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Give your investments a silver lining

May 25, 2009 17:41 IST

Give your investments a silver lining

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What can be purchased at a fraction of the price of gold? Silver, the queen of metals, of course.

It's the least expensive among all precious metals. Though gold always glitters, silver is shining. In fact, silver rose 28 per cent this year, while gold went up 17 per cent in months which have passed.

Some four years ago, more than 60 units of silver could buy a single unit of gold; even now, a little above 50 units are enough.

Regarding investment, take proper steps to choose and buy silver, so that you get golden rewards. For example, adulteration of silver takes place when copper or zinc is mixed. Another trick is to add the white cadmium metal.

Brass and nickel, through electroplating, make silver lose its original value. Here's how you should invest in gold's luminous cousin, silver:

Text: Meenakshi Subramanian

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Image: A silver bar

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Buy pure silver

Many people do not know that silver must carry a hallmark always. This guarantees purity, grammage and fineness.

While buying, make sure the jeweller has a magnifying glass of at least 10x magnification. Check if silver carries all the hallmark properties:

First, study whether BIS mark is stamped;

Check for purity grade or fineness. For example, fine silver is 999.9, 999.5 or 999 grade, while silver made with alloys has 970, 925, 900, 835 or 800 markings;

 Find whether the assaying or hallmark centre's identification mark is visible. That is, one of the logos of BIS site must be existent;

  The year of marking, denoted by a code letter, is to be examined. For example, J may denote 2008;

Jeweller's identification mark must be stamped.

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Image: Silversmith Krishna Chary works on a miniature replica of the historic Taj Mahal. The seven-inch long, seven-inch wide silver replica weighs 1.114 kg.
Photographs: Krishnendu Halder/ Reuters
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One may buy silver coins, bars or medallions from banks, government organisations like MMTC, reputed jewellers and prominent brokerage houses.

An assaying or guaranteeing for purity and weight certificate gives more credence to purchase. Insist on tamper-proof, blister-seal packs or certi-card packages.

What is silver grading? The purest silver is 999.9, which just crosses the stage of extreme malleability and escapes softening at room temperature. In general, sterling silver or 925 grade silver, which contains 925 parts per 1,000 pure silver is considered alright.

It is not scratched or damaged easily. While buying, one should remember that a difference in one grade makes silver two or three times more expensive. That is, a 900 silver coin may be triple the price of 835 grade.

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Image: An attendant decorates a mannequin with silver jewellery.
Photographs: Arko Datta/Reuters
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How to invest in silver

Let's understand the different modes of investment:

Coins jingle

The most popular way to invest is to buy silver coins. These are cheaper compared to other metal coins. For example, a silver coin may be purchased for as little as Rs 300, while a platinum one costs a hefty Rs 3,000.

Checking silver coins must be thorough. In looks, these must not appear brassy or leaden. Place one silver coin amidst two other silver coins and see if it lies evenly between them. If bent or distorted, it won't, giving its fake identity away.

In a counterfeit, letters are thinner. The obverse and reverse inscriptions must not be anachronistic. If 'empress' is written on one side and 'queen' on another, it may not be genuine.

The coin edges must be sharp, not blurred or irregular. The piece itself must not be thick on one side. The milling must be evenly spaced at gate i.e. the point where metal is poured into mould.

Rare silver coins are more valuable. For example, a 50p silver coin of 1936, with George V's name, fetches a high price.

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Image: A Laxmi silver medallion

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Buying bars

Silver bars are cheaper than coins. This is because they have no antique value. A kilo silver bar may cost Rs 21,600, currently. Don't forget the trader's receipt of guarantee.

There is a mistaken notion that a one ounce silver bar is cheaper; handling charges of such small ingots are higher. Purchasing a bigger bar is advantageous. In fact, a one kilo bar entails less handling charges. Regarding storage, a 3.11 kg bar or a 100 ounce one, can be easily kept at home.

The advantage of silver ingots is that these can be sold easily, compared to gold bars. When sold, gold attracts losses like high marking charges and deductions, of 8%, at sale time.

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Image: A customer tries sandals made from silver, with wooden soles, in the northern Indian city of Lucknow. Nearly 225-300 grams of silver are used on each pair.
Photographs: Pawan Kumar/Reuters
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Money from medallions

When artistic imprints or embossing are etched, medallions are available.

There can be 0.5g to 100g medallions, across the counter. Opt for silver medallions, in 99.9 per cent purity range.

One can buy medallions quite cheaply, as a 100g one costs Rs 2,830, while the smallest (10g) comes for Rs 300 only.

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Others

It is surprising, but silver artefacts must also be purchased only after seeing the purity grade engraved, on the object.

A real piece has 92.5 per cent or something similar etched, on the body. Silver utensils can be refined into bars, and sold after a few years.

As it is, utensils have a buy-back value of 90 per cent, if you want to dispose these.

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Image: A shopkeeper displays silver jewellery at a shop in Jammu.
Photographs: Amit Gupta/Reuters
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Surfing for silver

You can buy silver online, but check veracity. A silver coin may look as if it has been just polished, on screen. But, unless the seller mentions the polishing, don't buy.

There may be discounts, which can be handy. For example, MMTC gives a rebate of 2 per cent on silver medallions and 10 per cent on silverware for online purchases.

There's another easy way to acquire coins. Pay through EMIs and get possession. For example, a silver coin costing Rs 3,000 may be grabbed, paying six EMIs of Rs 500 comfortably.

Sometimes, a silver coin's price is initially reduced through discount and then EMIs are offered. It amounts to a double bonus.

Scout for credit cards of banks that have tie-ups with jewellery companies, as these too afford EMIs to buy silver coins.

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Image: When you buy silver, check its veracity.

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Scan silver deal

Take care that during sale of silver objects, like silverware, a heavy soldering deduction is not made by the seller.

The soldering charge is levied, as silver loses weight, when transformed into another object, like a bar. Beware of heavy handling charges during all kinds of silver transactions.

Choose silver dealers after minute investigation. A seller who marks up price by 28-45 per cent must be shunned. An honest dealer marks up price by 10 per cent, and that too to cover costs.

A bank charges a premium for silver coins -- that is, it sells at 10 per cent more than the market rate, but extends an assaying certificate, guaranteeing purity.

Though all investments cost money, the silver lining is that silver investing is very affordable.

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Image: A woman looks at a cobra made of silver.
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