As economic turmoil around the world continues to increase, more and more people are buying gold and silver for wealth protection. Gold and silver are insurance against currency collapse, although some people buy them as investments too. If you’re thinking about purchasing precious metals for the first time, this buyer’s guide for gold and silver will help.
When purchasing gold or silver for the first time, the two biggest questions usually are:
- Where can I buy precious metals?
- Is it better to buy gold or silver?
The answer to the first question is easy: You can buy gold and silver in coin shops, on the Internet, and from jewelers. Like anything else, you’ll need to shop around to find the best deals.
The second question is more complicated because there are many choices, each with their own set of pros and cons.
So, what to buy?
Silver comes in 90% American silver coins — better known as “junk” silver — numismatic silver, and bullion. If you want to buy gold you can buy numismatic gold currency and bullion.
Silver is more popular because of its lower purchase price; however its main drawback is that, compared to gold, you need more metal to store an equivalent amount of wealth. I buy both.
Although this won’t help you determine how much gold and silver you should own, here’s a buyer’s guide for gold and silver. It includes a list of options that will help you solidify your initial purchase strategy:
This consists of American dimes, quarters and half dollars minted prior to 1965. These coins are 90% silver and one dollar of them — for example, four quarters, or ten dimes, or one half-dollar and five dimes — weighs 0.77 troy ounces (a troy ounce equals approximately 1.1 ounces).
Pros: “Junk” silver is overlooked by many people. Many people who believe that a currency crisis is coming prefer these coins because they come in different sizes, and the risk of them being counterfeited is extremely low, which makes them an ideal choice for barter.
Cons: It isn’t 100% silver, so if you aren’t good at math it can be hard to know how much silver you have. If you aren’t careful it can get mixed in with your regular change. Not all places pay fair value on “junk” silver coins, so you have to be careful.
Comment: This is a great place to start if you want to dip your toes in the market.
Generic Silver Bullion
Generic silver bullion is produced at commercial mints and comes in “rounds” or bars of various sizes, from “fractional” rounds of less than 1 troy ounce to bars of 100 troy ounces — and even higher! It is 100% silver. Each round or bar is stamped with its weight and purity. Larger sizes usually have the lowest premiums — although there are exceptions. The largest sizes — 100 troy ounce bars, for instance — may be more difficult to sell, however.
Pros: Ounce for ounce, generic bullion is less expensive than premium bullion.
Cons: They may be slightly harder to sell or barter because some buyers prefer bullion issued by government mints.
Comment: Silver bullion is an affordable store of wealth and the preferred entry point for most first-time buyers.
Premium Silver Bullion
Premium silver bullion is 100% pure silver and is produced by government mints. Examples of premium silver include coins such as the American Eagle, Austrian Philharmonic (my favorite), Canadian Maple Leaf and Mexican Libertad.
Pros: It’s beautiful. Seriously. When bought in a roll (typically 20 coins) you can get them for a smaller premium. They may be slightly easier to sell or barter because some buyers prefer bullion issued by government mints.
Cons: Ounce for ounce, premiums are higher compared to generic silver bullion.
Comment: If appearances matter, then add some to your collection. If a dealer is offering them at a great price, then buy some. Otherwise, I suggest avoiding them because of the high premiums.
This category primarily consists of US silver dollars minted prior to 1936. They are 90% silver and weigh 0.77 troy ounces per coin. Morgan dollars were minted from 1878 to 1921. Peace dollars were minted from 1921 to 1935.
Pros: A handful of dates for both coins are very rare and valuable. Depending on their quality, numismatic silver can have high resale values.
Cons: They carry a high premium. Unless you have rare or high quality coins, dealers are reluctant to pay market value for them.
Comment: If you can get them cheap, then stock up. If you can purchase high quality rare ones at a fair price, then do it. Otherwise, leave them to coin collectors.
These are 90% gold US coins with a mint date prior to 1933. They come in different varieties and sizes.
Pros: They’re an historic addition to any collection — and they aren’t making them anymore. Extremely rare numismatic coins are worth significantly more than their gold value.
Cons: This is a large and difficult market to learn and profit from. American numismatic gold coins carry very high premiums. For those who are unfamiliar with them, it’s hard to verify the quality of a gold coin.
Comment: Don’t purchase these unless you’re a skilled collector.
Generic Gold Bullion
Commercial mints produce generic gold bullion; they come in “rounds” or bars. Like generic silver bullion, it is 100% pure. Generic gold bullion comes in many different sizes. You can buy amounts ranging from 0.5 grams all the way up to a 100 troy ounce bar. Larger sizes typically have lower premiums — although there are exceptions.
Pros: Ounce for ounce, generic bullion is less expensive than premium gold bullion.
Cons: Smaller sizes — for example, 5-gram and 1-gram bars — can carry a 25% premium, which you don’t recoup when you sell. They may be slightly harder to sell or barter because some buyers prefer bullion issued by government mints.
Comment: Gold is the ultimate store of wealth; as such, it’s intended to be held for a long time.
Premium Gold Bullion
Government mints produce premium gold bullion. Examples of premium gold include American Gold Eagles and Gold Buffalos, Canadian Gold Maple Leafs and South African Gold Krugerrands. Most of these coins come in multiple sizes. You can reduce premiums by buying larger-sized coins.
Pros: It’s beautiful. When bought in rolls you can get a smaller premium. They may be slightly easier to sell or barter because some buyers prefer bullion issued by government mints.
Cons: Ounce for ounce, the premiums are higher than generic gold bullion.
Comment: As with premium silver, if appearances matter then add these to your collection. If a dealer is selling them cheap then, buy some. Otherwise, I suggest avoiding them because of the high premiums.
Well that was a lot! I hope this primer provided you with some useful information. If you have any follow-up questions, post them below and I’ll answer them.
About the Author: Jesse Gernigin is a coin shop owner and author. He splits his time between the two in an earnest effort to help people live better lives.
Photo Credits: Lone Star Bullion; GoldenMoney; CoinWeek