Silver bullion for beginners: bars, coins and 999 purity

Why people buy silver bullion

The reasons we hear are fairly ordinary. Some customers like having a physical metal they can hold, alongside the money in their bank account. Others want something small before they look at gold. A few simply enjoy the coins and pick up each new year's design.

The low entry point helps. A one-ounce coin or a small bar doesn't need a large sum, so it is an easy way to see how buying and selling bullion works in practice. Silver coins are also a common gift for a new baby or at festival time.

We won't tell you whether to buy silver or how much to keep. Our job is to explain how it works, so that whatever you decide, you know exactly what you are holding.

How silver differs from gold

Both metals are priced in troy ounces and both follow a live world spot price. That is roughly where the similarity ends, and the differences affect how you buy and keep them.

Gold is worth many times more per gram than silver, and it is also much denser. Combine the two and silver takes up far more room for the same money. A kilo of silver fills nearly twice the space of a kilo of gold, yet it is worth only a fraction as much. People who build up a fair amount of silver are often surprised by the weight, and by how much shelf space it wants.

• Bulk: the same sum in silver weighs and fills much more than it would in gold, so storage and carrying need some thought.
• Industrial demand: a large share of silver goes into electronics, solar panels and other manufacturing, whereas gold is mostly held as jewellery and bullion. Silver's price is more closely tied to factory demand as a result.
• Price swings: the silver market is smaller than the gold market, and its price tends to move more sharply, up as well as down.
• Buying and selling gap: silver is cheaper per ounce, so the cost of making and handling each piece is a bigger part of what you pay. The difference between buying and selling prices is usually wider than with gold.

Silver bars or silver coins

Bars are the plainest way to own silver. Sizes run from one ounce up to one kilogram and beyond. Larger bars generally cost less over the metal value per ounce than small ones, because there is less minting work per gram. A proper bar is stamped with the refiner's name or logo, the weight and the fineness, and often a serial number.

Coins are struck by government mints and are legal tender where they are issued, though the face value is symbolic and bears no relation to what the silver is worth. The detailed striking means they usually cost more over the metal value than a large bar. In return they are easy to recognise and easy to count, and the standard one-ounce size suits a lot of people. The Canadian Maple Leaf from the Royal Canadian Mint and the Australian Kangaroo from the Perth Mint are two familiar examples.

If your interest is mainly the metal and keeping the cost per ounce down, bars make sense. If you care more about recognition, smaller units or the design, coins do. Many customers end up with some of each.

What 999 purity means on silver

Silver bullion is usually marked 999 or 999.9. The figure is parts of pure silver per thousand, so 999 is 99.9% silver and 999.9 is 99.99%. Some mints, the Royal Canadian Mint with its Maple Leaf among them, strike to the higher figure. For owning and selling bullion, the difference between the two hardly matters.

Purity also matters for tax. Since 1 October 2012, investment precious metals have been exempt from GST in Singapore. For silver, that means at least 99.9% purity in the form of bars, ingots, wafers or coins. Bars must come from an accredited refiner and show the refiner's mark, fineness and weight; coins must be legal tender and meet IRAS's other conditions. Silver below 99.9%, such as sterling silver at 92.5% or most silverware and jewellery, does not qualify, and the usual 9% GST applies. IRAS's e-Tax guide on investment precious metals has the full rules.

When you look at a piece, check the fineness is stamped clearly. A bar or coin with no fineness mark, or one stamped 925, is not bullion.

Keeping silver in Singapore's humidity

Silver tarnishes. In our humid weather, a coin left in the open can turn yellow, brown or rainbow-toned over time, and a bar can dull or develop spots. This is a surface reaction with sulphur in the air. It doesn't mean the metal is fake or low grade, and the silver content stays the same.

Most owners still prefer their pieces bright. Leave silver in its original capsule or sealed packaging if you can. Store it somewhere dry, away from rubber bands, newspaper and wool, all of which give off sulphur, and put a sachet of silica gel in the box. Hold coins by the edges: fingerprints can leave marks that only show up months later.

Don't polish. Silver dip and abrasive cloths scratch the surface, and a scrubbed coin is less appealing to whoever buys it next. Think about space early, too. A small safe that easily takes a few gold bars fills up fast with silver.

Buying and selling silver with us

Every piece we sell is tested first, with a Precious Metal Verifier and XRF, and PAMP bars get an extra Veriscan check. Our prices follow the live world spot price through the day, and the premium is shown openly on each product page. At weekends, when the world market is closed, we sell at the last closing price. Live prices and charts are at bullionking.sg/market, and current stock is at bullionking.sg/shop.

Online, you can pay by PayNow or bank transfer. In the shop we take PayNow, bank transfer, cash or card, with a fee on card. Self-collection from our shop at Centrium Square, 320 Serangoon Road, is free, and we deliver within Singapore by courier. For purchases above S$20,000 we take your NRIC or passport details, as the PSPM Act requires of every registered dealer. In silver, that sort of amount is heavy, so plan how you will get it home.

We buy silver back too. Bring your pieces to the counter, we test them, and the amount is set at that moment's price. Details are at bullionking.sg/sell.