Silver, like gold, has repeatedly shown throughout history to outperform the stock market and declining U.S. dollar values during economic turmoil due to its worldwide demand for various applications, which makes it a great diversification tool and inflation hedge for investment portfolios.
When purchasing silver as an investment, your main choices are silver bars and silver coins. However, they each differ in how they are valued, which will ultimately determine the best investment for you.
What are Silver Bars?
Silver bars are nothing more than chunks of precious metal shaped into rectangular-like cubes.
They are also produced in different sizes and weights, from 1-ounce bars all the way up to 1,000-gram bars, which is the equivalent weight of about 2.205 pounds.
Each bar also contains engravements that help legally identify it, including its weight, silver amount, and the refinery’s logo where it was manufactured.
What are Silver Coins?
Silver coins are round-shaped pieces of precious metal that were created as a source of currency dating all the way back to Ancient Greece. However, the minting of silver coins in the United States didn’t begin until after 1793.
Today, nearly all silver coins are produced by national mints and contain various circulating designs, depending on their country of origin.
Like silver bars, they also typically contain various other details concerning their production, such as the date they were created, their monetary worth, and other clarifying information that helps officially identify them.
Silver Coin Types
There are basically three main types of silver coins, bullion, proof, and numismatic.
Silver bullion coins are issued by the government as a form of currency; hence, they have a face value and are guaranteed by the issuer.
Silver proof coins are also produced by national mints; however, they are finer quality versions of silver bullion coins, which makes them more collector’s items.
And then there are numismatic silver coins, which are also known as rare coins or collectors coins.
These silver coins actually contain very little silver; however, they hold significant value to collectors.
Silver coins minted before 1965 are also considered rare or collectible because of their rarity. However, they were also produced using 90% pure silver, which also makes them valuable.
Silver Coin Weights and Sizes
Silver coins, like silver bars, are also produced in various sizes and weights, which offer different values.
For instance, some silver coins are as small as a dime, in which case, they weigh just a few grams. And then other silver coins are as big as quarters, half dollars, and silver dollars and can weigh as much as 5 grams.
How Silver Coins are Valued
National mint-issued silver bullion coins are appreciated more for their metal content, which gives them their melt value.
The higher the coin’s silver content, the more it’s worth to investors. For instance, silver bullion coins often trade at a lower amount compared to silver-proof coins because they have a lower metal content or melt value.
Meanwhile, numismatic coins have little silver content, but many of them are also known to sell for more than silver bullion coins because of the value that serious collectors put on them.
How Silver Coins are Priced
Silver coins contain metal, so they are valued according to the spot price of silver in the precious metals market. However, it is more difficult to use the spot price of silver to determine a value for numismatic coins because they contain little silver content.
Instead, they are produced more for novelty or hobbyists rather than as investments, so their value depends on collectors’ demand for them.
Common Silver Investment Coins for Investors
American Silver Eagle Bullion Coins
American Silver Eagle bullion coins feature the same inspired design that is displayed on the 1916 half-dollar, which is what they are most notable for outside of being the officially recognized coin of the U.S.
They are also the most popular silver investment coin in the United States, which also lends to their high liquidity potential.
These coins feature an American flag-draped, walking Lady Liberty with oak branches and shrubs in her hand, and coins made after 2020 also feature a landing eagle with an oak branch in its talons on the other side, which perfectly depicts the American spirit.
However, the American Silver Eagle bullion coins, unlike the American Gold Eagle bullion coins, are only available in 1-ounce weights, so it leaves little room for investors to add a small amount of silver to their portfolios at a time.
But their 99.9% silver purity is backed by the government, so it can be considered a safe choice for investors. We know reputable silver IRA companies like Augusta Precious Metals and Noble Gold Investments have it in their IRS-approved coin selection.
Maple Leaf Silver Coins
Maple Leaf Silver coins are also widely recognized like American Eagle coins; hence, they are also popular holdings among collectors. In fact, spectators believe that they have yet to reach peak demand since their burst in popularity over 20 years ago.
They are also the official coins of Canada, so they feature a picture of Queen Elizabeth II on one side and a maple leaf on the other, which makes them a highly respected coin.
The Royal Mint also rolls out a new version of the coin each year, which helps maintain its desirability to investors looking to own the entire collection. Therefore, they have the potential to always sell and at a premium in some cases.
Since they are official coins of Canada, it means they are also backed by the state for a sound investment.
Silver Krugerrand Coins
Silver Krugerrand coins weren’t produced in South Africa as circulated coins until 2018. However, now they are some of the most recognized annual silver bullion coin series worldwide.
Until then, the premium uncirculated Silver Krugerrand coin, which was released by the South African Mint in 2017 to celebrate the 50th anniversary of the gold Krugerrand, was the most recognized.
The Krugerrand coin gets its name from a combination of the name of the only ever South African President, Paul Kruger, and the rand, which is the name of South Africa’s currency.
Hence, in true honor, one side of the coin also features the president’s side profile. However, the other side displays an illustration of South Africa’s national animal, which is the springbok antelope.
The coins themselves are .999 pure silver, which also suits a variety of investors.
Silver Chinese Pandas
Silver Chinese Panda coins are released in limited supply by the Chinese government, which makes them highly valuable to investors across the world.
They also feature the beloved, endangered panda species, which also makes them rare and precious.
However, Silver Chinese Panda coins don’t often include mint inscriptions on them, so they may be more for collectors’ items for their beauty. And then, during times when they include mint inscriptions, they may be better suited for investment coins.
Silver Philharmonics are Austrian-derived coins that depict a detailed illustration of the Austrian Philharmonic Orchestra on one side and the Golden Hall in Vienna on the other.
They are also denominated in euros, which makes them great budget-buy coins compared to silver coins labeled in other currencies, and they also have reasonable premiums.
Their .999 pure silver content also makes them attractive to investors.
Silver Britannia Coins
Silver Britannia coins are not only greatly admired in the United Kingdom, but they also have commemorative worth in the United States since British silver was also a standard of its currency for many years.
Hence, they are some of the most liquidable silver coins to invest in, no matter which province.
In the meantime, the more newly produced Silver Britannia coins contain 95.8% silver and are produced in various partial-ounce sizes, which allows all investors to own a fraction of silver for their collection and at a great value.
However, acquiring annually-released uncirculated and proof silver Britannia coins will enable you to earn a premium on your investment.
Silver Britannia coins are recognized by their beautiful displays of Britannia and Her Majesty Queen Elizabeth on the front and back of the coin for an alluring look, and they are also state-backed for a reliable investment.
Who Should Invest in Silver Coins?
If you are an investor that appreciates a coin’s value beyond a financial vehicle, then investing in silver coins may be for you.
However, the amount that avid coin collectors are willing to pay above their original cost still provides great investment value.
This is especially true when it comes to silver coins minted annually, as part of a collection, or that are just simply rare and hard to find because interested investors that find them crucial to their investment goals will pay a high price for them.
However, the downside is the higher premium collectors are willing to pay will vary as their coin preferences change over time.
On the other hand, if you are an investor that values market-like returns over commemorative worth, then silver bullion coins or bars, whose value is based on the spot price of silver, may be for you.
This way, when the spot price increase, so will your holdings according to the market. However, your overall rate of return ultimately depends on how well you are at timing the market to get the lowest spot price on silver at the time of your investment.
Investing in Silver Coins as Part of a Larger Portfolio
For investors that have more to work with or larger portfolios, you may benefit from incorporating a wide range of silver coins into your investment mix because it will allow you to get the most for your money and reap the highest returns on it.
In the meantime, acquiring British coins as part of your portfolio will help ensure you receive increased profits upfront because they usually demand a higher amount than what they originally cost.
Should you choose to invest in British coins, it is also advised that you stick to coins minted in random years because they command a higher premium than those produced during subsequent years.
Investing in Silver Coins for the First Time
Ideally, if you are a new investor who is looking to invest in silver, you should stick to coins because it enables you to invest in it in smaller amounts.
For the most budget-friendly options, it is advised that you stick to silver coins like the silver Krugerrand coin because it doesn’t typically demand the high market premium for the ounce of silver like other coins.
However, no matter which type of investor you are, it is important to first assess your circumstances and investment goals before getting silver coins because it will help you choose the right ones for your investment risk level.
It also helps ensure you choose silver coins with the returns and premiums you want for the best value for the investment.
Owning Silver Coins as Part of a Precious Metals IRA
If you are a retirement investor, it is also possible to own silver coins as part of an IRA. However, it must meet IRS rules to qualify, which a silver IRA helps you do.
A silver IRA is offered by precious metal companies to provide you access to a self-directed individual retirement account, which allows you to hold silver coins and other alternative investments as part of your retirement plan.
How to Open a Silver IRA
Choose a Trusted Precious Metals Company to Work With
IRS guidelines dictate that you must have a self-directed IRA account (SDIRA) to own silver coins as part of your IRA. Therefore, you will need to find a reputable precious metals company to open your SDIRA.
To help determine if a company is reputable, be sure to check its Better Business Bureau profile for its BBB rating, accreditation, and any complaints filed with the organization.
You should also check their member testimonies on various reputable sites to see what actual clients have to say about the company.
Set Up Your Account
Depending on the precious metals company, you may be able to set up a Silver IRA account online via their website.
However, if they do not provide this option, or you would just simply like to talk to a representative directly, then call the company, and they will help walk you through the process of setting up your account over the phone.
They will also answer any questions you may have and provide you with additional education on precious metals before investing.
Add Money to Your Account
When you open a silver IRA, there are various ways to fund it so that you can purchase silver coins.
For instance, you can perform an IRA rollover, which enables you to transfer funds directly from your current retirement account to your new silver IRA account tax-free.
Or you can also simply withdraw the funds from your account and then fund your new silver IRA yourself. However, the amount must be deposited within 60 days from the withdrawal date, or you will be charged fees and taxes.
Your account manager will let you know if your current retirement plan is eligible for an IRA rollover.
Get IRA-Approved Silver Coins
IRS rules also state that the precious metals products for your silver IRA account must meet certain standards for fineness and quality manufacturing.
They must also be acquired by a custodian on your behalf, which your precious metals company will most likely provide you with a list of to help you choose the best one to suit your needs.
Some IRA-Approved Silver Coins
- American the Beautiful coins
- Canadian Maple Leaf coins
- American Eagle bullion and proof coins
- Mexican Libertad bullion coins
- Chinese Panda coins
- British Britannia coins
- Australian Kookaburra coins
- Austrian Vienna Philharmonic coins
Choose a Secure Storage Facility/Depository to Store Your Silver Coins
Your silver coins must also be stored in an IRS-approved depository, where they will remain until you are ready to retire.
Many precious metals companies also have a list of preferred depositories they work with for you to choose from.
Usually, the depositories have been vetted by the company based on their experience, storage options, security, and insurance coverage.
However, they also typically provide many additional perks, so be sure to ask which depositories your precious metals company works with, so you can do your research to determine the best one for you.
Track Your Silver Coins Account Online
Once your assets have successfully reached the depository, some custodians like Equity Trust (with their account management portal called myEquity) will also provide you with an online account to view their status any time you want.
So be sure to ask your chosen custodian if they offer this perk if it is something you would prefer.
Withdrawing or Selling Your Silver Coins
When you are ready to take possession of your silver coins, simply contact your custodian, and they will have them shipped to you. Or, if you’d like, you could simply request the cash equivalence for them and receive money instead.
Some precious metals companies also suggest to buy back your silver coins for the current spot price. This way, you always have a willing buyer when you are ready to sell.
Just be warned, if you take hold of your coins or sell them for cash before you reach age 59 1/2, you will be penalized with taxes and early withdrawal fees.