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Silver Bars or Silver Coins?

In this section, we will assess whether it is advisable to choose silver bars or silver coins when you invest in silver. In the section, “Tips for Buying Silver“, we’ve already covered other considerations such as the tax status for different kinds of silver.

Choosing between silver coins or silver bars

Let’s say you are planning to buy 100 troy ounce of silver. What kind of silver should you buy? Should you buy a 100 troy ounce silver bar, or should you for example buy 100 pieces of 1 troy ounce silver coins?

What to choose depends on why you invest in silver in the first place and what scenarios you think are likely to play out over the next years. Other considerations include practical ones. If you have to sell a small portion of your silver holdings to raise cash, it is rather impractical if you hold one 100 troy oz silver bar. If you instead hold 100 pieces of 1 oz silver coins you can easily sell a few silver coins at a time.

In the case of a financial crisis such as a currency collapse, or any other kind of financial meltdown, electronic payment systems may not work, cash might be scarce or there could even be hyperinflation. In such a scenario silver is suitable as currency. Having 100 pieces of 1 oz silver coins are then more suitable than having a 100 oz silver bar since the silver coins allow for small transactions.

If you on the other hand look at silver as a pure speculative investment, you may want to consider the silver price premium. The silver price premium is the silver price per ounce, above the silver spot price, you have to pay for your physical silver. All physical silver trade at a price premium. The premium consists of two parts. The first part is the natural premium consisting of the design cost, production cost, certification cost etc. The second part of the price premium is the price you pay for taking delivery of physical silver today as opposed to holding unbacked paper silver with a promise of delivery in the future. The silver price premium is generally lower per troy ounce for larger items. The reason is that for larger itmes, there are less items to stamp, mint and certify lowering the production cost.

Even with the slightly higher silver premium, it may still be advisable for the astute silver investor to select a large quantity of small 1 oz silver coins rather than a few large units. The silver price premium for small silver coins usually increases more than the price premium for large items in times of high demand. The higher silver price premium is normally also reflected in the buyback price when you sell back the silver. You can thus never go wrong buying 1 oz silver coins.

What silver coins should I buy?

coins-should-buyWhat silver coins to buy is mostly a matter of personal preference. The world’s most popular investment grade bullion coin is the American Silver Eagle , minted by the US Mint. The Silver Eagle has a slightly higher premium than other coins but the buyback price usually reflects the higher price. The Silver Eagle is furthermore considered to be the world’s most beautiful silver coins.

There’s however a wide range of beautiful high quality bullion coins from other world renowned mints and refineries to choose from including the Canadian Silver Maple, the Austrian Silver Philharmonic or the Mexican Silver Libertad.

Australian silver coins from the Perth Mint are also world renowned for their quality and appealing aesthetics. Perth Mint produces several series of coins such as the Australian Silver Kookaburra, the Australian Silver Lunar Series and the Australian Silver Koala.

If you want as much silver as possible for your money, privately minted silver rounds like silver buffalos can be a good alternative. Silver rounds are exempted from VAT/GST/Sales tax in some countries like the US although not in other jurisdictions like Singapore and Australia where only certain coins are exempted from tax.

What silver bars should I buy?

silver-barsAfter collecting a base of silver coins, you can start to look at silver bars. As for silver coins, what type and brand of silver bars to choose is mostly a question of preference. There are many neat looking high quality silver bars from well renowned suppliers. Some of the most common and highest quality silver bars include the Swiss Metalor Bars, the Royal Canadian Mint bars and the Heraeus Bars. Some of the advantages of silver bars are that the premium per ounce may be lower and that you have a larger amount of silver concentrated into a few units. This can be preferable from a warehousing perspective, especially for the larger silver investor.

It can however be argued that silver coins are just as convenient to store and inventorize as silver bars. Many large investors buy American Silver Eagles in so called mint tubes or “Monster Boxes”. The monster box is a plastic box that, in the case of the Silver Eagle, contains 25 mint tubes with 20 coins each for a total of 500 coins. Monster boxes are sealed by the producing mint verifying the content. A monster box therefore acts more as a unit of 500 troy ounce of silver rather than 500 individual pieces. A monster box can be much advantageous when a big monetary or financial crises hit. The coins can then be used for barter or emergency coins. It is also more convenient with a box of silver coins than larger units if you need to sell smaller quantities of your silver.

When choosing what silver items to invest in, the most important considerations are liquidity, storage and barter potential. Everything else is really a matter of aesthetics and personal preference.