What Is Silver Grain
Silver grain and silver shot are interchangeable terms referring to silver which has been purposely formed into a large number of regularly sized granules or globules, each only a fraction of an inch across. The grains are typically around the size of BB gun pellets – that is, around ¼ inch in diameter (6 mm). Silver grain was not intended to be used as an investment or for collectible purposes; rather, it is meant to be employed as a raw material when creating objects out of this precious metal.
However, in the modern age, with such widespread hunger for silver in any form due to concern about the future of the economy, many people have taken to buying silver grain as an attempted inflation hedge or investment as well. There is divided opinion on the part of silver experts on whether silver grain provides a good raw bullion investment for ordinary people, or if it is mostly useless for this purpose.
Silver grain is made in the state that it is found in so that small, precisely measured amounts can be used to make an item of jewelry or other small silver object. For example, if a craftsman wants to make a delicate pair of earrings, it is much easier to take a standard five grains of silver out of the box and melt it, than to hack an irregular chunk off a large silver bar, which would result in shortfalls on material at some times, and wastage on other occasions.
Silver grain is often made by throwing molten silver into cold water. This causes the silver to break up and solidify into small silver globules – “condensing” out of the water, as it were. Other, more sophisticated companies may make use of more advanced techniques to increase the regularity of the nuggets, but the end results are more or less the same. It should be noted that no government issues silver grain – its uselessness for investment purposes and its low margin above spot make it unappealing to mints.
How is Silver Grain Sold?
Silver shot or silver grain is sold, most typically, in sealed bags, which is something of a precaution to prevent anyone along the supply chain making off with some of your silver grain. These bags may also bear a label declaring that the silver they contain is genuine and pure.
Of course, this label does not constitute any kind of proof, and will not be accepted by any serious collector, coin store, or precious metals website. The possibility of tampering and theft is far too high for these people to risk their money on silver grain when surer methods of investing and profiting are readily at hand. Anyone with a laser printer could make a label saying that the bag’s contents are genuine silver, even if most of the weight comes from small steel ball bearings or some other trick.
The bags of silver grain and shot that you can buy from such suppliers as APMEX come in a variety of different weights. Generally, it is sold in larger weights than coins and bars – ten ounce bags are likely to be the smallest that you will find. Other sizes include 25 ounces, 1 kilogram (32 ounces), 50 ounces, 100 ounces, 500 ounces, 25 kilos (804 ounces, or 55 pounds), and 1,000 ounces. A 25 kilo bag will set you back over $28,000 at current silver prices.
Just because you are buying silver grain does not exempt you from paying a premium over the spot price. After all, the producers of the grain still need to make a profit, rather than a loss, from manufacturing and selling it. The premium is likely to be quite minimal with a price much closer to the cost price of silver – one of the few advantages to silver grain from an investment standpoint.
Problems with Determining Authenticity and Assaying with Silver Grain
Silver grain is a poor investment or inflation hedge partly because a sea of tiny, shimmering nuggets of silver, no matter how beautiful they are, is very difficult to either authenticate or assay. For this reason, it is extremely hard to sell silver grain on the usual silver market, and companies like APMEX will not buy silver grain, only sell it. In fact, they will not buy back the very grain they sold.
Since silver grain just consists of many hundreds or thousands of tiny, irregular spheres of metal, there is no identifying mark on it. Silver bullion coins can be examined for authenticity because they bear a struck image, inscriptions, dates, reeding, and other designs that make the process of determining if they are genuine silver bullion coins with a .999 fineness easy and straightforward. Silver grain is made up of anonymous fragments of metal, however, and there is no way to tell simply by looking if all the grain in the bag is silver or not.
Assaying silver grain is a nightmarish prospect, and is, basically, impossible. Each grain would have to be individually assessed, tested, weighed, and cataloged as genuine. Since there are hundreds of grains, and possibly thousands, in any given bag, assaying might take weeks and would surely cost many times the value of the silver itself. The process would take weeks and would cost far more than the silver itself is worth, at least at this point in time.
With no way to easily prove that the silver grain you possess is actual silver, you are likely to encounter serious liquidation problems if you ever attempt to divest yourself of the metal. The company you bought it from will not buy it back, because of the hideous difficulty of determining if the silver you are offering them has been mixed with lesser metals – or even worse, alloyed, which would be extremely difficult to detect with thousands of tiny pieces of silver to be assayed.
Are There Any Situations where Silver Grain would be Useful?
Silver grain is very useful to artisans, craftsmen, and in many types of industrial process for creating everything from jewelry items like bracelets, earrings, and necklaces to high tech components that need an extremely conductive, corrosion-resistant metal inside them. If you have a business which makes either jewelry or high tech equipment, silver grain can give you considerable savings on purchases due to the narrow premium above spot.
It is remotely possible that if society collapsed entirely, silver grain would have some use as well. Because the pieces of silver are small, you might be able to use them for smaller purchases than your coins and bullion bars would be able to be used for. However, the problem of proving the grain to be silver rather than steel, tin, or aluminum would remain.