The Basics: Silver Bullion vs Silver Coins

After reading the article below, be sure to check out complementary articles Where to Buy Silver Online and Top 5 Silver Investments

There are two main ways to invest in silver.  Buying paper ETF funds or buying physical silver bullion or silver coins.  This article will cover investing in silver bullion and silver coins.

Silver is one of the most volatile of the precious metals.  It can have swings of 5% in a single day.  The current spot price of silver determines the value of many silver bullion products, and can result in drastic price changes in a 24 hour time period.  Silver investing is not for the feint of heart.

However, investing in silver can be very rewarding.  Both as a hobby, and a means to invest in a safe haven metal.  When I say safe haven metal, I am referring to precious metals that can hold value independent of the dollar; gold and silver being the most historically dominant precious metals.

When buying physical silver, there are two ways to go:

Silver Bullion:

Silver bullion is the most popular investment medium.  Bullion products are 99.9% silver and come in either rounds or bards. The majority are IRA compatible.  The most popular silver bullion product is the American Silver Eagle, but other Silver Rounds and bars are available for a slightly lower premium.  For the new investor, Silver Eagles are usually a very safe bet, but other bullion products like the Canadian Maple Leaf or Austrian Philharmonic can diversify a collection and be available for a slightly lower price.

Silver Coins:

The other investment medium is silver coins.  The United States and other countries minted silver coins for many years, until the gold standard was abandoned.  Most U.S. coins were minted with 90% silver content.  The benefit is that 90% Silver Coins are available for very low premiums and come in a variety of denominations (dimes, quarters, half dollars).  Other popular choices for investors and collectors alike are Morgan Silver Dollars and Peace Silver Dollars.  The biggest drawback of investing in silver coins is that they are not IRA compatible.  However, they are still a great investment tool and can be very liquid.  The benefit for purchasing coins is that many of them (Silver Dollars especially) have a numismatic (coin collecting) value independent of the value of silver.  This can hedge against the volatility in the silver market.