Silver has been a popular investment for hundreds – perhaps thousands – of years, and it’s still a good option today. With a restricted supply and a wide range of industrial uses to keep demand high it’s highly unlikely to lose value and has an excellent long term record. Silver can be added to a portfolio in many forms, from limited edition presentation coins to metal pool certificates, but for serious investors bullion bars are one of the best options. They’re widely available, easy to sell and carry a low premium over spot price. They also come in a wide range of sizes that make them flexible as well as cost effective.
In fact there are too many sizes of silver bars to cover them all here – it would take a book to discuss all the options available. There are some common sizes that dominate the market though.
The sizes available can be split into two basic categories. The most common sizes are measured in troy ounces. These make up the bulk of the market, especially in the larger sizes where ounce-marked bars are used for most large trades between governments and banks. They’re popular everywhere and cover the full range from huge Good Delivery bullion to extremely small pieces. Then there are metric bars, which are popular in Europe. Another way to categorize them is between cast bars, which are usually large, and minted ingots. Minted ingots are produced similarly to coins; blank shapes, usually rectangles, are cut from a sheet of silver then placed in a die and pressed into the final design. Most small bars, and all specialty ones, are produced this way. Cast bars are made by pouring molten silver into a mold, usually rectangular with the sides sloped so the bar can be removed more easily. The largest sizes are manufactured this way. The finish is usually inferior and the base of the bar – the largest surface – is often irregular due to the way the metal contracts as it cools. Cast bars are almost always undecorated; the only markings are basic information that’s stamped into the metal after it’s been cast and removed from the mold.
Looking at minted bars first, the smallest are metric ones produced by popular mints like PAMP SA in sizes as small as 2.5 grams. The PAMP range includes 2.5g, 5g, 10g, 15g and 20g bars. They also make a ½oz size, their smallest troy bar. If you’re looking to get the largest possible amount of silver for your money you should avoid these; they’re so small that the cost of making them adds a premium that’s higher than the spot price of their metal content.
The smallest bar that’s worth buying is the 1oz size. This carries a premium of around $4-5 above spot price, so a good one – like PAMP’s popular Fortuna design – should cost you around $22 at current prices. Even at this size the premium is quite high; with the spot price of silver being so much lower than gold you can quickly make big savings by opting for a smaller number of larger bars. The next step up is the 50g size. Premiums are similar to the 1oz bar but with around 60 per cent more silver they’re a more efficient option. In European markets the 100g size is quite popular; in troy measures it’s just under 3½oz and the premium isn’t much more than for a 1oz bar. Then there’s a 5oz size. This is a less popular size so the premium is relatively higher – large production runs make for a lower premium – and you’re probably best avoiding it; it’s not much more efficient than the 1oz size.
For serious investors one of the most popular choices is the 10oz bar. These are made in large numbers, so the premium is low – usually around the same as for the 1oz size. The bars are a very manageable size and weight, and at current silver prices they give good divisibility too. Divisibility is an important factor when you’re buying metal bars. In terms of cost efficiency you’ll get the most metal for your money by buying one very large bar, but this causes problems if you decide you want to sell part of your silver holdings. A better option is to buy the bulk in large bars but get some smaller ones as well. If you’re investing more than about a thousand dollars in silver the 10oz is small enough to let you sell flexibly and it’s not really worth buying anything smaller. There are two metric sizes that straddle the 10oz; 250g and 500g. These are also worth collecting if you can find them at close to spot price. You could be lucky with that, as they’re less popular in the US market.
Moving on to larger bars, the first size that qualifies is the 1kg bar. This is popular in Europe but less common in the USA, so there’s a chance of finding them at a lower premium. It’s also the last size usually made as a minted ingot, although some cast 1kg bars can be found as well. Minted designs like the Fortuna carry a higher premium but are also easier to sell. For large investments the 100oz size is ideal. These are still a manageable size – they weigh about seven pounds – but the premium over spot is very low. Largest of all is the Good Delivery bar. Like the gold equivalent these are produced to standards laid down by the London Bullion Market Association and they’re what banks and governments use when they trade silver. Because the spot price is considerably lower than gold the bars are larger. Most gold Good Delivery bars are 400oz, but the permitted size for silver is between 750oz and 1,100oz. Most bars are 1,000oz of 99.0 per cent silver.
When you’re choosing sizes of silver bar it’s important to remember that sizes that would make a good investment in gold might be too small to be economical. For that reason serious investors should steer clear of anything smaller than 1oz, and realistically 10oz and 100oz bars should form the core of your stock. If you’re investing enough to opt for Good Delivery bars so much the better; that’s where the price per ounce comes closest to spot price.