First, let's get the terminology out of the way. Spot price for any commodity is the price you would fork over at this specific moment to obtain the commodity. Spot price is, basically, the commodity’s “right now” price.
Because there isn't a true physical marketplace where folks can bring their silver, the silver price is gleaned from the futures market using a formula that considers current interest and dividend rates and how many days until the futures contract is mature.
It's well known you can buy silver under spot by making bulk purchases of the right silver vehicle. Standard silver bullion – such as American Eagles and Canadian Maple Leafs – may come loaded high premiums above the metal's spot price. It can be difficult to find any bullion dealers willing to part with Eagles or Maple Leafs below spot.
But there is one way to get around that obstacle and sometimes buy silver under spot.
Buying junk silver coins.
The term “junk silver coin” is vast, looking at many world coins. But essentially, a junk silver coin is any government-issued coin containing any amount of silver that has little to no numismatic or collectible value above the value of the metal it contains.
Although there are many world coins minted in silver, the most popular junk silver on the market today are circulated U.S. coins minted before 1965. Before that year, the U.S. government produced many of its coins in alloys consisting of silver purities ranging from 35% to 90%.
Anyone can get U.S. junk silver coins for as little as 1% – 3% over spot prices. For certain buyers, you can even snag junk silver below spot if you buy in bulk.
Beware! Buying silver under spot means you have to buy the right coins.
A circulated Peace dollar in good condition, for example, will sell for a 15% – 20% premium from a coin shop or online auction – higher than the premium on a 99.9% pure silver American Eagle.
Knowing this means understanding a growing interest in numismatics. For decades now, more collectors and limited supply has vastly increased the premiums for certain, rare U.S. silver coins.
Often, the best junk silver coins are the purest. Junk silver coins with lower silver purities – such as the 40% silver Kennedy half-dollars and 35% silver Jefferson war nickels – encourage you to also own other metals of much lesser value, like copper and manganese.
We've noticed how junk coins with lower silver purities aren't as popular as the 90% silver coins and are ultimately less liquid.
It's important to note that it can be difficult to buy junk silver because there is heavy competition for it, and a lot of it has already been gobbled up by other people who want to buy silver at or below spot.
Can I Buy Silver At Spot?
If you're lucky, look for limited time promotions from companies offering some sort of incentive or an "at spot" deal. They are often limited in time and amount, but still prove a great deal, especially if you get free shipping!
Why are people trying to buy silver at or below spot now?
Right now you can get silver at a reasonably low investment cost, and you it's likely to rise again.
That makes it a great time to invest in this precious metal.
Why else would you buy silver? Let's look back a few years. Investors often want protection against inflation and buy silver and gold as inflation hedges. During the 1970s, silver and gold prices skyrocketed in response to price inflation that reached 13%. During the ’70s, popular silver and gold investments included any form of silver bullion, from 1-oz silver rounds and pre-1965 U.S. 90% silver coins to 100-oz silver bars and 1-oz Krugerrand gold coins.
For more blog posts on precious metals, visit our blog.