Silver is a desirable investment for a lot of reasons. It’s a hard asset (unlike the currently trending and easily hacked cryptocurrencies), it’s more affordable than gold, and it regularly has a higher upside than gold. But if you’ve never purchased it before, you may be wondering how to buy silver in the first place.

Where to Buy Silver?

You have several options if you’re looking to make an investment in precious metals. Your choices include:

• Online silver sellers
• Local shops
• Banks
• National mints

It is generally a good idea to avoid buying directly from a private individual rather than a licensed business. Unless you can have the coins or bars checked and their silver content confirmed, you do expose yourself to counterfeits. There are plenty of affordable, safe ways to invest.

Why Buy Silver Online?

Saving money is the biggest reason why people buy silver online since online dealers offer the lowest premiums. The key to investment success is always improving your ROI. It takes more than a lucky guess and good timing if you’re going to see big gains. You need to be smart about how you buy the investments you believe in.

Any time an investment comes with additional costs or fees (which is pretty much always), you need to be smart about reducing those costs as much as possible. It should be transparent how much you are paying. With bullion, it’s easy to see how much you’re paying in premiums.

What Are Premiums on Precious Metals?

Premiums are the price above spot. To find out what those premiums are, simply look up today’s silver prices and subtract that number from the cost charged by the dealer on coins or bars. The spot price is the current price per ounce traded on global commodity markets. What you pay is spot plus premium.

Here’s how premiums are calculated when you buy silver.

• The cost of producing that type of bullion. The type of silver you’re buying will change the premiums. Coins have higher production costs (machining, labor, design) than bars or rounds. Buying bars can help you save.
• Size of the bullion product. Similarly, the quantity of ounces in the product affects production costs. A 100 oz. bar costs less than a 1 oz. bar.
• Supply and demand. Premiums can also change due to fluctuating supply and demand. During stock market crises or bull markets, everyone wants precious metals, but that doesn’t change how much is being mined and how much mints can keep up with demand.
• Origin of the bullion product. Different mints have different costs that they pass on to dealers. For example, the Chinese Panda tends to have some of the highest premiums over spot in the world.
• Dealer costs. The dealer bears costs as well, including shipping, storage, and transportation. These are factored into the cost of the products so the dealer can also make money.

The last factor is why going online is cheaper. Local shops have higher overhead costs than online dealers, who pay for warehousing and a website but not a premium retail spot. That’s why it’s smarter to buy silver online.