Silver investment coins or bullion?
Ebeneezer
Posts: 332 ✭✭✭
While I have a rather sizable collection of U.S. coins spanning forty plus years of collecting, I am not including it as a retirement investment, opting to pass it to my heir apparent. So, that aside, and fifteen years from retirement, I am looking to add either coins such as Peace Dollars or bullion bar/rounds. Both will be included, yet I wonder which would have the greater potential. Coins tend to bring higher premiums over bullion despite being 90% versus .999 in bullion. Being a fact it would seem logical to go this route. Yet buying bullion, especially in bulk, is cheaper and should realize more long term. Am I right in this assumption? I remember buying silver from the Northwest Territorial Mint in the late nineties early 2000's at 6-7 dollars per ounce. In twenty years that doubled. The Peace and Morgans bought at or around that time seem to be about 75% above in the current market.
The one thing I do wish to avoid, and I know I'll get backlash for saying so, are American Eagles, Canadian Maple Leafs and the like. While I do have a few, as an investment I just don't see how they'd maximize my initial investment. They are already well over the spot price where as the 90% dollars are not.
Again, these are only my thoughts. Any incite to enlighten me is welcome.
Comments
Premiums change on both types of silver as time goes by, so it's hard to know in advance what will be worth more on a percentage basis in 15 years.
I consider liquidity & marketability in addition to premiums. I didn't know that silver dollars have a lower premium over spot than Eagles or Maples. Can you be specific in terms of the current premiums? What is your data telling you? What sources are you referencing?
Besides premium over spot, there is the buy-sell "spread" which may or may not negate the advantage of a lower premium. The spread also changes over time and can't be predicted. Spread can also be influenced by a particular dealer's inventory position and how the market is behaving on the day that you decide to buy or sell.
Also, the denomination and the size of a purchase both affect the premiums when both buying and selling.
Potential? As you might surmise from your experience in buying at $6 to $7, probably the largest factor in determining potential is the potential for silver itself to appreciate, more so than the actual vehicle chosen.
I knew it would happen.
I am no expert, but I believe that while the SEs etc. have a higher buy premium, they also have a higher sell premium.
Generic silver is cheapest, but may be harder to sell depending on how "generic" they are.
When 'stacking' silver... a term used generally to indicate saving as a hedge against inflation or bad times....get the best terms you can and hold for the long term....True, ASE's have a high premium... However, they are easily sold. Cheers, RickO
Silver Eagles.
Easy to sell.
Man, you need a strong back to stack much of any silver. It weighs a ton and takes up a boatload of space. Maybe use it to weigh down the bottom quarter of your safe, but then move on to something of better quality, and gold.
He who knows he has enough is rich.
Gold is a good investment for sure. However, dollar for dollar over fifteen years silver looks better. Say you buy one ounce of both Monday morning. That would be $2100 (approximate with premium) for gold and $24 for silver. Looking over both charts, in fifteen years silver would seem more likely to double than gold. Yes, weight is the down side comparatively. But I have a lot of property and know how to operate a shovel.
These are just some things I'm looking at. The reality is, in fifteen years will the market be booming and prices high? Or will they be on the downward trend as has been the case following 2012 only to level off again? It's the risk on both.
Cheap advice: Don't bury that "raw" silver in the ground.
Skip both and buy an ETF generating a monthly dividend.
I have been through two major upheavals in silver. If I had more nerve, I'd have more cash. Do you believe there will be another in the next (whatever time frame you think you have)? I like ASEs and the premium won't matter if we go through another 4X spike. I personally believe that the true industrial value of silver is $12-$14, so there's already a market premium..it's anybody's guess if we'll see another spike.
There is no good reason to buy physical when you can buy the gold or silver ETFs with no storage concerns and virtually 0 transaction costs. Also, from your statement above, I recommend that you learn a bit more about investing in general. Talk to a financial advisor.
If you are paying 2100 for an ounce of gold and 24 for an ounce of silver you are throwing money away that kind of premium will shrink with rising bullion prices and you need a 30% rise in price just to break even.
You want as small a premium as possible in something readily sold at melt. Gambling on future premiums is gambling not investing.
At best, buying physical bullion is insurance not investing. It doesn't compound or pay dividends. It almost always underperforms stocks and even bonds over long time frames
I like junk silver myself. They won't be counterfeited so you know they're silver; recognizable and accepted by many; and can be split up easily.
Actually, a lot of counterfeits will end up in junk silver. I mean 1 dime out of 10,000 isn't enough to care about, but I've found dozens of counterfeits in "junk silver" over the years - both U.S. and foreign.
Unless you already have a seven figure retirement plan ( such as Fidelity account), I think bullion hedging or expecting to make a huge return on coins is a poor investment choice being fifteen years out of retirement.
I would much rather live off the 4% rule on a seven figure retirement account than on a return in bullion stacking.
It’s fun to stack a little as an insurance policy but never have more than 10-20% in bullion in your portfolio.
IMO it is just about preference. Personally, I doubt that either will perform better than just the rise (or decline) in silver prices. With Peace Dollars you get the numismatic angle - even if the Peace dollars really have little numismatic premium. You are owning a cool piece of history. Both are very popular and liquid.
Now it just comes down to volume. With ASE's you get more silver for volume / stacking / storage. They are 1 oz pure, while the peace Dollars are only .77 silver oz per coin, so you end up taking up similar space for 23% less silver with the Dollars.
LIke others have said, if your time horizon is 15 years, the markets are the place to be.