Jump to: Silver Coins and Silver Bars | Silver Coins: Pros and Cons | Silver Bars: Pros and Cons | Silver Selling Privacy Concerns | Performance During Financial Crisis | Collectibility and Appreciation | Where to Store, Buy and Sell? | FAQs
In this article, we intend to go through several advantages of buying both silver coins and bars. Further, we will explain some significant differences between the two versions of silver bullion products, together with crucial silver market aspects to consider before buying silver bars or coins.
Definition of Silver Coins and Silver Bars
First, let us start by defining both forms of silver products in the 21st Century.
Silver Coins are precious metals wafers struck in a coin format by a government mint typically stamped with a legal tender face value. Sizes may vary, but one troy ounce is the most common and widely traded. They can even be used in individual retirement accounts.
The American silver eagles are one of the most popular silver bullion coins and are IRA-approved products. The coin shows two important American symbols, Lady Liberty and the bald eagle. Its gold counterpart, Gold Eagles, is also very popular within the precious metals market and is often a common option for those looking for a sensible way to purchase gold.
Silver Bars are precious metal in the physical shape of a block, struck mostly by private mints, but also by a few select government mints, such as the Royal Canadian Mint. Typically, silver bars do not carry legal tender face values and cost less per troy ounce vs. silver coins. Both products should have a minimum fineness of 999 percent to be IRA approved.
Silver bars, just like silver rounds, are not considered legal tender money and rather have their value based mainly on their silver content, which is usually displayed on the bar itself.
The answer to which is better will often be determined by the silver buyers' investment goals.
Aside from silver bars, you might also ask yourself which is better: Silver Coins or Silver Rounds?
Silver Coins: Pros and Cons
Below we discuss some of the main reasons why investors would choose to buy silver coins.
Silver Coins: Struck & Guaranteed by Government Mints
Silver coins offer the advantage of being world-wide recognized and backed by their respective governments' mints.
Not every government mint produces bullion bars. The Royal Canadian Mint and the Perth Mint are examples of governments that produce both silver bars and coins.
Some investors prefer to buy silver coins from government mints because the authority of a government institution gives more security in the authenticity of the silver content itself and also more liquidity when selling.
National Mints that produce modern silver bullion coins include:
- US Mint
- British Royal Mint
- Chinese Mint
- Austrian Mint
- Canadian Mint
- New Zealand Mint
- Somalian Mint
- Mexican Mint
Silver Coins are Typically Legal Tender In Their Nation-State and have a face value
Governments have a monopoly on determining what is legal tender or not, and only they can issue silver coins with real face values.
Most modern silver bullion coins have low legal tender face values, which is typically much lower than the silver spot price.
Take the American silver eagles as an example. Their face value displayed on the reverse is one dollar. But the price in dollars for one ounce of silver, as of January 2024, fluctuates around $23. Therefore, you aren't really expected to spend American Eagles in your grocery shopping.
However, having a face value means that a silver product will never be worth less than its denomination. Even in the unlikely event of a widespread economic collapse, a Silver Eagle coin will still be worth at least one dollar.
Besides that, The weight and purity (99.9% pure silver) of the Silver Eagles are guaranteed by the United States. And do not forget about the design, which was specially chosen to embody the main symbols of American virtues and values.
Details such as these increase what we call the numismatic value.
Numismatic value
The numismatic value of a coin pertains to its rarity, purity, quality, and demand, as well as every aspect that will interfere with the actual price a collector will pay for the numismatic coins.
Not all silver coins are numismatic coins. In fact, most coins are mainly valued based on their precious metal content and are a form of investing in silver.
A numismatic coin, on the other hand, derives its value based on scarcity and its condition. In other words, how valuable it is to a collector. Rare coins usually fetch higher premiums because they are not only an investment but also a collectible item.
To clarify, collectible coins can have the same amount of silver as bullion coins, but because of their collectible value, they can be sold for a higher price.
Contrary to a numismatic coin, junk silver refers to pre-1965 coins that were made of 90% silver and held no collectible value; those include US Dimes, Quarters, and Half Dollars dated before 1965. Unlike numismatic coins, junk silver coins are valued primarily for their silver content rather than any collectible attributes.
Silver Bars: Pros and Cons
Silver in the bar form doesn't have the same potential numismatic value as coins but rather carries lower premiums over the spot value since their manufacturing process is cheaper, and their designs tend to be simpler.
So, what makes silver bars cheaper is the simplicity in production if compared to the high quality and complex processes coins go through.
For example, British Sovereigns and Peace Silver Dollars are popular numismatic coins that feature unique engraved imagery; silver bars, on the other hand, usually do not enjoy so much variety in designs. There are some rare vintage silver bars that are highly sought after, but this tends to happen more often with coins.
Peace Silver Dollars
Silver Bars for More Ounces Overall: Low Premiums on silver
Although there are a few exceptions, most silver bars are struck by private mints.
If your highest priority is to get the most silver weight for your money, silver bars and silver rounds are going to be a better general option over silver coins. Because premiums are typically lower, you will be able to acquire more pure silver per dollar invested.
You will yield less if you ever decide to sell bars versus silver coins. But the bid-ask spread between silver bars should be slightly tighter than government-issued bullion coins.
Silver Selling Privacy Concerns
Is selling privacy on 1,000 oz or more of silver bullion bars vital to you?
Today's current IRS silver tax facts are essential to learning.
Scroll to the second half of this IRS Silver Selling privacy page for further information.
If privacy on large silver bullion bars sales to bullion dealers is vital to you, perhaps buy silver coins over silver bars (even silver bullion rounds, too, as they get also treated like silver bars in large volume sales to silver bullion dealers).
Silver coins are just more private when sold within the USA.
Any silver capital gains or losses you might have, you will have to rectify with a tax professional regardless. We're merely making silver bullion privacy points here.
Silver Coin vs Bars Performance During Financial Crisis
To give a more recent example of how silver performs in times of crisis, after a few years of relatively stable prices, we saw, in 2020, silver prices go as far as $29. The silver market had last experienced its peak in 2012, with the prices going as high as 47$.
The explanation for the peak in 2020 is the increasing demand for different investments during the pandemic as a form of protection against the economic uncertainty that loomed as humanity entered a phenomenon that was, until then, a concept unknown to the current generation.
Check out the Silver Prices Today.
In a financial crisis, it is government-issued silver coins that enjoy the highest demand and largest pool of potential bidders. Financial crisis typically brings new silver bullion buyers to the market due to concerns over further losses in fiat currency savings or other stricken asset classes. This new pool of silver bullion buyers typically trusts government-issued silver coins first.
Pay attention to the far left side ← AND on the far right side → of the following Silver Coin price premium charts. They represent the Financial Crisis of 2008 and the start of the Covid-driven restrictions in 2020.
American Silver Eagle Coins
Canadian Maple Leaf Silver Coins
Austrian Silver Philharmonic Coins
90% Silver Coins
Over the above chart's near 15-year time frame, there were also slight silver product shortages in 2013 and 2015, respectively, hence their rise in price premiums. But those two spikes were nowhere near the financial crisis, like in late 2008 and 2020. It takes a real acute financial crisis to create silver bullion shortages.
Silver Coins vs. Bars Collectibility and Potential Product Appreciation
When it comes to holding value, lower-mintage, high-quality silver coins might be the best option.
Both the Perth Mint silver coins and Mexican Mint silver coins have become highly collectible as many of the coins they strike have hard-limited mintage populations.
This silver coin is one of the legal tender silver coins in Australia.
Where to store, buy, and sell silver coins and bars?
Secondary market - the secondary market is constituted of the private sellers selling their products in an independent way, local coin shops, or online dealers. Though it is perfectly possible to find reputable dealers online, make sure to proceed with caution and conduct proper research. Prefer established online bullion dealers to avoid scams and pitfalls. You will usually find lower premiums online than from brick-and-mortar shops.
Storage - as with any investment, purchasing silver comes with drawbacks. Before purchasing silver bars or coins, make sure to have a storage plan. You can store them in a safe deposit box, at home, or at the bank. But, if you purchase them to fund an IRA, the IRS commands you to store your silver investment in a secure and licensed third-party depository.
Final Considerations
In this article, we aimed to compare silver bullion products, as well as contribute to the debate of silver bars vs coins as a form of precious metal investing.
We learned that there is no right answer, but when it comes to prices, silver bars take the lead. However, silver coins are usually more liquid, easily recognizable, and, considering rarity, design, and condition, tend to hold numismatic value over time. Your priorities will dictate which one you should choose.
If you are also interested in buying gold bullion products, check out our article on Gold Coins vs Bars.
FAQs
Silver bullion bars vs silver coins: which is better to buy for investment?
Silver bars are cheaper than silver coins because they enjoy lower premiums over the troy ounces. Because of this, they are more affordable for the investor who is looking forward to buying silver in large amounts. However, silver coins often have a widely recognized face value and are minted by government-backed institutions, making them easily recognizable and tradable. Additionally, silver coins are often smaller in size and, thus, more accessible for smaller transactions.
What is the best form of silver to buy?
It depends on your personal investment goals. Buying silver coins can be an interesting option for those who are looking for a highly recognized and liquid asset. On the other hand, silver bars offer cheaper prices than coins, which allows the investor to purchase silver bars mainly because their price is based on the precious metals content.
Is it cheaper to buy silver bars or coins?
Within the bullion market, purchasing silver involves paying a premium over the current spot price of silver. This premium is usually a few dollars above the price of silver per ounce, and it is related to the costs involving the manufacture of the silver product. When it comes to prices, silver bars are usually less costly to produce and are a cheaper form of silver investment if compared to silver coins.
Do silver bars hold value?
The value of a silver bar, like any other precious metals investment product, is mainly based on the precious metal content. Silver, in turn, has shown to be a popular way of diversifying one's investment portfolio. Silver and other precious metals, such as physical gold, have been used since remote times as a way of currency and hold intrinsic value because of that. So, silver will never be worth nothing, and thus, silver bars will never be worth nothing.
