Can Silver Help With Inflation Woes?

Silver prices are presently around $22.75/troy ounce and will likely go higher if inflation continues at the rates we have seen recently. Silver is a good way to safeguard your savings at least theoretically as inflation erodes your cash savings.

In order to facilitate conversion of cash to silver, there are a number of companies that will buy or sell silver to anybody who wants to work with them. They are, of course, in business to profit from trading in metals, so you can't buy silver from them at the "melt value" nor can you sell them your silver for "melt". The difference in their prices and "melt" is called a premium, which represents their profit.

Normally they charge a bigger premium to sell you their wares as they usually offer free shipping on minimum orders. When they buy from you, the premium is smaller but you pay the shipping.

So if you buy 20 ounces of silver, they have an extra cost of about $10, or about fifty cents an ounce for handling and shipping. So logic tells me they should have a premium of their profit plus 50 cents per ounce and their buy price should be their profit less fifty cents and ounce. Therefore the difference between their buy price and their sell price should be about a buck an ounce, plus their profit margin.

Right now, though, they are selling with a much higher premium than their buy premium. Sell premium is over $5 an ounce but buy premium is just about a buck. That tells me they are more interested in buying than selling right now. And I suppose that reflects their expectation of prices going up. They probably know more about the future than I do, at least regarding the price of metals.

So is there a less costly way to buy or sell silver? I have considered selling in person to a numismatic shop but haven't researched how they price things. Iit is likely to be a good alternative as it removes shipping costs from the equation. They are still in business for profit, though so they aren't going to be able to meet "melt".

Then there is the "direct" method whereby somebody that wants to sell finds somebody who wants to buy and they agree on a price probably very close to melt. There are some risks to both parties here, especially to the  buyer who has to know the difference between sterling, .999, and silver plate and how to tell what he is looking at. Both buyer and seller have to be alert for robbery if the transaction is not done carefully.
 
The final way to work with silver is to use it in "barter" situations, when one person accepts it in lieu of cash and the other offers it in lieu of cash. This is likely to happen more in the future as crypto currency is losing its luster and the dollar is depleted by inflation.