Silver coins and bullion act as a hedge against market crashes, inflation, and economic uncertainty.
Investing in silver offers a lower upfront investment compared to the most popular precious metal investment: gold.
Silver is typically better suited for retirment savings, bulk investments, and long-term holdings, making it less popular in retail markets.
While people often think of gold as beautiful and elegant, silver is able to give it a run for its money. It reflects 95% of the visible light spectrum, making it the single most reflective metal out there. Silver objects also stem back as early as 4000 BC, so those investing in the metal can know that they're getting into a millennia-long tradition.
However, as a budding investor, you have many questions to answer. A primary one is, "Should I buy silver bars or coins?"
Read on for a comprehensive answer to this inquiry that compares the pros, cons, and situational specifics of both options.
Why Invest in Silver?
Before choosing between silver bars vs coins, it's critical to consider why investing in silver is a good idea in the first place.
Silver, like gold, is a tangible investment that you can see and touch. Its value isn't assigned to it by a government or banking entity. Instead, the metal itself holds intrinsic value because it's useful in several applications, beautiful, and easy to trade.
This means that it can never lose its value because an external entity loses its worth. Unlike a stock or bond, a crash in the market can't bring silver down to a low value.
This makes precious metals like silver a great safety net as part of a broader portfolio. If another risk doesn't pay off and a stock becomes worthless, you'll have diversified enough to regain some funds and land on your feet. Unless you lose the physical silver, it's certain to accrue value.
Another core reason is upfront costs. Silver is an inexpensive alternative to gold and costs only about $23 per ounce. The same amount of gold costs $2035, making it less feasible for those who are building an investment portfolio with limited funds.
The lower price also means that silver offers extremely high returns. Prices are at a record high and those who invested in silver 40 years ago and selling today are seeing a 96.8% return on their purchase. Even those that are selling silver after just five years in holdings are seeing an ROI of 82.6% - 12.8% annually.
Silver also serves as a reliable investment because it's useful in many different industries and applications. It makes beautiful jewelry and collectible coins. However, it also can be melted down for use in industrial machinery, automobile/aerospace equipment, and manufacturing materials.
This is part of the reason that silver will always be worth something. Those in need of its properties will always be willing to buy it for practical reasons.
Silver Bars and Coins: The Similarities and Differences
Silver bars and most coins are classified as bullion. Silver bullion is a type of silver investment that holds no numismatic value. It can't be used as currency and doesn't have worth to collectors.
Instead, the worth of bullion lies in its precious metals content. A 98% silver bar can accrue value over time as silver's worth skyrockets, and it will always have worth because of this content. The bar/coin won't be worth any less when the economy shifts and changes, so the investment will almost always pay off.
Despite this, there are some differences between silver bars and coins to keep in mind.
The main difference between the two is their shape and design. Silver coins are smaller and easy to hold onto while bars are rectangular and take up more space. If you have limited storage space, coins may be a good choice, but if you're prone to losing things, you may want to go with bars.
Additionally, while they usually contain the same amount of silver, they're bought and sold in different markets. This means that they'll have different premiums when you purchase them, so you'll want to look at the specific premium over spot price of your purchases. They also may have different liquidity in the market, so keep an eye on your specific investment.
The Benefits of Silver Bars
Silver bars are generally best for those who want to make large investments. This is because there are lower premiums per silver ounce when you buy a large bar. However, since they're not very liquid, you'll likely want to be a more experienced or informed investor before taking advantage of this benefit.
You're also unlikely to be cheated out of your money when you buy silver bars because they require professional verification. Since they're bigger, an expert has to examine and approve bars before a reputable company sells them.
The double-edged sword here is that you can only trust verified, reliable companies like the US Gold Bureau when buying silver bars, so you can't randomly buy them offline. Still, this is a blessing in disguise since there are many benefits to working with reputable precious metal dealers.
because they come in small sizes, so you can buy and sell them in small quantities. They work well for incremental investors.
When to Invest in Silver Bars
Silver bars are meant for those who want to make massive investments at once. Besides the lower premiums, they also lack divisibility, which means that they're better suited to bulk investments.
This isn't a bad thing, but it does mean that most people investing in silver are professional investors. They're not usually hobbyists and they're not looking to grow a personal portfolio. You can buy bars as an individual, but coins may work better.
They're also best for those planning to hold the investment for a long time. This is because they're not as popular in retail markets as silver coins are. You'll take longer to find the right buyer, making them beneficial mainly as retirement savings.
The Advantages of Buying Junk Silver Coins
Most day-to-day investors will prefer purchasing silver coins. Junk coins, silver coins that hold no numismatic value but are still worth something because of their precious metal content, are a great choice. They're inexpensive and easy to buy in bulk.
These bullion coins are extremely popular and have lower premiums over spot price when mass-produced. They're also more liquid because they're smaller and easier to sell. People want to buy them as small investments to sell later, which creates a high demand.
Storing junk coins is also easy at home or in a safe deposit box at your bank. You won't need professional large-scale storage unless you're purchasing something for a specific precious metals IRA.
You also won't need to pay the same high taxes and fees that you would need to pay to store them at a large, specialized facility. The size and weight of bars mean that they require such a storage location. So, investing in coins over bars can save money for budget-minded investors.
They're also more divisible, which makes them easier to sell. This is because they come in small sizes, so you can buy and sell them in small quantities. They work well for incremental investors.
When to Invest in Silver Bullion Coins
Silver bullion coins are an ideal investment for most people who want to diversify their portfolios. The coins are great for new investors who want to minimize upfront costs by making purchases in smaller amounts. They work well for retail investors, too.
Basically, unless you're buying a bulk quantity of silver to stick into a long-term reserve, you'll want to rely on coins for your bullion needs.
What About Numismatic Coins?
Up until now, we've exclusively discussed silver bullion coins. However, collector coins like the American Eagle are also available, and they hold numismatic value.
This is because collectors put a price on them for their rarity, beauty, exclusivity, and government-assigned worth. They do hold intrinsic value that can't be taken away, but people also prize them because they want to add them to collections.
Collector silver coins are also easy to hold and store at home. They have high liquidity and are easy to buy and sell whenever. Like bullion coins, they're ideal for small-scale investments and portfolio diversification.
However, you can expect to pay a higher premium when investing in numismatic collector's coins. That being said, assuming that you keep the coin in good shape, you'll be able to sell it later for a huge return. This is because they'll become rarer and more highly-coveted collector's items over time.
Basically, collector's coins are for those who want an easy-to-manage silver investment that they can store easily. However, they're best for those who don't mind making a high upfront investment in exchange for a high future return.
They're also good for those setting up precious metal IRAs. You can only select silver items for valid IRA accounts, so do your research and see whether silver collector's coins can help you save for retirement.
So, Should I Buy Silver Bars or Coins?
While neither bars nor coins are intrinsically better investments, most people will choose bullion or collectible coins when buying silver. Bars are generally best left as large-scale bulk investments.
Now that you know the ins and outs of investing in silver, you can stop Googling "should I buy silver bars or coins" and begin making a valuable and informed investment today.
The U.S. Gold Bureau offers a wide range of precious metals and silver products including bars, coins, and rounds. Get our free precious metals investor guide to learn how you can maximize your silver value over time.