2016 $1 American Silver Eagle MS70 PCGS

The first question to ask yourself before buying silver coins (or any others, for that matter) is whether you’re buying them for their monetary (bullion) or collectible (numismatic) value. The goals may be similar—building wealth, for example—but the tactics are quite different.

Buying for Collectability

You may choose to buy collectible coins for personal or historic reasons, and your personal goals dictate the reasons. That may simply involve collecting coins of specific dates, countries or designs with less emphasis on rarity or condition than someone collecting for value would have. On the other hand, collecting for value means knowing what’s important in determining a coin’s numismatic value. It takes specialized knowledge, and mistakes can be costly. It can also be fascinating and potentially quite rewarding, especially over the long term. Just like collecting artwork or beer cans, the more you know, the better you’ll do.

Buying for Monetary Value

Silver and gold coins used to be used in everyday commerce. Their value reflected the amount of bullion they contained. A silver dollar had roughly a dollar’s worth of silver in it. But that all changed when currencies were decoupled from the value of bullion in the 1960s and 70s. Today, a pre-1936 90% bullion U.S. silver dollar is worth nearly $14.00 for its silver alone. That holds true proportionately for lower denomination coins, as well. For instance, a silver dime has about $1.30 worth of silver in it at today’s silver price.

Buy Old or Buy New?

If bullion (monetary) value is all you’re interested in, it doesn’t really matter how you acquire silver other than the convenience, both in storing and in using it. Bags of old U.S. silver coins with no numismatic value—called “junk silver”—are readily available in all denominations. The U.S. Mint also makes fresh, new silver coins available as both bullion and as collectibles. While the collectible ones carry a significant premium (markup) over their silver content, 99.9% bullion coins are sold through dealers at a much lower premium. But old or new, bullion buyers are less concerned about the coin’s condition than its silver content. They buy based on their goals. Some of those are listed below.

Buying Bullion for a Purpose

There are several reasons one may choose to buy bullion. They include:

• Appreciation: Silver, like other commodities, is actively traded, and its price varies due to market fluctuations. Buying for appreciation involves some risk, but over the long term—sometimes a very long term—it has usually proved profitable.

• Speculation: Speculative buying presumes you can time short term market swings and take advantage of them. It’s risky and takes a deep pocket plus lots of nerve.

• Hedging Against Inflation: As the value of the dollar drops, the price of silver generally goes up. While it’s not always directly related, many people consider silver and gold good ways to preserve wealth during inflationary periods. History has largely proved them right, but history can be a long time.

• Bartering: Trading one thing for another instead of using money or traceable payments such as checks or credit cards is popular with some people. Sometimes it’s because the person feels prices are more negotiable with tangible things; sometimes it’s because they want to keep things on the QT. Silver coins are popular because they come in many different denominations that are more in line with everyday purchases. While gold might be practical for buying a car or a house, you’d be hard pressed to find a gold coin small enough to buy a cheeseburger.

• Survival: If an apocalypse comes, whether Armageddon or a political or economic crisis, official currency may become worthless. Just ask the people in Zimbabwe or Afghanistan. That’s when having a stash of silver or gold would come in handy. And like in bartering, smaller coins are easier to use than gold or large bars of bullion, making silver coins the choice. But they also take up more room per unit of value, so storing a lot of them is a consideration. Let’s just hope it doesn’t come to that in the first place. But if having a few bags around makes you feel better, go for it.

Real vs. Unreal Coins

Coins are the official currency of a nation. They have a monetary value stamped on them along with the country of issue and nice designs. While that value may not reflect the coin’s actual worth, it’s there nonetheless. Other coin-like objects may be called coins, but are technically known as “rounds” or medals. Rounds are typically issued by private mints with specific bullion content and are meant for bullion collectors rather than numismatists. The advantage of rounds and bullion coins is that, unlike most true coins, their bullion content is clearly stated and they are easier to handle than heavy bars. Other than that, an ounce of silver is an ounce of silver, whether in a coin, a round, or a bar.

The Great American Coin Company^® offers a wide selection of silver bullion coins and bars, so check us out today!