Historically regarded as the poor man’s gold, silver has wide uses from an investment perspective as well as for industrial purposes. Below we’ll highlight a few of the many uses of silver and discuss which silver coin investment options you should consider pursuing.
Silver’s Marketable Uses
While silver is no longer valued as an aid to photography, as pointed out in Investopedia’s Beginner’s Guide to Precious Metals, that doesn’t mean its use as an industrial metal is over. In fact, it’s quite the opposite. Much of our technological advancement is due to silver’s amazing use as a conductor, from batteries and microcircuits, to medical and industrial machines. Continued demand from emerging markets and developing nations should help to increase the need for silver for various uses such as x-rays, water purification, and solar energy.
The Silver Institute lists among the benefits of silver its use as a purifier and as a means of limiting algae and bacteria growth in water (along with chlorine buildup). Silver also helps to eliminate bacteria from household appliances, such as refrigerators and dishwashers. Additionally, silver is used alongside silicon cells to develop solar energy panels, and is also used to protect office workers in high-rise buildings as a window coating from the searing rays of the sun.
Types of Recognizable Bullion Silver Coins
For the average investor, possibly the best way to invest in silver is in the form of silver coins. It’s always advisable to buy easily recognizable items for liquidity and resale purposes. Some investors choose to speculate by making annual purchases of American silver eagles; sometimes in the form of a monster box, and re-selling them in a few years’ time for a nice profit. Per Silver Monthly’s article “The 10 Best Silver Coins for Investment,” Austrian philharmonic silver coins should also be considered. As is the case with American silver eagles, they’re considered legal tender and regularly command a premium; although less so than silver eagles. Canadian maple leaf silver coins are also a recommended silver bullion coin option and have the dual advantage of a slight increase in purity (.9999 fine), low mintage years, and high resale value. While these coins aren’t as visually appealing as the aforementioned coins, they’re highly popular among investors and collectors alike.
Differences Between Bullion and Numismatic Coins
It’s potentially dangerous to your investment dollars to ignore the differences between bullion and numismatic coins. Numismatic coins are rare coins that primarily derive their value from the age, condition, and rarity of the coin. An ill-advised touching up or cleaning of a numismatic coin, as well as improper handling, can significantly reduce the value of the numismatic coin. Bullion coins, on the other hand, derive most of their value from the metal content of the coins, and aren’t significantly devalued if they’re not in uncirculated condition. In a worst case scenario, you may be looking at the difference of just a few dollars for an off quality bullion coin.
Numismatics to Watch
The field of numismatics is flush with options available to the coin collector. Whether you’re investing in obsolete coinage, such as three cent silver pieces or twenty cent pieces, or prefer to invest in more recognizable options, such as silver dollars, there’s something for everyone. Slight variations, including the patina, coloring, alloy, denomination, cameo contrast, and mintmark all play into the value of silver coins. The NGC Price Guide is a good resource for determining coin prices, and shows the huge disparity in prices for coins based on their demand and collectible value. Distinctions such as a Morgan silver dollar minted in Carson City (CC), or a Mercury dime’s small bundle of wooden rods (fasces) that display fully separated horizontal bands (FSB), can be worth a great difference in the value of the piece.
In summary, due to its many industrial uses and demand from emerging markets, we would expect for silver to continue to perform well for the foreseeable future. For most individuals, investing in silver bullion coins is the best way to invest in silver, as the premium is relatively low, and the resale market is broad and liquid. Rather, if your primary interest in silver is primarily as a collectible, consider one of the many numismatic coin options that are available for coin collectors.