Buy silver

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The best buying and selling prices in the world are available where the liquidity is deepest - on the international physical bullion market. Centred in London, this is where central banks, bullion banks, investing institutions, silver miners and refiners trade what are called "good delivery" bars.

These silver bars are a standard size: 1,000 troy ounces (31.1kg). They are made by accredited refiners and kept in accredited vaults. Their movement, by accredited couriers, is carefully documented.

Because these bars' entire life is auditable, and because they have never been in private hands, a professional buyer accepts them as "good delivery" by the seller. So the seller achieves the international spot market price and gets paid quickly and efficiently. No fake bars have been detected in the good delivery system in living memory. If they were, the bad bars would be replaced for free without question or hesitation.

Coins are not good delivery. They cannot be sold on professional markets because their life history is not auditable and without specialist knowledge and tools it is surprisingly difficult to ever be 100% sure that a coin is pure silver. Though uncommon, fakes certainly exist. Without that auditability buyers will often need to re-refine, and the expense eats into the price you will get when selling.

Although few customers think to ask, when they transact silver coins with a dealer there should be two prices; both a higher buying price and a lower selling price. The trader makes money by buying from a selling customer at the lower price and selling to a buying customer at the higher price.

In professional markets, the customer will always ask for both prices at the same time – before the dealer knows if they are buying or selling. This forces the dealer to keep the two prices competitive (i.e. close to each other) if they are to win any business.

But in retail markets this dynamic disappears, and the difference between the buying and selling price, known as the ‘spread’ becomes large, while very often remaining hidden.

'Commission free' is not helpful if the hidden spread costs many times what an openly declared commission would cost. A wide spread is the key component of lost value for the retail customer who buys and sells silver coins – always at least 20% due to VAT, but often 30-50%.

On BullionVault, our commission is transparent and starts at 0.5% and gets lower the more you trade. The spread between the buy and sell price on our Order Board is typically around 0.25% for silver.

An exchange marketplace lets large numbers of buyers and sellers compete to offer each other the best possible price. Because there are many potential buyers, only the buyers who offer high prices will attract you when you want to sell, and because there are many sellers, only the sellers who offer low prices will attract you when you want to buy. This competition naturally keeps the prices fair and the spreads low.

Usually a coin shop or website will offer you just one counterparty – themselves. Lacking open-exchange competition allows them to buy from you at low prices and sell to you at high prices. Both buyers and sellers are usually better off when they have the choice of counterparties available on an exchange. Show me BullionVault's exchange.