars are slightly better

Sterling hallmarked plates/spoons are ideal

Pre 1920 sterling coins are difficult to obtain and suffer from being collectable. 

But the best is 1920-1947. You can obtain this at spot. 

[LawrenceChard]

35 minutes ago, Bigmarc said:

A pint of beer is 95% water. Imagine having to pay £4 a pint coming out of your tap.

Some people pay more than that for water.

Example:

"The Acqua di Cristallo Tributo a Modigliani was dubbed the "World's Most Expensive Bottle of Water," recognised by the Guinness Book of World Records. Theirs comes in a 24-carat solid gold bottle and holds 750ml of water sourced from Fijian and French springs, plus it also has some glacial water from Iceland. Not only is it quite an experience, but it also comes in a diamond-encrusted bottle designed by Fernando Altamirano, the same man who's designed the world's most expensive cognac bottle. Estimated Value: US$6.1 million or around HK$47.3 million for 750ml" (Source Tatler).

...and I very much doubt that the bottle is actually solid 24ct gold, probably just 24ct gold plated, but that would spoil a good PR story.

[LawrenceChard]

1 hour ago, Pete said:

I am assuming you are entering the precious metals club more as a hobby, curiosity or interest rather than a serious investment.
If the latter then my wisdom and age would advise you to stay well away and get yourself mortgage free, pension pot established and all your ducks in order so if you suddenly lost your income or interest rates rise you are not forced on to the street. The "youngsters" today are in a bubble and if it bursts .....

So back to PMs
Gold has the lowest spread between buy and sell so if you bought gold at 5% over spot you could worse case probably get 97% back in an emergency.
However gold is expensive and the price does change up and down so if you bought at a peak it could be a very long time before you breakeven when selling.
Problem is no-one, and I repeat NO-ONE knows the future price of gold and regardless of your research this is a risk that goes both ways.

Buying small bits of gold is paying a high premium plus percentage wise often expensive shipping so you need to always factor the total cost of your purchase.
Perhaps the best deal is to look for a full sovereign with shipping included - often fair prices and definitely easy to sell.

As for silver - "investors" in silver tend to hold contracts or have their silver in a bonded store meaning they have not been charged 20% VAT.
The majority of forum members prefer to hold their silver in their hand so unfortunately there is no way around paying 20% VAT buying from business sellers.

Buying and selling on this forum, eBay, Facebook etc means usually lower prices than buying from dealers, VAT is not relevant with private sales.
Due to current demand for PMs and the active market, silver does seem expensive compared to spot or melt value and not just due to the added 20% VAT.
A rule of thumb today is to expect to pay £28 - 30 per ounce for coins but you will find sellers, on this forum for example, selling at less.
To take advantage of the best deals you need to upgrade your membership to premium.

As for paying these high looking prices the way to look at this is - I buy a coin for £30 when spot is £19 so I feel that is a high price.
But if I wanted to sell I would hope to receive £30 so not really being out of pocket.
The margin built into silver remains with the coin or bar - for bullion - but can be different for numismatic & collectibles but prices fluctuate both ways also.
If you buy from a dealer who charges £30 plus VAT you will pay £36 and if you sold back next day you might get £29 or less.
You will have had to pay in addition postage both ways and that could amount to up to say £10 depending on the seller's choice of posting.

On the forum you may find a seller asking £28 for a one ounce silver coin plus shipping that might be say £3.00.
If you decided to sell this coin next day from receipt the chances are you would be able to find a buyer who would pay £28 plus cost of postage so you will have already lost 10% of your initial investment.

Lot's to think about but this forum is packed with useful information and many who started just like you, so benefit from their experience and not from Youtube or adverts on TV or shiny leaflets issued by the bigger dealers.

"I am assuming you are entering the precious metals club more as a hobby, curiosity or interest rather than a serious investment.
If the latter then my wisdom and age would advise you to stay well away and get yourself mortgage free, pension pot established and all your ducks in order so if you suddenly lost your income or interest rates rise you are not forced on to the street. The "youngsters" today are in a bubble and if it bursts ....."

Very sound advice there from @Pete.

"So back to PMs
Gold has the lowest spread between buy and sell so if you bought gold at 5% over spot you could worse case probably get 97% back in an emergency.
However gold is expensive and the price does change up and down so if you bought at a peak it could be a very long time before you breakeven when selling.
Problem is no-one, and I repeat NO-ONE knows the future price of gold and regardless of your research this is a risk that goes both ways.

Buying small bits of gold is paying a high premium plus percentage wise often expensive shipping so you need to always factor the total cost of your purchase.
Perhaps the best deal is to look for a full sovereign with shipping included - often fair prices and definitely easy to sell."

I agree partially. Always look at total cost, but don't be fooled by "free postage".

"As for silver - "investors" in silver tend to hold contracts or have their silver in a bonded store meaning they have not been charged 20% VAT.
The majority of forum members prefer to hold their silver in their hand so unfortunately there is no way around paying 20% VAT buying from business sellers.

Buying and selling on this forum, eBay, Facebook etc means usually lower prices than buying from dealers, VAT is not relevant with private sales.
Due to current demand for PMs and the active market, silver does seem expensive compared to spot or melt value and not just due to the added 20% VAT.
A rule of thumb today is to expect to pay £28 - 30 per ounce for coins but you will find sellers, on this forum for example, selling at less."
 

Example pricing on 2021 Silver Britannias:

Qty	Chards (Excl Delivery)	Chards (Inc Delivery)	B*	G*	AB	RM	UKB	GER
5	£27.98	£29.18	£31.68	£30.36	£31.80	£31.94	£31.42	£30.72
10	£27.68	£28.28	£31.68	£30.24	£30.00	£31.17	£30.68	£29.40
25	£27.32	£27.56	£31.68	£29.88	£29.52	£30.66	£30.47	£28.68
50	£27.26	£27.48	£31.68	£29.76	£29.04	£30.23	£30.37	£28.56
100	£27.02	£27.30	£31.68	£29.64	£28.80	£29.92	£29.35	£28.20
250	£26.78	£26.90	£31.68	£29.64	£28.56	£29.92	£29.23	£28.08
500	£26.54	£26.64	£31.68	£29.52	£28.32	£29.92	£29.14	£27.84
1000	£26.48	£26.58	£31.68	£29.52	£27.72	£29.92	£29.14	£27.84

Updated At: 14-Jul-2021 16:17

"On the forum you may find a seller asking £28 for a one ounce silver coin plus shipping that might be say £3.00.
If you decided to sell this coin next day from receipt the chances are you would be able to find a buyer who would pay £28 plus cost of postage so you will have already lost 10% of your initial investment.

Lot's to think about but this forum is packed with useful information and many who started just like you, so benefit from their experience and not from Youtube or adverts on TV or shiny leaflets issued by the bigger dealers."

You will get a wide variety of opinions and advice, so you can pick whichever appeals to you most. Do shop around though. 🙂

[LawrenceChard]

6 hours ago, Robda1986 said:

Physical silver has a high premium. Generally. Manufactured costs. Vat. p&p. dealer profit. Bigger bars and coins tend to be cheaper per oz and buying from trusted sellers on here generally works out a heck of a lot cheaper I.e kilo bars sell on here between 700-800 and you won't find dealers selling at spot plus 20%

With spot silver currently at £608.614 per kilo, £700 would work out at 15% premium, while £800 would be 31.4% premium.

I am sorry to contradict Robda1986, but you will find at leat one dealer asking 20% premium for secondary market kilo silver bars, which would work out to £730.34 each, which is of course much less than the £800 you mention. Of course, we do charge shipping separately. Naturally, these tend to sell like the proverbial hot cakes when we have them in stock.

We do have a facility to be alerted when we have them in stock.

Similar applies to one kilo silver coins, and other sizes. Exact premiums can and do vary.

[sixgun]

If i were you and interested in picking up a bit of precious metal (a good idea) i would start with gold. 
Pick up sovereigns and half sovereigns. They sell easily, there are no taxes on them, including CGT when you sell. 
Once you have found your feet then start looking into silver.
Novices often pick up the wrong silver and end up disappointed and can drop out. No need for that if you kick off with sovereigns.
Yes you seem to be paying a lot for a little coin. Little coins that look like pennies. Easy to move, easy to hide, easy to move across borders, easy to sell.
That's why 9 out of 10 members recommend beginners start with gold sovereigns.

Edited July 14, 2021 by sixgun

[TringSilver]

16 minutes ago, sixgun said:

That's why 9 out of 10 members recommend beginners start with gold sovereigns.

This