The spot price of silver is the current market value of the bullion itself. The actual price is the amount that the free market has determined. In other words, this is the figure where there is an equal amount of buyers and sellers. When the number of sellers starts to overtake the number of buyers, the price will naturally begin to drip down. If the number of buyers outweighs the number of sellers, however, the price will start to go up. Theoretically this is how all products would work in the worldwide economy, but most have some sort of government or other artificial involvement. Silver bullion is an actual scarce resource that can not be duplicated, so the price is alway an accurate reflection of both the supply and demand.
Factors on Spot Price
Needless to say, the number of buyers and sellers in the market will be the primary factor in the up to date spot price of silver. There are other dynamics that will change the price itself, but there is not anything else that plays a role in setting the price. In other words, there isn’t some body or figure that can say “the price should be this or that.” The amount that buyers are willing to pay in relation to the amount that sellers are willing to unload their silver at is all that really matters.
How Spot Price is Used
Spot price is used in various ways depending on where you are purchasing from. If you are buying your bullion from a local brick and mortar dealer, you will probably play the spot price that was posted when the market opened in the morning. There are some businesses that will adjust their sale price for the up to the minute figure, but most do not operate this way. The reason that they use the open price vs. the exact up to the moment price as it allows them room and the ability to work on a static figure throughout the day.
When buying your silver online, the price that you pay will coincide with the exact moment that your order is placed. Online companies move such large volumes of bullion every day that they do not need to worry about the common adjustments that the market will create from minute to minute and hour to hour.
Buying Silver at Spot Price
There are no truly reputable silver companies that will sell their silver at anything over spot price. Now, this doesn’t mean that coins, rounds and other forms of metal beyond raw metal won’t carry a premium. The spot price of silver only applies when you are talking about generic forms of pure silver with no collectible value. In other words, if the spot price of silver is X, a 10 ounce bar of silver would cost 10x.
There are no added fees or charges in relation to the spot price itself. What might be added, however, is a per ounce charge from the dealer. This is most common in brick and mortar businesses as they have more overhead to take care of, but the majority of online retailers of silver will not add in any extra fees whatsoever. If you want to buy your silver at spot price and nothing more, online is definitely the way to go. You can buy silver with a credit card, via wire, bank transfer, and anything else that the company offers.
Selling Silver at Spot Price
When you are selling silver, the spot price will play a slightly different role than when you are buying. Where a purchase is in coordination with the current spot price, a sale is usually going to be the spot price minus $1, for example. This is what allows bullion companies the opportunity to make a little bit of money. Most every silver business will buy their metal at only $1 less than spot price. On one hand, this seems like you are losing a lot on a large sale, but on the other hand, the company is really not making that much. If you are looking to get rid of your bullion, you need to consider the marginally lower price that you are going to receive as compensation.