What Is the Bid-Ask Spread?
When trading silver bars, you encounter two prices: the ask (what dealers charge when you buy) and the bid (what they pay when they buy from you). The difference, known as the bid-ask spread, represents the transaction cost.
Understanding spreads is essential for evaluating the true cost of silver ownership. A 1000 oz bar purchased at 1% premium and sold at 0.5% discount requires silver to appreciate 1.5% just to break even.
1000 oz bars typically enjoy tighter spreads than smaller bars due to institutional market efficiency, often just 1-2%.
Factors Affecting 1000 oz Bar Spreads
COMEX accreditation significantly influences spreads. Accredited bars trade efficiently through institutional channels. Non-accredited bars may face wider spreads and authentication requirements.
Market conditions affect spreads. During volatility or supply stress, spreads can widen. Calm, stable markets produce the tightest spreads.
Dealer selection matters. Work with dealers experienced in institutional silver product for best pricing.
Calculating Your Break-Even
Before purchasing, calculate the price appreciation required to break even after accounting for the full spread. If you pay 1% over spot and expect to receive 0.5% below spot when selling, you need 1.5% appreciation to break even.
For a 1000 oz bar at $92,200, that 1.5% represents a few hundred dollars in silver price movement—quite achievable over typical holding periods.
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