The GoldSilver Team
SEP 22, 2023
Navigating the world of silver investment can feel a bit daunting. With some platforms offering hundreds — or even thousands — of choices, from coins and bars to bullion and numismatic pieces, it's easy to get lost in a sea of terms and options.
That's why we're here to help.
In this special Silver September issue, we're cutting through the clutter to bring you a comprehensive guide on the different types of silver you can invest in.
But first, did you know...
Silver Holds More Patents Than Any Other Metal — Silver boasts more patents issued with its use than all other metals combined. That’s because it’s one of the world’s best conductors of heat and electricity, it’s highly reflective and it’s one of the most ductile elements on earth. One single ounce of silver can be made into a wire 8,000 feet long.
Silver Can Act As An Antibiotic — Silver has the unique ability to penetrate the cell walls of bacteria, preventing bacteria from growing and spreading. This unique property has been recognized for centuries; the Phoenicians, for example, stored water, wine, and vinegar in silver bottles to prevent bacterial contamination.
Silver Is Mentioned 320 Times In The Bible — In the King James Version of the Bible, silver makes 320 appearances — 302 in the Old Testament and 18 in the New Testament. Notably, during Abraham's era (as outlined in Genesis 13:1-2), silver was the preferred currency for day-to-day transactions.
Silver Speeds Up Your Winter Commute — You know those thin defrosting lines built into your car’s rear windshield? They’re made of silver. Because of silver’s conductivity, there’s no faster way to heat up and defrost a windshield.
I Bet You Can’t... — Believe it or not, there's no word in the English language that rhymes with "silver." Go ahead, try to think of one. If you succeed, we'd love to hear it!
When it comes to investing in precious metals, understanding the key differences between bullion and numismatic coins is crucial.
Because there’s thousands of different silver products claiming to be smart investments – yet many have wildly different pricing?
How do you decide which one to choose?
Numismatic Coins: The Collector's Realm
You might've seen them on TV or in catalogs – those shiny, rare coins often labeled as "collectible" or "commemorative." These are what we call numismatic coins.
Now numismatics aren’t inherently bad, but they’re basically just collectibles. They're like that limited-edition baseball card or that vintage toy you keep on your shelf.
You buy them because they mean something to you, not necessarily to fatten your wallet.
These one-ounce silver numismatic coins are sold on the https://catalog.usmint.gov/ website are priced at over 3X the price of an ounce of silver (right now around $23.40/oz).
That’s not to say that all numismatics are useless. If the Bills were to finally win a Super Bowl and a lifelong Bills fan wants to spend $100 or even $1,000 on a numismatic Josh Allen 1-ounce silver coin to commemorate the occasion, who am I to tell them that’s a bad investment?
That coin, though just an ounce of silver, could be priceless to some.
But you shouldn’t ever buy collectible numismatics, with the plan to get rich one day. The value of a coin can be affected by a wide range of factors like age, rarity, year of issue, design, and the mint where they were produced. The numismatic market is complex, illiquid, and requires a steep learning curve. If you're not well-versed, it's easy to end up with the short end of the stick.
Reputable dealers typically offer spreads on bullion coins, bars, and rounds ranging from 3% to 8%, depending on the specific product and quantity purchased. In contrast, the spreads on numismatic coins can start around 30% to 40%. This means that the moment you purchase a numismatic coin, its market value could be 30% to 40% less than it was when you paid for it.
If you’re buying silver with an investor’s mindset, there’s only one right choice...
Bullion Coins: The Investor's Choice
Bullion coins are valued mainly for their precious metal content. Their market is transparent and easy to navigate, offering investors a clear understanding of their worth based on the type and weight of the metal. For most precious metal investors, bullion offers a simple, transparent, and historically reliable store of wealth.
At GoldSilver, you won't find numismatics. Why? We focus on offering only the most sought-after, universally recognized bullion products. When you invest in bullion through us, you're investing in a tangible asset with a storied legacy of stability. Its cost is clear-cut and mirrors the global market price for precious metals, making it a trustworthy choice for discerning investors.
Bullion enjoys wide recognition and high liquidity. When it's time to sell, you'll find a robust market ready to offer you a universally recognized, fair price. You can easily compare bids and make an informed decision.
In contrast, the numismatic market is far less liquid. Finding a willing buyer at a fair price can be a challenge, given the specialized and subjective nature of these collectibles. The numismatic market is so nuanced that a single coin can be assigned up to seventy different quality grades, adding another layer of complexity.
Bullion is to stocks as numismatics are to art pieces. Both stocks and bullion are traded in bustling markets. When it's time to divest, popular bullion, like shares of tech giants Microsoft or Apple, can be sold swiftly and at the price you want. From Beijing to Boston, there's a consistent demand for bullion.
But with art (and numismatics) many things are subjective. You may not find a buyer who values your coins the way you do.
When you're ready to purchase some bullion, there are two main factors you should keep in mind – low premiums and popularity.
When you look at the spot price of silver, it’s important to remember that you can’t just buy right at the spot price. Manufactured a silver nugget into a fungible physical form like a coin adds a small cost to the process.
This is what’s called the premium. Premiums are the markups added to the spot price, which is the real-time value of the metal as it trades on global markets. Unlike spot prices, which are dictated by supply and demand, premiums simply cover manufacturing and wholesaling costs.
The lower the premium, the more metal you get for your money, effectively lowering your cost basis. Keeping your premiums low is the best way to get more bang for your buck.
100 oz Silver Bars
If you want to get the most bang for your buck, 100 oz silver bars are hard to beat. These bars are among the most cost-effective forms of bullion you can buy, making them an excellent choice for those looking to maximize their investment.
Why are bars the go-to option? Simple: they allow you to exchange the most currency for the highest amount of pure metal.
1 oz American Silver Eagle (Common Date)
The U.S. Mint has been producing an average of 15 million Silver Eagles annually for over three decades. These coins are the most popular — and most liquid — bullion coins in the world.
You might wonder, "Don't these coins have higher premiums than bars? Doesn't that contradict the criteria for a good investment?"
The answer is no, and here's why: Investors are generally willing to pay those higher premiums for Silver Eagles, both when buying and selling.
What makes Silver Eagles particularly attractive is their low "bid/ask spread" — the difference between the price you pay to buy and the price you receive when you sell, assuming the same spot market price. This spread is narrow for these coins, making them one of the best bullion options to own if you're going to choose just one.
Many invest in gold and silver ETFs, but these carry the same counter-party risks as many other investments nowadays. Counterparty risk is simple: it means you are relying upon another party to make good on your investment. If they fail, for any reason, your investment is in jeopardy.
Buying silver bullion means you OWN silver bullion. When you buy a paper promise like an ETF, you may be able to track the price of metals, but do you really own anything? You’re still reliant on another party to make your investment whole when it’s time to cash your chips.
One of the main reasons to own silver is to get some insurance outside of the traditional financial systems, some real assets that you can always have if you need.
Investing in a silver ETF completely defeats the purpose of that.
If you want physical exposure to silver at today’s prices, then consider InstaVault. You can buy silver (or gold) in increments of your choosing, that can be converted to the whole product of your choosing. Once you have enough for an entire bar or coin, you can choose to have it delivered or stored in our world-class vaults.
You can see our silver pricing right here.
Until next time!