Newbie Question

[Netnerd]

Question: In the UK it costs around £768 for a 1kg Silver Bullion bar including tax, with the current silver price at £16.90 the total value of the silver in the 1kg bar is £591.50 so that's £176.50 over the actual value of the bar. When selling a bar the dealers would only pay spot price so to get back to the point that you start the price of silver per Oz would have to rise by 50%+, therefore why is silver such a "good" investment?

[SilverJacks]

You cannot buy silver for spot price, so why would you sell for spot?

Dealers are businesses with overheads. If all you're offered is spot, find another buyer.

Whether bullion silver is a good investment is probably a hotly contested topic, but most would agree it has good potential

Edited August 10, 2021 by SilverJacks

[Netnerd]

4 minutes ago, SilverJacks said:

You cannot buy silver for spot price, so why would you sell for spot?

Dealers are businesses with overheads. If all you're offered is spot, find another buyer.

Whether bullion silver is a good investment is probably a hotly contested topic, but most would agree it has good potential

Well from what I can see I would be out of pocket immediately if I purchased and it could well take a long time to actually make good on any investment if at all. Some 1kg bars seem to be £1,000 and over but yet with 35oz of silver in them it fails to make logical sense to me as a newbie.

[SilverJacks]

1 minute ago, Netnerd said:

Well from what I can see I would be out of pocket immediately if I purchased and it could well take a long time to actually make good on any investment if at all. Some 1kg bars seem to be £1,000 and over but yet with 35oz of silver in them it fails to make logical sense to me as a newbie.

You are right in being cautious. Some might say silver is not a good investment. Not everyone would agree.

Some bars do have a collectors premium, vintage bars maybe. Otherwise, £1000 for a kilo bar is overpriced.

I don't think anyone would advise you to buy a silver bar and look to sell it immediately. If you were looking for a vehicle to drive for a few weeks before selling, you probably wouldn't choose a new one with zero miles as it will lose thousands driving off the forecourt.

That said, spot price is not the same as market value and if I bought a kilo bar that needed moving on quickly, I would hope, or even expect to get far above spot by selling privately.

You can get paper silver for spot and trade it quickly without all the baggage that comes with physical...

[Netnerd]

4 minutes ago, SilverJacks said:

You are right in being cautious. Some might say silver is not a good investment. Not everyone would agree.

Some bars do have a collectors premium, vintage bars maybe. Otherwise, £1000 for a kilo bar is overpriced.

I don't think anyone would advise you to buy a silver bar and look to sell it immediately. If you were looking for a vehicle to drive for a few weeks before selling, you probably wouldn't choose a new one with zero miles as it will lose thousands driving off the forecourt.

That said, spot price is not the same as market value and if I bought a kilo bar that needed moving on quickly, I would hope, or even expect to get far above spot by selling privately.

You can get paper silver for spot and trade it quickly without all the baggage that comes with physical...

Thank you for your advice it is much appreciated.

[LawrenceChard]

1 hour ago, Netnerd said:

Question: In the UK it costs around £768 for a 1kg Silver Bullion bar including tax, with the current silver price at £16.90 the total value of the silver in the 1kg bar is £591.50 so that's £176.50 over the actual value of the bar. When selling a bar the dealers would only pay spot price so to get back to the point that you start the price of silver per Oz would have to rise by 50%+, therefore why is silver such a "good" investment?

Using your figures:

Cost	768.00
Intrinsic	591.50
Cost/Intrinsic	1.30
% Premium	29.84

I recommend you get a new calculator!

However:

https://www.chards.co.uk/silver-1-kilo-bar-our-choice/12689

1 Kg Silver Bar Our Choice - New

£722.22 (Inc. VAT)
£601.85 (Exc. VAT)

INTRINSIC VALUE £543.85

Repeating the above calculation:

722.22
543.85
1.33
32.80
 

and...

(Different timing compared with my earlier pricing.)

Or you can legally avoid VAT:

https://www.chards.co.uk/1kg-vat-free-silver-bar-switzerland/13321

VAT Free Silver 1 Kg Bar Our Choice - Loco Zurich
New 1kg Silver Bars - VAT Free Storage in Switzerland.

£603.43 (Zero Rated) (Based on single piece pricing, there are price breaks for larger quantities)

🙂

 

 

[SilverJacks]

@LawrenceChard The price comparison chart, what does the asterisk represent? Is it for sister companies?

[LawrenceChard]

1 minute ago, SilverJacks said:

@LawrenceChard The price comparison chart, what does the asterisk represent? Is it for sister companies?

Yes.

It is explained on the linked page "*Companies owned by a single group selling the same product at different prices."

🙂

[SilverJacks]

Just now, LawrenceChard said:

Yes.

It is explained on the linked page "*Companies owned by a single group selling the same product at different prices."

🙂

Thanks. I did engage my brain and check the link for myself, albeit after opening my mouth 😂.

[Alex944]

Also take comfort in the fact that <usually> you'll be able to sell your metals with a % above spot. Especially in the UK where VAT is applied on Silver. You will see plenty of items on this forum listed for second hand, and they tend to be priced a bit below dealer prices and a bit above spot (for bullion coins that is). In that regard it can be viewed as a win-win - buyer pays less than when purchasing at a dealer and the seller gets more than selling to a dealer.

Needless to say though that second hand market always carries a risk. Here on the forum people are generally well intended and trustworthy and you can always ask them for more information, check their profiles and trading feedback, etc. Dealers tend to offer more safety than any second hand transaction, though it may be a slightly higher price. It's up to you at that point to decide if paying a few £ more or less is worth it considering the safety of the transaction. 

In terms of ''is silver a good investment'', I would generally lean towards no, especially if you are consistently paying VAT on it. Rather than an investment necessarily, silver (and PM's in general) is a nice way to build an alternative savings account away from fiat currency. If you are looking to buy low and sell with profit, silver is a tricky one. However if you want to build a stack and hold it for years and years to come, it's probably one of the better ''investments'' you can do. You'll be able to retain your fiat's buying power AND you get nice shiny things.

this is just my opinion and experience and not financial advice.

Edited August 10, 2021 by Alex944

[SilverJacks]

Another thing to consider, spot price is down 22% from this point last year, but secondary market value is actually up!

For many pre-owned items, you would have to pay more for silver now than this point last year due to premium increases and Brexit.

That said, it may not stay like that if spot price keeps tumbling...

[SilverJacks]

11 minutes ago, SilverJacks said:

Another thing to consider, spot price is down 22% from this point last year, but secondary market value is actually up!

For many pre-owned items, you would have to pay more for silver now than this point last year due to premium increases and Brexit.

That said, it may not stay like that if spot price keeps tumbling...

Correction - this only applies to certain items like American silver eagles and Krugerrands. Perhaps not so accurate across the wider market

Edited August 10, 2021 by SilverJacks

[dicker]

I have seen this in Morgan Dollar prices to an extent.  

[SilverJacks]

@dicker I know you like your Morgan Dollars. I don't know enough about them to make a confident purchase but I'm probably gonna go for the last of new releases at 5pm. Do you think they will do well, or will they prove costly with vat/import etc?

[dicker]

I have looked at the recent issues but at not impressed with the level of detail.  
 

I will keep buying interesting Morgan’s from the original series.  
 

Best

Dicker

[sovereignsteve]

13 minutes ago, SilverJacks said:

Do you think they will do well, or will they prove costly with vat/import etc?

They will do well in the US, certainly at the prices they are able to buy them over there.

To buy them from the UK will work out expensive once you add in the enhanced shipping costs and VAT. I'm not sure you would be able to sell them for the price you paid to a buyer in the UK.

Having said all that, I'm buying them.😉

[SilverJacks]

Thanks @sovereignsteve. I think I'm gonna roll the dice and hope for the best.

Do you have an estimate for cost per coin based on the limit of 3? I was hoping they'd be under £80, but is that too hopeful?

[sovereignsteve]

42 minutes ago, SilverJacks said:

Thanks @sovereignsteve. I think I'm gonna roll the dice and hope for the best.

Do you have an estimate for cost per coin based on the limit of 3? I was hoping they'd be under £80, but is that too hopeful?

I estimate the max cost per coin for 3 will be £85 but it may be a little less depending on if there is a courier vat collection charge or whether the vat is charged on the full shipping fee or not.