Buy Silver Coins or Bullion – 5 Important Things to Consider
Demand for silver coins and bullion, and precious metals in general, have been booming since the beginning of the pandemic in March of 2020. While the pandemic has subsided and the economy has opened back up, the number of new and seasoned investors buying silver coins and silver bullion continues to remain robust.
This is in part due to inflation at 40-year highs, bubbles in the stock market, bond market and real estate markets, supply chain issues, shortages, volatility in the cryptocurrency markets, the Ukraine war, etc. These issues, among others, have driven many investors to seek safe haven or inflation-hedged investments.
Historically, silver, including gold, have been some of the best performing asset classes in high inflation environments. While we’ve seen many newcomers to the silver market, there’s some confusion as to how to invest. Which investment options are available, which are best, how to know if you’re getting a good deal and how to sell when the time comes to liquidate your investments.
In this piece, we’ll cover all these topics and more. Our goal is to help you make the best decision when you decide the time is right to buy silver coins and/or bullion.
How to Invest in Silver Coins and Bullion
There are many ways to invest in silver, but we’re going to limit our discussion to silver coins and bullion. The two most popular ways to invest in silver coins and bullion are from an online or local dealer.
There are pros and cons of each, of which we will discuss throughout this article.
Online
The online dealer may have more options to choose from, and at times, may offer slightly more competitive pricing when looking to buy silver coins, but there are also some cons. The most obvious is the lack of a coin expert to consult with. This is especially important if you’re a first-time buyer and need some guidance on your first purchase.
Additionally, there’s always a bit of uncertainty regarding anything that you purchase online. Will the item be shipped, ill it arrive safely at your residence and/or will it be lost or stolen in transit? While there’s typically insurance to cover some of these scenarios, shipping carriers have become much less reliable over the past couple of years. Just check out the comments on the official USPS site! m
In many cases, they’ve waived signatures when required by the seller. In turn, leaving valuable items on your front porch or in your mailbox.
Local
A local coin dealer may not offer as many options. They may also at times have rates slightly higher than some online dealers. That said, they can be a tremendous resource and help in guiding you through a first-time purchase.
They can also verify the authenticity of the items on the spot. Local coin dealers can also provide an element of privacy that you don’t get when you conduct business online. Lastly and possibly most importantly, allow you to take physical possession of the silver coins or bullion at the time of the transaction.
Oftentimes, these benefits far outweigh any minor differences in price.
Buying Silver Coins & Bullion – Options
We could easily dedicate an entire article to discussing silver coin and bullion options. There are literally hundreds of options from which to choose, but we’re going to limit our discussion to a few of the most popular types of coins and bullion to not overwhelm our readers.
Before we delve into the different types of silver options, it’s important to first define what we mean by silver coins and bullion.
A silver coin is government-issued and legal tender, which is guaranteed by the country of issuance. In other words, it has a face value and can be used as currency in that country. Of course, you wouldn’t want to use these coins as money, as in nearly all cases, the value of the underlying silver content is substantially more than the face value of the coin.
For example, an American silver eagle has a face value of $1 but contains silver worth more than $20. Other examples of silver coins are Austrian silver philharmonics, British silver Britannia and Canadian silver maple leaf coins.
Other popular silver coins are 90% U.S. dimes, quarters and half dollars issued in 1964 and earlier as well as U.S. Morgan and Peace silver dollars issued in 1935 and earlier.
On the other hand, silver bullion is privately produced silver, typically in the form of bars and rounds. These items are not considered legal tender, but are still in high demand. Keep in mind that since they’re privately issued, they typically trade at lower premiums than government-issued coins.
There are many producers of privately issued silver bullion, but they typically fall into two categories: generic and name brand. A few refiners stand above the crowd and are considered premium or name brand producers. They include Engelhard, Johnson Matthey and Royal Canadian Mint.
The Royal Canadian Mint, along with the Perth Mint in Australia and the Royal Mint in the UK, are the only government mints that produce silver bullion at the time of this writing.
The Best Silver Coins and Bullion
We’re frequently asked which silver coins and bullion we recommend or that are the best to buy. There’s no right or wrong answer; as it primarily depends on the individual, their budget, goal and intended use. We’ll address some of these situations below.
Many customers are concerned about hyperinflation, the collapse of the dollar and the need to use silver for bartering purposes. In this case, it might make the most sense to invest in 90% US silver coins issued prior to 1965. These coins are commonly referred to as “junk silver” or “survival silver.”
90% silver coins are in demand due to their relatively small denominations or sizes. For example, in a dollar collapse scenario, a dime may be used to purchase a loaf of bread. A quarter for a gallon of gas or a half dollar for lunch. These are U.S. coins and recognizable, so this increases the chances of the general public recognizing them as silver coins.
Other investors are interested in purchasing silver at the lowest premiums possible. While there are certainly many low premium options available, such as U.S. silver war nickels, 40% U.S. half dollars and 80% Canadian silver coins, we’re going to limit our discussion to the most popular silver coin and bullion options. In this case, privately issued silver rounds or bars may be the best option.
These items trade at lower premiums than government-issued coins and can be acquired at further discounted rates in larger sizes. An example of this would be 100 oz silver bars. 100 troy ounce silver bars are produced by generic and name brand producers of silver bullion.
Some investors feel more comfortable with legal tender or government-issued coins. If legal tender laws are passed in the U.S., it’s conceivable that these coins may be used as money in the future. They would trade for their gold and silver values compared to their face value. Additionally, coins are traded and recognized worldwide and tend to be more liquid than silver bullion.
At the time of this writing, some of the most popular foreign-issued silver coins are Austrian silver philharmonics, Australian silver kangaroos, British silver Britannia and Canadian silver maple leaf coins. While these coins trade at higher premiums than silver bullion, it’s not substantially so.
With respect to 1 oz silver coins, the American silver eagle soars above the rest; at least in the United States. American silver eagles have been issued annually since 1986. They are the most popular 1 troy ounce silver coins in the marketplace.
Historically, these coins have traded at a couple of dollars above most 1 oz foreign silver coins. However, at the time of this writing, demand is unprecedented with very little supply available.
This has pushed premiums up as high as $7 over the previously discussed foreign silver coins. If you believe like many of our customers that the price of silver will explode sometime soon, the additional premium may be negligible. For those investors that only want pure silver U.S. coins in their portfolio, you can’t go wrong with silver eagles.
How to Know if You’re Receiving a Good Deal Buying Silver Coins and Bullion
Supply, demand and premiums for silver coins and bullion can vary substantially, even over a relatively short period of time, so we’re not going to provide any hard and fast numbers in this section but will instead discuss some general guidelines that might be helpful.
We highlighted above the high demand for silver since March of 2020. Since that time, we’ve seen somewhat of a decoupling between the spot price of silver in the futures market and the price for physical silver. In other words, the spot price doesn’t always reflect the price or demand for physical silver.
At the time of this writing, premiums are above normal. In other words, the price of physical silver is trading for more than the spot price of silver, with silver eagles trading at the highest premiums.
Generally, premiums tend to fall as the spot price of silver increases, but this isn’t always the case, as ultimately the silver market is based on supply and demand just like any other market.
An honest dealer will be transparent with respect to their premiums and rates. If you have any question as to if their rates are reasonable, it’s easy to check the sell rates of online coin dealers. Calling around to price shop is acceptable as well.
If you find that after doing your research, your preferred coin dealer is offering competitive pricing, request an appointment.
We recommend not waiting until the spot price of silver falls, which may or may not occur. The reasons for this are two-fold. One, if you’re not quick enough on the draw, the supply may dry up before you have a chance to make a purchase.
Secondly, especially in the current environment, the price for physical silver doesn’t move in lockstep with the spot price. In other words, a drop in the spot price doesn’t necessarily mean that the price for physical silver coins and bullion will decrease.
How to Sell Your Silver Coins and Bullion
If you’re convinced that silver coins and bullion are a sound investment, and you’ve identified who and where to purchase them, you may be wondering how to sell your silver coins and bullion when the time comes to liquidate them.
After all, as with any investment, there’s usually an exit strategy and an ultimate use for the proceeds from the sale of that asset.
Unlike some other alternative investments, such as antique guns, artwork and collectible cars, there’s a broad and liquid market for precious metals. Nearly any coin dealer that you purchased coins or bullion from would be happy to purchase them back.
In fact, this is probably the best place to start, as many dealers will offer customers who previously purchased from them preferred rates when the time comes to sell.
However, you’re not limited to just the dealer that you worked with in the past. Any local or online dealer is a potential option. Additionally, any business that frequently utilizes precious metals, such as jewelers and dentists, are viable options. Many companies and industries use precious metals for industrial purposes, of which are a potential outlet.
In other words, there are no shortage of options available to you when the time comes to liquidate your holdings.
Summary
In conclusion, it was our goal to provide a road map for individuals that are new to investing in silver.
We began our discussion with where to buy silver coins and bullion. Also discussing some of the most popular investment options in the market. We hope this helped you to narrow down which options are best for you.
We touched on premiums and how you know you’re receiving a good deal. Lastly wrapped up by providing some options when the time comes to sell your silver coins/bullion.
In the current economic environment, nearly all asset classes are highly valued, extremely volatile or in a bubble. Precious metals, however, are not. If you’re concerned about inflation and the future strength of the dollar, you owe it to yourself and your family to limit your risks. Purchasing silver coins or bullion is (in our opinion) the best way to do this.
The experts at Atlanta Gold & Coin Buyers are here to help. We have a long track record of assisting investors with first time purchases and providing answers to your most pressing questions. Helping you make the right decision for you and your personal situation comes first in our list of priorities when working with our clients.
Contact us today to see why we’re Atlanta’s leading coin dealer and one of the top dealers nationwide.
We look forward to hearing from you!
