How to Determine the Best Silver Investment for You and Your Situation
Before Amazon or Google reviews, many of us may remember using Consumer Reports as a reliable resource. Today, consumers head to Google Reviews to check a company out before ordering food, going shopping, and even prior to investing in silver or other precious metals!
Oh, the good ole days, right?
In fact, I grew up relying on Consumer Reports for all my major appliance and equipment purchases, as I always wanted to purchase the best of what was available in my budget. Now, years later, other third-party reviews, namely Amazon, have become my “go-to” for supposedly unbiased reviews. Yet, even now, I still read and consider Consumer Report ratings whenever I get a chance.
The reason I do this, and probably most of you do as well, is because we want the best quality at the best price. However, the term “best” is somewhat a subjective term and doesn’t necessarily apply across the board for everyone.
Even Amazon breaks down their “best” or “top” ratings based on a few different categories. It’s impressive that as the largest company in the world they realize everyone is different and that one size doesn’t fit all.
As a veteran coin dealer, we receive calls daily from newcomers to the precious metals market. Inevitably, they ask which gold and silver coins or bullion they should buy, or which items are “best” for their budget.
As you would expect, most folks are surprised when we respond with the phrase “it depends.” After all, everyone IS different, has different needs, goals, and timeframes.
Our answer is likely similar to the type of response you’d expect from a financial advisor or wealth manager. Clearly, everyone’s investment portfolio is different, and considering that silver is an investment, it shouldn’t come as a surprise to anyone that there are different strokes for different folks.
We understand how being a new silver investor can be overwhelming, especially considering the endless number of resources and videos online. We were new to investing in metals once as well.
Knowing that, our goal for each client is to help simplify the process and provide guidance. We’ve done so by identifying five types of buyers that we believe address the needs and desires of most of our callers.
Since we mentioned Consumer Reports in our intro, we’re going to take a similar approach regarding our recommendations for each category of silver buyers. We hope you can relate to one of these categories and that the information is helpful in your pursuit of adding physical silver coins or bullion to your holdings.
The Cost-Conscious Investor
Approximately 10% – 20% of our callers are looking for the “cheapest silver” possible. Of course, there are many ways to inexpensively invest in silver, such as buying silverware or flatware sets, buying scrap jewelry, or recycling electronic equipment.
While these are all viable ways of acquiring silver inexpensively, there isn’t necessarily as broad of a market when the time comes to sell, so we recommend that you stay away from these alternative forms of investing in silver.
Did you know there are inexpensive ways to invest in silver and in a form that is recognizable? A decent number of our callers are aware that U.S. dimes, quarters and half dollars issued in 1964 and earlier are 90% silver, but very few realize that the U.S. Mint continued to produce half dollars with 40% silver content up until 1970.
Another fun fact you may not be familiar with is that even some U.S. nickels contain silver content! The reason for this anomaly was that nickel was needed for armor plating during World War II. In response, Congress ordered the removal of nickel in October of 1942, which changed the metal composition of the coins to 35% silver, 56% copper and 9% manganese. The 1942 coins with a mintmark above the Monticello, the building on the reverse side of the coin, are 35% silver. All nickels from 1943 – 1945 are 35% silver.
These coins, known as war nickels, tend to have a darker patina than their nickel-copper counterparts making them somewhat easier to spot.
Another cost-effective silver coin option many consider is 80% Canadian silver dimes and quarters issued in 1966 and earlier as well as half dollars and silver dollars issued in 1967. These coins are typically bought and sold in bulk like the 40% halves and war nickels. Canadian dimes, quarters, and half dollars tend to trade at a lower price point per ounce than silver dollars. Please note, at the
time of this writing, Queen Elizabeth II recently passed, so these coins are becoming more popular than usual because they depict the queen’s image on the obverse of the coins. However, we suspect that by the time you read this article, the demand will have waned, and availability will have returned to normal.
Other inexpensive options include Mexican and British silver coins that were previously used in circulation, such as Mexican coins issued in the 1950’s or earlier and British coins in the 1940’s and earlier.
Top Pick – 40% silver halves
Runner Up – 35% silver war nickels
Honorable Mention – 80% Canadian silver coins
The Hedge Against Inflation Investor
Possibly the most common reason clients are interested in acquiring physical silver is as a hedge against inflation. These individuals are concerned about the future strength or viability of the dollar, an economic or financial market collapse, and/or hyperinflation.
At the time of this writing, the inflation rate is 8.3%. It peaked in June of 2022 at 9% but considering that food and energy prices are on the rise, except for gas, and supply chain issues persist, the consensus is that inflation will remain stubbornly high for the foreseeable future. The obvious concern is that it may spiral out of control in the months and years to come.
Another concern related to the long-term viability of the dollar is that Saudi Arabia is considering or is beginning to accept currencies, other than the dollar, for oil. Until now, the dollar has maintained its world reserve currency status in part due to the petrodollar. This simply means that Saudi Arabia has required dollars as payment for oil, which has caused other countries to keep plenty of dollars on hand or to convert their local currencies into dollars when buying oil.
Individuals buying silver as an inflation hedge aren’t necessarily concerned about trading or bartering with silver. They merely want to maintain their purchasing power. In fact, we’ve seen an uptick in interest from retirees who are on a fixed income and are attempting to keep pace with inflation. Inflation-hedge buyers aren’t typically picky as to the type of silver they purchase, other than it being pure at .999 fine.
Fortunately, there are several options available to folks interested in purchasing pure silver. The most cost-effective way to do so is by purchasing privately issued silver bullion. Silver bullion comes in all shapes and sizes, but the most popular forms are rounds and bars. With respect to rounds, 1 oz sizes are the most popular. Silver bars come in all sizes, ranging from a gram to 1,000 ounces, but the most common are 1 oz, 10 oz, kilo and 100 oz sizes.
Individuals interested in acquiring a moderate amount of silver tend to stick with the 1 oz and 10 oz sizes. Those looking to make a substantial investment gravitate toward the larger size bars, including kilo (32.15 oz) and 100 oz silver bars. As you might suspect, in most cases, the larger the size, the lower the premium. One other factor to consider is that premiums tend to be higher for name-brand bars (Royal Canadian Mint, Johnson Matthey, Engelhard, etc.) and rounds, so do your research and compare prices before making your first purchase.
Top Pick – 1 oz silver bars & rounds
Runner Up – 10 oz silver bars
Honorable Mention – 100 oz silver bars (great for stacking)
The Barter-Minded Prepper Investor
As financial and geopolitical issues worsen, more and more people are concerned about the long-term viability of the dollar. While folks who are worried about inflation also have this concern, individuals interested in acquiring silver for barter purposes are expecting a complete collapse of the dollar and banking or financial system.
Some are also concerned about an EMP attack and are preparing for a Mad Max scenario. This EMP or Electromagnetic Pulse event can be man-made with weapons or due to human nature by way of a solar flare from our sun. If you have not heard of the Carrington Event, it is worth taking a quick look into our sun’s potential.
These individuals are commonly referred to as preppers or survivalists.
Granted, you don’t necessarily need to find yourself in a full-blown societal breakdown to possibly need silver to barter. In fact, in countries such as Venezuela, hard assets such as gold and silver, are some of the only forms of payment that are currently being accepted, as the Venezuelan bolivar is rapidly heading to zero.
A fact many folks don’t realize is that all currencies used today are known as fiat currencies. This simply means that they’re not backed by a commodity, such as gold or silver, and are only good as long as the public has faith in the currency. A loss of faith can quickly cause a currency to become worthless, as we’ve seen more than once in Zimbabwe.
Individuals acquiring silver for the purposes of bartering typically want varying sizes or denominations in coins or bullion in the event of a worst-case scenario since many people may not have the ability to provide change. For example, you wouldn’t want to use a 1 oz gold coin to purchase a loaf of bread in hopes that the seller can make change. It seems to make better sense to use smaller denomination silver coins or small-size silver bars or rounds for those smaller transactions.
As mentioned above, silver bars can come in sizes as small as a gram, but this size bar isn’t common and sells at a high premium relative to its silver value. A more cost-effective way to acquire smaller denomination silver is by purchasing 90% U.S. silver dimes, quarters and half dollars issued in 1964 and earlier. These coins can easily be identified as silver by the year and the color of the edge. If the coin has a solid silver stripe, it likely is 90% silver.
These coins not only come in smaller sizes, but they’re also U.S. legal tender and are likely to be recognized as silver coins by a larger percentage of the population than some of the other options we’ve highlighted thus far.
From a practical perspective, a silver dime may be used to purchase a loaf of bread, a quarter for a gallon of gas, or a half dollar for a meal. You also have the flexibility to mix and match denominations to meet whatever financial need you might have.
Top Pick – 90% silver dimes (most versatile)
Runner Up – 90% silver half dollars (most popular)
Honorable Mention – 90% silver quarters
The Portfolio Diversification Investor
The great thing about silver is that it can be used for a variety of purposes, including as a hedge against inflation and for bartering purposes, but another common use of silver is as an investment. In fact, many financial planners or wealth managers recommend that their clients maintain a 10% – 20% allocation in precious metals due to their low correlation to other asset classes. This helps to reduce the volatility of a portfolio and increase the returns.
Make note, we’re not here to provide general investment advice, but when comparing investment options, it’s typically prudent to consider the valuation of the options you’re considering before pursuing a particular investment. At the time of this writing, the stock, bond, and real estate markets all appear to be in a bubble.
Cryptocurrencies have taken off in terms of popularity in recent years, but they’re extremely volatile and are subject to large corrections. If you don’t have the intestinal fortitude to deal with wild volatility, then cryptocurrencies probably aren’t for you. To make matters worse, many coins from the Mt. Gox (a bitcoin exchange that handled roughly 70% of all bitcoin transactions) bankruptcy in 2014 have been recently recovered, which could flood the market with Bitcoin and further drive down the price.
Considering that the price of silver is hovering around $20 at the time of this writing, and the price to mine silver isn’t too far off from its production cost, it appears as though silver has very little downside risk and substantial upside potential. While we don’t know if we’ve seen the low, we can’t imagine the price falling below production costs, at least not for long.
Very few investment opportunities exist that allow you to acquire the item at close to its cost, which makes silver a rather attractive investment opportunity.
Those most popular among investors are 1 oz American silver eagles, Canadian silver maple leaf coins, British silver britannias, Austrian silver philharmonics, and Australian silver kangaroos. All these coins have been in production for decades with a combined hundreds of millions of coins produced. Additionally, they’re recognized and popular worldwide, which makes them incredibly liquid if/or when the time comes to sell the coins.
Currently, premiums on American silver eagles are a decent bit higher than the other coins, which has to do with supply and demand. Demand for the silver eagles is nearly unprecedented at this time, and supply remains low due to supply chain issues and a lack of silver planchets on which to stamp the coins. In fact, there are rumors as of the end of September 2022 that the U.S. Mint may be suspending silver eagle sales for a period, which may temporarily further increase premiums.
Top Pick – American silver eagles (even though premiums are elevated)
Runner Up – Canadian silver maples (our neighbor to the north)
Honorable Mention – Austrian silver philharmonics, British silver britannias, Australian silver kangaroos
The Silver Coin Collector
The last and final category that we’ll be highlighting is the silver coin collector. In some respects, this category encompasses many of the other types of investors that we described above, except possibly the barter investor. Coin collectors are interested in coins that have collectible or numismatic value and are more focused on the aesthetics of a coin, including the grade, historical significance, and rarity.
While investment is a consideration, collectors are more concerned about acquiring rare or hard-to-find pieces. They may also have a specific collection goal in mind, such as assembling a complete collection of Morgan silver dollars.
Speaking of Morgan silver dollars, these are probably the most collectible silver coins in the market today. A total of 650 million coins were produced from 1878 – 1921, but unfortunately many were melted down in response to the Pittman Act, so fewer than 650 million coins exist today.
There’s more to these coins than meets the eye, which is why we’ve spent considerable time in the past addressing these coins from different perspectives.
Another popular silver coin that collectors gravitate towards is the Peace silver dollar. These coins were produced after the Morgan silver dollars but had a limited run of only 10 years. A total of 24 different coins were produced by the Philadelphia, Denver, and San Francisco Mint from 1921 – 1928 and again in 1934 and 1935. The somewhat limited run accounts for the overall smaller number of these coins available as compared to Morgan silver dollars.
In fact, Morgan silver dollars were produced at a rate of nearly 3.4 times that of Peace dollars. In our most recent article on Peace dollars, we’ve highlighted six coins that are common in circulated condition but considered key date or valuable coins when uncirculated.
Another highly popular and attainable coin pursued by coin collectors is proof silver eagles. The U.S. Mint introduced these coins in 1986 and has produced them every year since with the exception of 2009. Every year, many precious metal buyers purchase these proof silver eagles to add to their silver investments.
These coins come directly from the mint in attractive packaging with a velvet case, COA and outer box. They are also widely available in certified condition but are only IRA-eligible if they come with the original government packaging (OGP), so many collectors prefer collecting them as raw or ungraded coins.
It shouldn’t come as a big surprise to our readers, but here are our picks for collectible silver coins:
Top Pick – Morgan silver dollars (the cornerstone of most collections)
Runner Up – Peace silver dollars (an impressive and valuable coin in its own right)
Honorable Mention – Proof silver eagles (limited edition varieties also exist)
There are a lot of “best” options available that we’ve discussed depending on the category that most closely represents you and meets your goals. As you can see, one size doesn’t necessarily fit all and that’s why a conversation is necessary before we can recommend certain items.
To recap, we began our discussion with low-priced silver coins. These are U.S. and foreign silver coins with a purity of less than 90% that were previously used in general circulation. These coins typically trade at small premiums over the melt value or silver weight of the coins. We suggest staying away from alternative forms of silver or trying to melt down silver yourself.
We then covered how silver might be best used as an inflation hedge, most notably silver bullion. Depending on the quantity of silver you’re interested in acquiring, you may want to purchase 1 oz, 100 oz, or any size in between.
Typically, premiums are a bit lower per ounce at the kilo size or above. The 1,000 oz silver bars do have the lowest premiums, but they’re more institutional grade and may be more difficult to sell in the future.
The idea of using silver for bartering purposes used to be a fringe mindset, but in recent years, we’ve spoken with and met with a substantial number of clients who are interested in acquiring silver for this very purpose. Generally speaking, 90% U.S. coins, including silver dimes, quarters and half dollars are best used as a medium of exchange.
Many of our callers and clients are interested in silver as an investment, considering its upside potential and relatively low correlation to their other investments. Even financial advisors recommend precious metals to provide diversification to a portfolio consisting of traditional asset classes.
Lastly, coin collectors account for a decent percentage of our customer base.
There are numerous collectible coin options available, including Morgan silver dollars, Peace silver dollars, and proof American silver eagles, just to name a few. With respect to Morgan and Peace silver dollars, these coins range anywhere from the low double digits upwards of thousands of dollars, so be sure to educate yourself if you decide to invest in or collect these coins.
We hope you found this article to be helpful and welcome you to contact Atlanta Gold & Coin Buyers no matter your needs, goals, or circumstances.
We are here to help all categories of silver buyers and can offer items and provide recommendations of items that best suit your needs. Give us a call today for help making your first or 1,000th investment in silver or other precious metals.
Happy Treasure Hunting!
Call today at 678-515-5763!