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Commodity Investing

Investing in Silver Bullion Coins

Silver is one of the most important and fascinating metals on the planet. The white metal’s bigger brother, gold, usually gets most of the attention. But there’s one thing no gold bull likes to talk about. It’s one of the secrets of the gold industry…

Gold is rarely consumed. Estimates suggest that 95% of all the gold that man has ever produced is still around in one form or another, either in coins, bars, artifacts, or jewelry.

The historic value and human attachment to gold ensures that it’s recycled to be used again and again. But unlike gold, silver is typically used only once, and then thrown out.

This might sound strange. But it’s just a matter of economics. Much of the silver that’s mined goes directly into the products we use everyday: cellphones, laptops, hearing aids, electronic switches, etc. But only a tiny amount of silver is required for each product. And it’s simply cheaper to get new silver supplies from mining than to recycle the silver out of circuit boards and LCD screens.

But of course, silver is a finite resource. And global supplies from traditional mines will one day certainly be depleted. Meanwhile, there are no known major stockpiles of silver anywhere in the world. And demand for silver is expected to continue increasing. Silver demand in places like China and India are expected to jump 40% this year alone.

A spike in demand, coupled with the devaluation of the dollar, global political tensions and general market nastiness has edged a horde of new investors into silver.

For most investors starting out, silver bullion coins are the cheapest and easiest option. Bullion coins can have the lowest premium of any other silver investment option. But some silver coins are better options for investors than others. And buying the wrong silver coins could easily make or break your entire investment.

The Best Silver Bullion Coins for Investment

The best silver bullion coins to buy for investment are simply those that will be easy to sell when it’s time to cash in. The last thing you want is to be stuck with a bunch of heavy metal you can’t sell.

As with any investment, liquidity is key. And just like any other investment, some silver coins are more liquid than others.

The most liquid silver bullion coins are those that are clearly marked of their fineness and backed by a major government or reputable private minters. And of all the silver bullion coins on the market, the U.S. Silver Eagle sets the standard.

The American Silver Eagle is the most recognized, trusted and liquid silver bullion coin in the world. It’s the perfect option for any size silver investment.*

All precious metal bullion coins sell for a premium over the market’s spot price. Some coins command higher premiums than others.

A new, uncirculated Silver Eagle will typically sell for about $3 to $4 over spot price from an online bullion dealer right now, and about $5 to $7 over spot from a coin shop.

Premiums for Silver Eagles vary on eBay. And it’s really quite rare that you find a great deal. So eBay isn’t really worth your time if you’re looking to obtain a sizable silver investment.

There are also shipping and handling charges, both from eBay and from online bullion dealers, and they should always be considered before making a purchase. So when buying Silver Eagles, just make sure to shop around for the lowest premium.

There are also several other government- and privately minted silver bullion coins available on the market that also make for great investment coins. Here are a few:

But these prices are really based on the rarity of the grading. Numismatic Guaranty Corp., one of the most respected third-party coin graders, has only fourteen 2002 Silver Eagles graded at MS 70. This represents 0.0001% of all Silver Eagles minted that year. The NGC registry only includes sixteen 2001 Eagles graded MS 70.

silver eagle coins

Source: David Lawrence Rare Coins

So graded coins aren’t the best option for investors, they’re for collectors. Investors would be best owning uncirculated or almost uncirculated silver bullion coins that were minted by a government or reputable private-minter.*

Bullion coins, like the American Silver Eagle and others I’ve mentioned here today, offer investors direct exposure to volatility in the silver market, and can provides the comfort of knowing you can instantly sell it for cash or barter.*

Good Investing,

Luke Burgess

*Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Wall Street analysts.


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