US Representative and Republican presidential contender Ron Paul made an excellent case for owning physical silver. Last week, when Federal Reserve Chairman Ben Bernanke was on Capitol Hill for a congressional hearing, Paul held up an ounce of silver and told Bernanke that back in 2006 it would have bought over four gallons of gasoline. “Today, it'll buy almost eleven gallons of gasoline,” he said, adding, “that's preservation of value.” For many people, silver is an inflation hedge or a safe haven. They buy the metal because the purchasing power of their money is rapidly eroding. Instead of holding cash, they protect their wealth in a product whose value isn't likely to deteriorate. Many also view silver as a universal currency that can be used as money or exchanged for fiat currency if a particular monetary system fails. Then, there are some investors who simply see profit in the metal. They buy in at one price with the intention of cashing in at a higher price. Spot prices Whatever one's motives, plans to invest in physical silver should begin with an understanding that the metal's spot price is like a base cost. Investors should not expect to buy silver at these prices. Instead, the spot price provides a gauge for how much investors should pay for a particular product at a given time. The mark up above the spot price is the premium. Premiums are part of the game, but all are not created equally. The same product from two different sources can be two different prices, so it is in investors' best interests to protect their profits by doing comparison shopping. However, a lower premium does not always translate into the best choice. Ensuring that purchases are made from reliable sources that will deliver the agreed upon products in a timely manner is more important. Further, even if one seller's premiums are higher, other fees may be cheaper, so investors should assess the total cost of each deal.