Wholesale pricing is the price that businesses usually offer to other businesses when these firms are purchasing in bulk. Since those who produce something and those who sell it to the general public are not usually part of the same company, due to limitations on resources, a mechanism must exist to move raw materials to producers and finished products to retailers who maintain outlets for consumers to visit. This mechanism is wholesaling.

Basically, in exchange for being willing to purchase large quantities of the same item or same range of items, the retailer is given a large discount by the wholesaler so that they can make a profit when they sell to the public and thus cover their own costs. The purchases must be large because it is bulk production, with its repetitive efficiency, that allows the wholesaler to offer the products at a discount.

Can Precious Metals be Purchased at Wholesale?

The short answer to the question of whether precious metals can be purchased at wholesale is yes, although there are some moderately high barriers to entry. Buying your silver at wholesale or in bulk (which typically comes to the same thing) is an excellent way to either build up an inflation proof nest egg or to invest in silver for later resale.

The advantages to buying silver at wholesale are obvious. You are paying less than retail for the metal, which means that you can obtain much more of it than you would otherwise have been able to. If, for example, you have enough money to buy 10,000 ounces at retail, using the same money to buy wholesale at 60% of retail would permit you to buy 16,667 ounces instead. This is obviously quite a difference.

Furthermore, the price of silver will not need to rise much for you to make a handsome profit at retail, if you are buying it for investment rather than as a store of value. If you are expecting even a modest rise in silver prices, buying the metal now at wholesale will allow you to pursue the classic, timeless maneuver of buying low and selling high, or at least higher.

What are the Drawbacks to Buying Silver at Wholesale?

The scale at which you need to buy silver is one of the major drawbacks to purchasing the metal at wholesale. A bulk purchase is typically necessary to have any hope at all of getting a wholesale discount, and bulk in this case means at least several tens of thousands of dollars, and perhaps a hundred thousand or more. This means that such purchases are far out of reach for ordinary bus drivers, factory workers, clerks, and other workers on average salaries who buy two or three coins per week to stash in the bottom drawer against a rainy day.

Buying silver in bulk, in short, is a real case of needing money to make money – and to save money as well. You will also need to arrange for transportation and possibly secure storage as well, for a considerable weight of metal. Remember that 5,000 ounces of silver weighs in at 312 ½ pounds, and this is an amount you may need to have shipped as well as placed somewhere it is safe yet accessible.
You can offset this problem to some extent by finding other silver enthusiasts to combine your resources with, and to obtain silver with a pool of money larger than any individual investor could raise (or is willing to risk, at least). This approach can be an excellent way to get a deal that would ordinarily be too costly for your pocketbook.

You need to proceed with caution, however – choose only reliable people to team up with, and have a clear written agreement on who gets exactly what for what contribution. When money and valuables are concerned, people who are ordinarily quite reasonable tend to see things in a rather more predatory light. Spending a few hundred extra dollars to have a lawyer draw up a proper contract between all parties involved in the deal is cheap at the price when tens of thousands of dollars are on the line.

What is the Commodity Market Method of Getting Wholesale Silver?

Most people who buy and sell on the commodity markets do so purely for speculation, and have no intention of holding onto the contract until it matures and then take physical delivery of the commodity. However, you can buy wholesale silver by doing precisely that. Buy a silver contract and simply hold onto it until it matures, then arrange for physical delivery of the precious metals.

This is one of the primary means of buying wholesale silver if you are not the representative of a major precious metals retailer. Its advantage is that it also allows you to lock in the current price solidly, so it is a very effective maneuver if you are expecting silver prices to rise. However, the main purpose of this method is simply to get silver at as low a price as possible, and you will definitely be able to make a bulk purchase of silver at less than retail by making use of this method.

How Does Ordinary Wholesaling Work?

You can also attempt to get a wholesale tax number – typically called a “resale number”, a “tax number”, or the like – from your state. You will probably need a business bank account, which can be as simple as choosing a business name and putting “Your Name DBA Business Name” on the bank account (DBA means “doing business as”). There is also a fee, and you will need to be careful to collect sales tax for any retail sales of gold or silver you make within your state and forward these to the proper authorities.

This method works best if you already have a resale number from an established small business, of course. As usual, you will need to buy large quantities and supply your tax number to get wholesale access to precious metals. Some wholesalers will refuse to sell to you unless you have a physical store location, with photographs for proof, while others are more laid back.

This method allows you to possibly obtain wholesale precious metals in bulk without needing to set up and manage a commodity trading account. However, it has its own problems and burdens you will need to cope with.

One of these is that the state you obtain the tax number from may assess you an arbitrary tax bill based on what they think you should have paid for sales tax, rather than what your actual sales tax figure is. You will need to challenge this actively in order to avoid the risk of the state attaching your bank accounts to pay for this nonexistent tax bill. Fortunately, this is easily corrected, but it is something you should be aware of.

Conclusions About Silver at Wholesale

Obtaining silver at wholesale is a superb way to bulk out your bullion holdings quickly and with considerable savings. It is carried out using either the purchase of a futures contract (not an option) with an intent to take physical possession on the commodities market, or by getting a tax number and buying the silver as a sole proprietorship, LLC, or S Corporation retail firm. Its downside is that you need large amounts of money to carry out such bulk purchases – but if the suitable funds are on hand, there are few better ways to expand your portfolio of precious metals efficiently.

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