Finding reliable or honest silver dealers is of critical importance to the successful silver investor. He/she knows that there are several entities out there that are more than willing to sell fake silver, charge excessive fees, etc. This is the bad news. The good news is that there are steps you can take to protect yourself against unreliable dealers (or dealers that will not serve your best interests):
Step 1: Avoid Paper Silver – Paper silver should be avoided like the plaque itself. Silver Bullion is of the opinion that most forms of paper silver present unacceptable risks, especially if one considers the following: Physical Silver vs. Paper Silver. Any dealer that offers you paper silver should not go on your list of reliable or honest silver dealers.
Step 2: Use your Common Sense – Common sense is one of the greatest weapons you can deploy in your search for reliable or honest silver dealers. E.g. one of the first signs that you should stay clear from a relevant dealer is when he/she charges you a price for silver bullion which is at a ridiculous premium compared to the average premiums charged in a certain country. Silver Bullion is aware of at least one instance where 1kg of silver with a purity of 999.99, which equates to 32.1507466 troy ounces of silver, is sold for $2850 (at the time this was written). Now that equates to a massive premium of well over 200% above and over the true value of the silver content, which is ridiculous to say the least whatever your purpose of buying silver is. The same applies to ridiculous high postage & packaging (P&P) or delivery charges. In fact, some dealers will sell you silver at good premiums (or premiums even below the spot price of silver) since they make their money on ridiculous high P&P or delivery charges. This is simply wrong and such dealers must be avoided at all cost. Always make sure that you know exactly what they’re going to charge you in terms of P&P or delivery charges before you order, bid or buy. We can give more examples, but then it will defy the meaning of common sense, right?
Step 3: Limited Trade Test – The limited trade test refers to the instance where the silver investor buys a small or limited quantity of silver at first, physical silver that is. This is firstly, to establish whether the relevant dealer can be trusted or not, and secondly, whether the relevant dealer understands your unique needs or not. E.g. if you order and buy silver from overseas, the way the silver gets send to you can be of vital importance, not only in terms of avoiding that the silver gets lost/stolen along the way, but also in terms of avoiding unnecessary additional costs. Silver Bullion recommends a limited trade test quantity of no more than 1 troy ounce of silver, physical silver that is. This way you lessen your risk of suffering a financial loss which could see you go bankrupt or having to go without food or other basic necessities.
Step 4: Test for Pure Silver – You will always get dealers who will deliberately try to sell you fake silver. This is a common problem, especially at online marketplaces such as eBay and Bidorbuy. Does this mean that you should avoid eBay? No, some of the best deals and silver dealers can be found at eBay. Do a limited trade test and when the silver arrives test for pure silver.
To sum up: Avoid paper silver, use your common sense, perform a limited trade test and test for pure silver! If you follow these steps, chances of you losing any substantial amount of money is very slight.