Silver has been the most popular and used form of money throughout history.
The great economist, Milton Friedman, described silver, and not gold, as the primary monetary metal in the world. Today, silver is believed to be just 8 times more abundant than gold and remains a finite and very rare precious metal. In fact, the quantity of above-ground, investment grade silver, is only slightly more than that of gold bullion held by governments and banks.
Due to banks and central banks desire to move to purely fiat currencies and due to silver’s limited supply and high price, the use of silver as mass-circulation coinage was abandoned over 40 years ago. In effect, silver went from being used as currency and money to being used as in investment and store of value and in industrial use.
Today, silver bullion bars and coins are still widely minted all over the world to meet its increasing demand as a tangible asset and critical industrial and technological component. With demand expected to outstrip supply in the coming years, pure silver bars offer potentially attractive returns for investors.
Therefore, when you buy real silver bars or bullion coins, you are essentially making the same prudent choices that Emperors, legendary kings, and prosperous merchants have made throughout history. By allocating a portion of your savings to silver bars is investing in a rare precious metal which is a store of value with substantial and ongoing global demand.
How Silver Bars Are Made?
Most silver you see as jewellery or coins begins life as a silver ingot or bar refined from silver deposits found in mines underground. A little-known fact about silver is that there are very few pure silver mines worldwide; most silver is produced as a by-product of gold, lead, and other base metal mining.
Due to its relatively lower value, silver bars are cast more widely than gold bullion by both private and sovereign mints. The two precious metals are refined through a similar process, with the most common forms being poured bars (or cast bars), and minted (or pressed bars). Silver mines extract the ore and refine it into pure metal through smelting. The molten metal is ultimately poured or cast into a mould to produce silver ingots or cast bars.
The word ingot is an old term used to refer to metals and other elements that are melted and poured into a mould with a specific shape, usually a rectangular block. Ingots are simply a convenient form of producing metals or non-metals in a refinery into a form that is suitable for transportation and storage. Ingots are labeled with basic information such as weight and the name of the producer and are not meant to be traded as investment grade metal.
Cast and pressed bars differ in several ways, and both have unique advantages to suit the preferences of every investor.
As a new investor in silver bars, you might wonder:
- How do cast silver bars differ from minted silver bars?
- Which type of bar is the most suitable for investment?
- What types of bars offer lower premiums?
- Which bars are easy to sell at the best possible price?
Firstly, what’s the difference between poured bars and minted bars?
Poured or Cast Bars: These types of silver bars are made by pouring molten silver into a mould, or cast, with the desired shape. Once the molten silver cools and solidifies, it is removed from the mould and weighed to ensure it contains the exact amount of silver. The cast bar is then stamped with the name of the refiner, its purity and gross weight. Alternatively, a serial number may be stamped on the bar for identification and authentication purposes.
Cast silver bars do not have as polished and as shiny a finish as that of minted bars. Instead, they have a rougher, matte finish, and just like two muffins, no two poured bars are identical.
The process of making cast silver bars is relatively simple but can be costly when producing numerous small bars. This is because it involves a tremendous amount of energy to melt the silver, and a lot of labour to painstakingly pour molten silver into each mould.
Pouring bars is only cost-efficient when casting large bars of more than 100 ounces. Large bars, like the 1000-ounce bars traded by governments and banks and investment funds, are almost always made through the casting method. For smaller bars of less than 100 ounces, the pressing or minting method is commonly used.
Minted or Pressed Bars: The process of minting silver bars does not involve heating the metal past its melting temperature. Rather, it begins with silver blanks; large pieces of silver shaped as bars or rounds without any markings. A pressing or stamping machine is then used to apply large amounts of pressure to the blanks using a die containing the desired design. The die typically has intricate logos or elaborate designs and creates an attractive and glossy finish.
Smaller minted bars can be produced quickly and cheaply using this process because it does not require lots of labour or energy to heat the silver. However, large bars of more than 100 ounces cannot be produced efficiently via this process.
The choice between cast or minted bars will, therefore, depend on the preference of the investor as well as the cost differences between minting and casting of the silver bars. Generally, bars larger than 100 ounces will be cast bars while smaller bars will be pressed bars.
Silver bars can also made by heating the metal to soften it, before forcing it through a circular or rectangular space to produce an evenly shaped length of silver, which is then cut into smaller sizes and before stamping. This is known as extruded silver.
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How to Determine the Purity of Silver?
Over the 4000-year history of silver, refiners have used varying methods to improve the purity of silver and therefore its quality. Today, advanced technology can produce silver with a purity of 99.99%.
The fineness of silver is denoted using the millesimal system, where 99.9% of silver represents 999 parts for every 1000 parts, or 999 fineness. Sterling silver, the highest purity in silver jewellery, consists of 92.5% silver and 7.5% copper, is denoted as 925 fineness.
The karat system used for gold, where 99% purity represents 24 parts out of 24 karats, was previously applied to silver. Today, silver bars or coins are stamped only with the millesimal denotation, with the karat system remaining optional.
Bullion silver bars and coins have one thing in common; they are made from pure silver with at least 999 fineness. Also known as investment grade silver, bars and coins are vastly different from silver jewellery and other collectibles.
Silver, just like gold, must be 99.9 percent pure, or .999, sometimes referred to as “three nines fine” to be considered as investment grade. Silver bars of such high purity will be accepted as a financial asset by leading exchanges, and can be traded as an investment by governments, banks, and individual investors alike. Investment grade silver, therefore, only derives its value from the weight and purity of its silver content. This is unlike silver collectibles including numismatic coins, which may not be 999 silver, and whose value derives more from their historic significance and rarity, rather than their silver content.
To be used in jewellery or as mass-circulation coinage, silver must be alloyed with a different metal to strengthen and make it more resistant to scratches and other damage. Copper is usually employed for this purpose because it does not tarnish nor alter the colour of silver.
Because silver jewellery is alloyed to other metals, its value is based mainly on the craftsmanship employed and not its silver content. It, therefore, does not offer much in terms of investment value.
How to Measure the Weight of Silver Bars?
The weight of bullion silver, like that of every other precious metal is measured in troy ounces as opposed to regular ounces. The regular ounce, also known as the avoirdupois ounce, is equivalent to 28.35 grams and is used in commerce to measure every item including common goods like sugar and salt. A troy ounce is equivalent to 31.1035 grams. Silver bullion is generally measure and priced in dollars, euros or pounds etc. per troy ounce.
Since the 16th century, the troy ounce has been the official measure of all precious metals such as silver, gold, platinum, and palladium. It is heavier than the regular ounce and measures 31.07 grams
London Good Delivery Silver Bars
The most common type of investment grade silver is the London Good Delivery silver bar. This is the type of bar traded by large institutional investors and governments and has a weight of 1000 ounces and 999 fineness. The price of a Good Delivery bar is what determines the silver spot price you see quoted internationally.
For a silver bar to be labeled as Good Delivery, it must be minted from a refinery recognised by the London Bullion Market Association and remain in the custody of a secured vault approved by the LBMA. Once the bar is taken out of secure storage, it loses its Good Delivery status. Just like the gold version, good delivery silver bars fetch the best prices of any silver bars.
Some popular forms of silver investment such as silver ETFs, and digital silver, deals with Good Delivery silver bars and not any other form. Furthermore, most silver is originally bought as good delivery bars, before being transformed into the silver products or jewellery we buy today.
Popular silver bars are manufactured by recognised private and sovereign mints which include:
- Perth Mint
- MKS Pamp
- Johnson Matthey
- Royal Canadian Mint
- Argor Heraeus
Types of Silver Bars
Silver bars, just like coins, are a great option for every type of investor. Although most people associate silver bars with government or bank stockpiles, individual investors can also conveniently buy bullion bars and benefit from the investment advantages that they offer.
Silver bars come in different sizes, from the smaller 5g, 10g, and 20g bars and up to 1000-ounce bars. Furthermore, cast bars have a deeper profile than stamped bars and appear thicker and shorter in length and width.
The most popular silver bars are the large silver bars as they are the best value for investors and more liquid than smaller bars. Smaller investors tend to favour silver coins ( 1 oz) rather than small silver bars.
Other silver bars which can be bought are:
One-ounce bars: These are the size of a biscuit. A 1-ounce Scottsdale silver bar for example measures about 50mm by 29mm by 2.6mm and contains 31.07 grams of silver.
Ten-ounce Bar: These bars contain 310.7 grams of pure silver and are about the length of a pen across their diagonal. Such a bar typically measures 73mm x 41mm x 11.4mm.
One-kilo Bar: With 1,000 grams of silver, a one-kilo bar is about the size of a brick. A PAMP bar is approximately 52 x 118 x 17mm in size.
100-ounce Bar: This silver bar contains 3.107kg of pure silver. They measure about 184 by 80mm by 20mm and are one of the most popular silver bars.
1,000-ounce Bar: Also known as a Good delivery bar, this is bar contains 31.07kg of silver and is 6 inches long, 2 inches wide and ¼ inch thick.
Benefits of Silver Bars Over Coins
Silver bullion bars and coins both offer exposure to the silver market, and an opportunity to hedge against risk while profiting from price appreciations. However, for every investor, the choice between bars or coins will depend on several factors that include:
- The amount of capital you wish to invest in the silver market
- How fast you want to build your silver investment portfolio
- The need to sell your silver quickly in times of crisis
- A desire to avoid paying high premiums on your purchase
- The need for cost-efficient storage
Based on the above factors, investing in silver bars rather than bullion coins will have the following advantages:
- Silver bars can be bought at a lower premium than bullion coins since it takes more time and painstaking labour to strike coins into their ornate shapes and designs.
- An investor seeking to build up their investment portfolio quickly will find silver bars more suitable since they cost less per pounce than coins.
- Bars take up less storage space than coins of similar value and will, therefore, can cost less to store in an insured and high-security vault.
What Storage Options Do You Have When It Comes to Silver Bars?
Once you buy silver, you must consider storage options that provide the best security, quick access, liquidity and potential tax advantages. As such, silver bullion bars should be stored in a high security bonded warehouse, which allows you to store silver free of tax. This is known as bonded silver; it remains tax-exempt unless withdrawn from the warehouse.
By not paying VAT on silver bars, bonded warehouses in safe jurisdictions such as Switzerland, Singapore or Hong Kong provide the safest and most secure storage while allowing your precious metal portfolio to grow without the burden of tax.
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