How to buy silver bullion online at the lowest costs

You can buy and own physical silver in a number of ways. The key difference and biggest cost factor is whether you are charged VAT or sales tax. Investment silver stored in a London Bullion Market Association (LBMA) approved vault is exempt of VAT.

Silver coins and small bars are popular but incur VAT, shipping costs and insurance if kept at home. The table below illustrates how much silver is contained in popular coins and bars. It then shows the live prices to buy the same amount of VAT exempt silver on BullionVault. Use this table and our cost calculator to compare different ways to buy physical silver.

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Why choose large-bar silver?

The professional silver bullion markets only deal in large bars that meet the Good Delivery specifications of the London Bullion Market Association (LBMA).

Typically weighing around 1,000 troy ounces, Good Delivery bars are assayed to be 99.9% pure silver or better. This is how the wholesale market trades physical silver, but the standard dealing amount is one tonne. So most private investors must resort to small silver bars or coins. Compared to large-bar silver, these smaller units are always sold at a significant mark-up.

All silver bought through BullionVault is held in 1,000 troy ounce Good Delivery bars, and it is all stored securely in professional market-approved vaults. You can choose to buy silver bullion in London (UK), Zurich (Switzerland), Singapore or Toronto (Canada). There is no VAT or sales-tax to pay in any location, saving you money again compared to coins or small bars.

Please note that silver is not permitted in a UK self-invested person pension (SIPP).

Buying silver - comparing silver coins, ETFs & vaulted silver

Because private investors cannot usually buy silver through the wholesale spot market, they often buy coins or small bars, or invest through a derivative, such as an ETF.

Choosing to buy silver coins or small bars can cost you 10% or more over the metal's spot-market value. That is before you account for any local sales tax. The VAT on silver bought in the UK for instance runs to a further 20%, and you cannot reclaim that cost when you sell. That makes the typical loss between prices to buy and to sell silver worse still for private individuals.

There is no sales tax to pay on BullionVault. Silver bought in Switzerland is traded inside a Zurich's tax-free freeport zone. Customers who buy silver in London avoid the UK's 20% sales tax (VAT) because BullionVault is recognized as an LBMA member and when silver is stored by a professional London-market participant, that tax is only triggered if you choose to withdraw your silver from the vault.

Investors buying small silver bars or coins usually have to arrange storage themselves, which may present a significant security risk if kept at home. For this reason, trying to insure privately held silver can be very expensive when you compare that cost against BullionVault’s combined storage and insurance fee.

In the Gold News article Buying silver: the definition of crazy Adrian Ash investigates how the record sales of US Mint Silver Eagles actually cost investors $113m more than they need spend in 2014.

Exchange-traded trust funds (silver ETFs) track the silver price using complex derivatives, and may not even be backed by bullion. Dealing is restricted to stock-market hours. The annual fee for silver ETFs is about 0.50%, deducted from the quantity of silver backing the shares each day. That charge may not include insurance.

Other trust-fund products called "closed-end funds" track the price of silver less closely. Because they only change the quantity of silver backing their shares irregularly, the share price can vary sharply from the silver underlying it, known as the Net Asset Value.

Silver dealing and storage charges

On BullionVault's live markets the dealing commission you'll pay is the lowest around, starting at just 0.50% for your first trades and decreasing with the amount traded over time. Annual custody charges, with insurance included, are 0.48% by value. That's half the cost of the next-best service for physical silver stored in Zurich, for instance.

Please note that for storage there is a monthly minimum of $8. That's markedly cheaper compared with most allocated silver programs. Your monthly storage fee is charged to your cash balance, and deducted in US Dollars or the British Pounds, Euro or Japanese Yen equivalent.