Hello. I'm still extremely new to this game and I am looking for more information regarding electronic Silver. I have a small stack of physical Silver (~$1k) and wanting to have answered some questions about Digital Silver to see if spreading into it is appropriate for me. From my immediate impression, it seems that Digital Silver covers the convenience factor of not having to deal in a physical asset, making it easier to unload/trade quickly. What types of Digital Silver exist (particularly for the Australian market, ASX), Ive heard words such as ETF and the like thrown around? How volatile is Digital Silver? Do they typically just follow the Spot price of physical AG? Or is it more gambling on future outcomes? Thanks.
There is a lot more digital gold than digital silver but here are the various types. Unallocated pool is the cheapest option that will get you the closest to spot price and no storage fees. You do not have rights to specific bits of silver, just a slice from a much larger bar. Allocated pool is the next cheapest option, next furthest from spot. They will let you buy and store certain items such as bars and coins but there are storage fees for this. What is stored is "fungible" which means you may not get the exact coin you bought but one just like it instead. Segregated storage, this option allows you to buy certain items and have them store it for you. The storage fees are higher on this one and your purchases will be further away from spot. Then there is keeping it at home which you currently do. To add to this list you now have things called "stablecoins" that are supposed to be backed and valued on the amount of precious metals they have available with the blockchain. These are normally based on gold and are very new so nobody has much experience with them. ETFs and silver stocks are next, just buy and sell them through a broker. All of these have one major problem which is that you do not hold the metal. Several of these types of organisations have gone under and each time the people who kept their metal with them end up getting a couple of cents on the dollar. Imagine getting $10 for the $1000 of silver you have because someone ran that company into the ground. If you want to trade precious metals on a daily basis then use either ETFs or unallocated pools. If you want to buy and hold silver then do physical. ETFs can come in many types. Some of them just track the spot price of silver, others have a mixture of metals and some even have mining stocks mixed in as well. Think of ETFs as mutual funds that do not just have to have stocks and bonds in them, they can have assets as well. You trade them through a regular broker just like you do with stocks and bonds. You can find websites that will help you see what mixtures each ETF has and how well it sticks to its target. ETFs seems to come and go, they hang around for a few years and then get replaced with different ones. You get the current value of the ETF when it closes but it is inconvenient to have to find another one. Some ETFs handle futures as well if you want to get into that without becoming a futures trader yourself. Have a look around and see what is out there. Unallocated pools are handy if you can find one with a low "spread" and fees, then you can play the ratios as these follow spot price exactly. However all they do are precious metals and so you cannot branch out into other metals or even mining stocks with them. Most of them do a 0.5% fee to buy or sell.
Probably your best bet would be Perth Mint unallocated silver. You can have either an internet account or phone account. I think the phone account has the lowest fees, but can only be accessed during biz hours. It’s probably best if you call Perth Mint and let them know how much you have to invest and they’ll be able to advise you.
Bullion Now in Melbourne has the best rates for unallocated gold and silver in Australia, lowest spread and great if you want to exchange for physical. Only downside is you can only buy/sell during business hours, there's no online portal.
There are a few other options as well in crypto - however once again mainly gold (for example Perth Mint now have one). There is a crypto token that follows silver on the Synthetix ecosystem called sXAG. Its a bit bleeding edge and isn't backed by PMs (it's value is maintained by people staking another asset of value). It is definitely the higher risk of the options. The amount I put aside for silver per month isn't large enough for me to buy frequently at a reasonable premium. My strategy is to buy a small amount of sXAG each month (cost efficient to purchase at very small quantities, ~$0.30 + 0.5% a trade) and then once I have accumulated a larger amount, I sell them and buy silver of larger denominations (say 1 kg or anything I see at spot). I do the same with gold (sXAU).
Perth Mint unallocated is what you want. Government guaranteed, follows spot price, buy/sell and withdraw as cash to your bank account at any time. Low buy/sell spreads, current price this minute. Silver has more spread than gold. Can convert to allocated or have physical bars delivered at any time. Other private unallocated (or "pool") accounts are not government guaranteed, but otherwise work the same way.
That's not too bad. About 1.2% from the spread. Do they charge the 1% fee on top of that from their fee section?
Yes, 1% for orders under $10k. Gold is only 0.6% spread. If you want to take physical possession in a near term time range, e.g. put in small amount periodically and then get one big bar, then one of the dealers might be a better bet, but all have "barring" fees to convert from unallocated to physical. Both Perth Mint and ABC Bullion has very expensive delivery fees, but if you just want to store your spare cash in gold or silver they are good safe bets.
