Investing in Silver Coins

While silver is less valuable by the ounce than gold, silver prices are also historically more volatile. Which means bigger price swings, and for investors who can take the risk when silver prices are relatively low, even greater potential gains.

Silver has value as a precious metal because of its natural scarcity and globally recognized value as currency. Older U.S. coins, including dollars, half-dollars, quarters and dimes contain up to 90% pure silver.

Silver coins are easily bought and sold nearly anywhere in the world, and the metal can nearly always sell quickly for very close to its going spot price.

Additionally, silver is in high demand in a variety of industrial uses, thanks largely to its excellent properties as a conductor of electricity. This steady industrial demand tends to give silver prices some support when gold and other commodities are falling.

Silver is also an increasingly high-demand asset for IRAs, as more investors become aware of the advantages of self-directed retirement accounts.

Silver Premiums and Discounts

Spot price, premiums and discounts are important concepts to understand before investing in any kind of precious metal.

The ‘spot price’ is the current price per ounce of silver available on the market today. It fluctuates every day, based on market sentiment and supply and demand.

But few genuine silver bullion coins sell at spot price. Indeed, bullion coins in good condition usually command a price well above spot. When a buyer pays more than the spot price for a given amount of metal, we say he is paying a premium, or “buying at a premium.”

Bullion vs. Proof and Collector Coins

The concept of bullion is critical to understand before you begin investing in silver coins. Bullion is minted solely for the value of the metal. Every bullion silver coin of a given type is carefully manufactured with exactly the same amount of silver. Bullion therefore holds its value after a few scuffs or scratches better than ordinary proof coins.

In contrast, proof coins derive more of their value from their desirability to collectors and hobbyists. Proof coins may sell for much more than their silver content.

Silver Coins Vs. Rounds

Silver rounds are bullion products, similar to coins, except that rounds are manufactured at private mints, while coins may be minted by public or private mints. Rounds are manufactured simply, and valued almost entirely for their metal content.

Coins are often considered legal tender in the countries where they are manufactured by national mints. They have a legal tender face value amount stamped right on the face. Rounds are not legal tender and typically don’t have a currency amount stamped – just a weight, if that. Rounds will typically sell at a lower premium than coins, per ounce of silver.

Mint Quality and Prestige

Some mints are more prestigious than others. Coins and other products from these mints routinely sell at a substantial premium to spot price. Usually, the smaller the coin or bar, the greater the premium. Small coins from established high-quality mints tend to sell at the highest premiums.

Coins from well-known, respected mints are in higher demand, pushing prices up. They are also easier to unload quickly, and can be readily sold anywhere in the world. Very small coins from prestigious mints can command premiums as high as 150%.

Common or Popular Silver Coins

The most recognized silver coins include: