Are Silver Coins a Good Investment?

Investing in silver is not as common as investing in its cousin, gold. However, this does not make silver any less attractive, most especially now that the monetary policies of governments are destroying the purchasing power of every unit of currency we hold. What are the things you have to know about silver?

The very first thing you have to know are the two types of silver most commonly traded today: silver bars and silver coins. Silver bars are pretty common but there are a few characteristics of bars that make them less desirable as coins. The first reason is that bars are less prestigious as bars. When trading, coins can be bought and sold much easier than bars. Besides, with bars you have to sell the whole thing in order to liquidate. Either you sell everything or nothing at all. It is an all-or-nothing situation with bars. Silver coins clearly do not have this problem.

Going into detail, while value is not diminished with bullion against coins, the fact that they are government-minted and can be broken up into smaller quantities are the main reasons for the preference of coins. There is also the universality of acceptance of coins that make them attractive. Even when silver prices fluctuate wildly, there will be little question to government-minted coins. Their value practically stays the same way on the market. An assay, or scientific measurement of silver in a coin or bar, is also less likely to happen when you trade in coins.

One warning: be aware of rare coins and excessive premiums. Numismatics can have a high price but in some cases you will not be able to sell them. High premiums on top of the spot price are a bad sign as well, you better compare before you buy.

Another reason why silver coins are a good investment is in the analysis of the gold/silver ratio. The ratio is used to determine the absolute and relative prices of gold and silver. In this case, the important thing to know is that it is accepted that the ratio will normalize to 16:1 based on historical evidence. Though the ratio currently stands somewhere between 50:1 and 60:1, declining below-ground supplies and the movement of the ratio to normal levels will make silver a top commodity in the near future. You must understand that there is a wide variety of uses for silver, especially in the camera industry. Lastly, if gold prices were to stay the same, and as the ratio normalizes, then the price of silver should double or even breach the $100 mark per ounce.

Written by Madison Carter – October 2012

 


 

Beginners’ Guide – All Articles

 

INTRODUCTION TO THE WORLDS OF GOLD & SILVER

What’s This Financial Crisis About and What’s The Link With Gold & Silver?

Physical Gold: antidote against the ongoing global debt crisis

7 key benefits of owning gold and silver

7 Ways to Invest in Gold  and  7 Ways to Become a Silver Investor

Is Silver a Safe Investment  and  Are Silver Coins a Good Investment

Buying Silver is a Volatile Investment  and  The Value of Silver

Why To Buy Gold Bars as a Gold Investment

Understanding Gold Coin Prices

Understanding Gold Price Per Ounce

 

7 TIPS TO INCREASE YOUR WEALTH WITH GOLD & SILVER

Introduction: Now is the time to invest in gold and silver – 7 tips to increase your wealth

Tip 1: Gold and silver is for everyone – You too should own it

Tip 2: Be sure to have physical gold & silver

Tip 3: We are in stage 2 in the long term gold & silver bull market

Tip 4: Be prepared to see sudden price drops

Tip 5: Timing when buying is crucial

Tip 6: This is the century of silver

Tip 7: Gold & Silver stocks can have high yields

 

IS NOW THE TIME TO BE BUYING GOLD & SILVER?

7 facts proving we are in a long term powerful uptrend in Gold and Silver

Is This the Best Time to Be Buying Gold and Silver?

Gold Investments in 2012

 

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