Commodity markets in the twenty first century can seem a very odd thing indeed to the outsider, particularly when at a certain point they begin trading not the commodities themselves but just the price of those commodities, often with some unexpected and unintended consequences and side effects.
If you are intending to buy silver at the current spot silver price, and wish to understand why you are paying what you are for that spot silver price, you need to have at least some kind of basic understanding of how spot silver prices work in relation to the commodity markets. The main two questions that need answering at this point – what is a spot price and how can you buy silver at it?
The spot price, to put it at its absolutely simplest, is the price you will have to pay for a commodity – in this case silver – if you want it right now at this specific moment. That does not mean that it is not affected by current market trends, however – the spot price for silver and other such non-perishable commodities is greatly affected by the expected future spot price. In other words, if speculators in silver think that the price of silver will go up in the future, the current spot price will be affected.
The great majority of the silver which is available to buy on the market today tends to be sold with a premium above spot. The premium above spot of, for example, collectible silver coins can be huge, often even a number of times more than the current spot price of the silver. Of course, this is fairly inevitable given that obviously everyone is in this business in order to try to turn a profit after all. However, the closer you are able to buy silver to its current spot price, the more the ultimate profit margin will be to your own advantage. Buying at the spot price itself would be the best way to achieve the greatest results on the investment. Silver round and silver bars tend to be the nearest silver to spot available from most dealers, with bullion coins usually having a much larger premium over the spot price because of how much more collectible they are. Thus if you are trying to keep your premium as low as you can, it is best to avoid buying from the official mints and try to find a reputable dealer who sells “junk silver” instead.