Silver Investing is Not Collecting
June 20, 2011
At my online seminar last week about silver investing, it became apparent to me that there is some confusion in the minds of newcomers as to just where the line is between silver investing and coin collecting.
It is not a surprise that when you move among coin collectors that you will observe and perhaps feel some sort of pressure to do something. The reasoning would be something like, “They must know something I don’t.”
While that can be true, it also can be a waste of time and money.
Don’t get me wrong, I would like to see all silver investors become coin collectors. But I know that is a forlorn hope.
Silver investors need to stick to their script: how to buy the largest quantity of silver for the least amount of money.
Should they buy collector coins, they ask?
No. Absolutely not, unless they want to pay higher prices and take the risks all collectors take in owning something that might go out of fashion in future years.
I know why investors ask this question: Some bullion sellers point out that collector coins were not called in by the government in 1933 when other gold coins were.
Two things to keep in mind about that:
Silver was not recalled. I repeat, silver was not recalled.
Also, for gold coins, collectors were allowed to keep two examples of each collector coin.
What does this mean?
If the precedent would hold about collector coins in a seizure, that means collectors can keep their coins. But investors who have dozens or hundreds of coins will still have to turn them in even if they call them collector coins if they are all examples of the same date.
How about grading?
Collectors send coins to grading services to be graded. Should bullion coins be graded?
Only if you are looking for a nice high-grade coin for your collection.
If you check population reports by grading services you will see that for recent issues there are thousands and tens of thousands of high-grade modern coins.
How much of a premium can these common coins hold in the future?
The odds are not good.
If you are a silver investor it is not worth the up-front cost and the risk of any present premium disappearing over time with graded bullion coins.
Bottom line is stay with commonly traded bullion coins or U.S. 90 percent silver coins or silver bars and favor those that sell for the least premium over silver value.
In future, the silver is all that is going to matter for the investor anyway.
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