How to buy and invest in physical gold and silver bullion

One of our readers wrote to us and asked,

I wanted to ask you about a point that came up in the gold and silver book - when talking about storage there was plenty of practical information about the security aspects, and a glancing mention of the fact that silver will corrode/tarnish and so will need to be kept in a "sealed" environment. Could you possibly add some detail to that point? How sealed should it be? Absolutely airtight? Is there any way to clean it or reduce this problem without detracting from the value of the bullion/B Coin? Over what length of time will this be an issue?

Once, we went to a coin shop and asked to look at some silver medallion (which is basically a coin that has no legal tender face value). The proprietor went to the back of the shop and took out a few cases of silver medallion. We were told that these were fine silver (the book will explain what “fine” silver is) and had been lying in his shop for a long time, collecting dust over the years.

When we opened the case, we saw that the side of the medallion that was exposed to the air was badly tarnished. However, the side that was not exposed looked ‘clean.’ One thing is clear: that case was not air-tight.

The proprietor recommended us some specialised silver cleaning solution. But instead of using it, we applied tooth-paste to clean the tarnished side of the silver medallion. We managed to clean away a fair bit of the tarnish with tooth-paste, but at the end of the day, anyone can still see the remnants of the tarnish. But one thing to note: whether you use tooth-paste or specialised cleaning solution, some tiny amount of silver will be removed whenever you clean silver with them.

How much will tarnish and cleaning detract the value of the silver? Our opinion is that if you are buying silver just for the value of the metal content, it is not so much of a problem. As the proprietor told us, tarnish or no tarnish, it is still silver. Numismatic coins, on the other hand, will have much more to lose. Think about it: back in the old days when people use silver coins as money, the exposure of the coin to the environment must be pretty harsh isn’t it?

If you want to be safe, you can keep your silver in air-tight Zip-Loc bags- they’re cheap and effective.