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Silver Investment Methods: What Kind of Silver Bullion is Right for You?

Silver Investment Methods: What Kind of Silver Bullion is Right for You?
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Posted: 04-28-2016 04:43:00 PM

Whether you’re adding to your silver stack or just getting started, the sheer number of choices available can be overwhelming. However, once you understand the various pros and cons of each form silver bullion comes in as well as sizes and premiums, picking the right product for your situation will be a breeze. Let's get started.

What are the basic types of silver bullion and what advantages does each offer?

Typically, when you’re shopping for physical silver it will be available in three forms. These three forms are coins, bars, and rounds. The most confusion surrounds coins and rounds, so we’ll start there.

An example of a silver coin is the American Silver Eagle. Usually coins are found in circulation, so what makes this US Mint bullion product a coin? The first thing that qualifies the Silver Eagle as a coin is the fact that it is issued by a government. The second factor is that while the Silver Eagle is not intended for circulation, it does have a face value. Whether it was struck in 1986 or 2016, all Silver Eagles have a face value of $1. While you wouldn’t want to, you can legally use it as currency. These factors are what determines what is and is not a coin. That leads us to rounds.

A silver round is the same shape as a silver coin: round. However, silver rounds are not issued by the government. They are struck by private Mints, such as Sunshine Minting, Inc. Silver rounds display their metal content and fineness like the Silver Eagle, but they cannot be used as currency.

Silver bars are just what they sound like, solid bars of silver. While many silver bars come from private Mints, there are some government Mints around the world that offer silver bars such as the Royal Canadian Mint. Like rounds, bars do not have a face value. They are inscribed with their weight, purity, and typically a unique serial number.

Now that we’ve established the differences between the various forms of physical silver bullion, let’s talk about the advantages of each.

Silver coins like the American Silver Eagle and Canadian Silver Maple Leaf are popular choices for stacking. Since they are coins, they are widely recognized. The same goes for pre-1965 silver. Widely recognized silver coins such as these can easily be sold or traded when the time comes. In fact, the US government even has special reporting exemptions in place for those who sell their Silver Eagles back to coin and bullion dealers. No one is going to bat an eyelash if you want to sell or trade a roll of Silver Eagles. They’ll make you an offer and you can go from there. The trade-off is that silver coins are typically only 1 Troy ounce and can have higher premiums. We’ll discuss this soon.

Silver rounds are one of the more economical forms of silver bullion. Various sizes can be found, but 1 Troy ounce is the most common by far. Since silver rounds are issued by private Mints, they tend to have lower premiums. This means a lower total price per piece for you. However, not all silver rounds are cost-efficient. If you want to get as much silver as possible for your money, don’t assume that just because it’s a round that it’s a good buy.

Silver bars can offer the best of both worlds in the right price range. This doesn’t mean that silver bars are the right choice for you personally, you’ll have to determine that for yourself. Silver bars vary greatly in size, many are 1 Troy ounce, but 5, 10, 100, and even 1,000 ounce silver bars are common. Larger silver bars can be easier to store than a similar amount of silver coins or rounds. Premiums vary and often depend on the Mint the bar came from. Many silver bars have a unique serial number to discourage production of counterfeits and to allow the product to be authenticated.

How many ounces of silver should you buy?

The largest factor when deciding how much silver to buy is your budget. Anyone can stack silver, even if you only have $20 to start with. Aside from that, purchasing larger products or higher quantities leads to substantial savings over smaller products or lower quantities. As far as quantity, it’s a bit like anything else. The more you buy, the better the price will be per ounce. However, as the cost per ounce drops, your total price will continue to grow. As long as you can afford it, you’ll get more silver for your money by buying this way.

What are premiums and how do they work?

We know that the spot price of silver is the standard price for a Troy ounce of silver at a given time. If you take the total cost of a 1 ounce silver bullion product and subtract the current spot price from it, the number you are left with is the premium.

One of the most important things to know about premiums is that they are applied per ounce, not per item. For example, a 1 ounce silver round will have the premium applied to it once since it only weighs 1 ounce. However, a 1,000 ounce silver bar will have a premium applied to it for each of those 1,000 ounces it contains. To clarify, if a 1 ounce silver round has a premium of $2.99, the total cost of the round will be $2.99 plus spot price. If a 1,000 ounce silver bar has a premium of $1.45, the total cost of the bar will be the spot value of 1,000 ounces plus $1,450.

When you purchase a large amount of silver bullion, the money you save comes from the premium. While the total cost may be high, you’re paying a lower premium per ounce. A 1 ounce coin may have a premium of several dollars, but a large silver bar is likely to have a premium of a little over $1.

In addition to the quantity or weight of the product, the Mint of origin plays a large role in the premium as well. Products from certain Mints are just more costly than others. For example, a single American Silver Eagle will typically cost more than a single Canadian Silver Maple Leaf. Bullion products from PAMP Suisse are recognized around the world, but they usually come with high premiums.

So, now you know about the various forms of physical silver and the advantages of each. If you are looking for low premiums on a budget, check out silver rounds. If a higher level of security and ease of trade are what you seek, take a look at silver coins and some larger silver bars. Silver bars have a bit to offer everyone with their wide variety of sizes and Mints of origin.

No matter which type of silver is right for you and your needs, whether it’s large or small, a coin, a bar, or a round, MCM has what you’re looking for. Just take a few minutes and you’ll see that MCM has plenty of options that are right for you!

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About The Author

Brian Comp Jr. Brian Comp Jr. is a coin and bullion expert from Pennsylvania. He attended his first coin show at the age of 8 with his father in the late 90s. Brian has been working as a writer since 2011 and specializes in content that helps customers make good decisions. In his free time, Brian enjoys reading, checking out new coins, lifting weights, and drinking coffee. He’s always ready to answer questions, just email him at bcompjrservices@gmail.com.

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