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Best Way to Buy Silver Coins

Updated on November 22, 2011

American Silver Eagle - Best Way to Buy Silver

Diversification, Hedging and Collecting

So you are interested in purchasing government issued silver coins? Whether your reasons are for asset diversification, investing, hedging against economic uncertainties, preparing for a currency collapse, or you just like to collect them, you've come to the right place for answers on the best way to buy silver coins and bullion.

Purchasing physical silver is different than trading futures contracts because you immediately get to own the physical commodity. Whether you keep it in a safe at home, your bank's safety deposit box, or bury it in your backyard, the key is that it should be somewhere it cannot be easily taken from you. Ownership in-hand is why many prefer physical silver over "paper" silver.

Judging the best way to buy silver coins depends on a few factors, mainly your budget and your options for storage.



What Are Silver Coins?

Silver comes in many forms, from coins, bars, rounds, wire, solder, and sterling silverware. Not to be confused with silver rounds, which are silver ingots minted into circular, often reeded, coinlike shapes, stamped with images, silver coins are government issued and carry a face value, or legal tender value.

The most well-known example of a government coin is the American Silver Eagle. First minted in 1986, the American Silver Eagle, or ASE, has a face value of one dollar. But real collectors and investors know that with the price of silver between $30 and $45 per ounce, you would be silly to spend five of them on a pack of cigarettes.

Many investors and collectors prefer silver coins backed by a government because they are reliable, authentic, and guaranteed for weight and purity. This makes reselling them to coin shops and precious metal buyers easy. If the silver bullion you have is not government issued and not from a reputable maker, you could run into trouble when trying to sell.

Another benefit of having a coin with a legal tender value is that if the price of silver plummets, it will never go below the face value of the coin. While the American Silver Eagle is worth $1, many prefer the Canadian Maple Leaf silver coin, which has a face value of $5 CAD.



Types of Silver Coins

Silver coins generally come in two types: bullion grade and junk. Bullion grade coins are generally produced for their bullion (silver) value, are not intended for circulation, and are usually almost 100% pure silver. Purity is usually indicated by a notation of .999, .9999, .999+, or 999. This means the coin is almost 100% pure silver. The coin should also indicate the weight, which is usually one troy ounce (1 ozt).

Common bullion coins include the American Silver Eagle, Canadian Maple Leaf, Chinese Panda, Austrian Philharmonic, and UK Brittania.

Silver coins that were intended for circulation are commonly referred to as junk silver. Prior to 1965, many circulating coins such as the half dollar, quarter and dime contained 90% silver, also known as coin silver (sometimes denoted as .900 or 900). Many of these coins were hoarded starting in 1965 and are hard to find in circulation, but can easily be purchased.

Pure silver bullion coins generally cost more to purchase, but are usually bought back at higher prices than junk silver. For those interested in having a means to conduct business in case of a societal or currency collapse, one would do well to have a good supply of junk silver coins.



Best Ways to Buy Silver Coins

A local coin shop - most decent sized towns have a coin or collectibles dealer who likely buys and sells silver and gold coins. Before visiting, call ahead and ask about their premiums. Premiums are the amount they charge over the current spot price of silver. Before visiting and purchasing, you should know the current spot price of silver. A good place to check the POS is at kitco.com

Most successful buyers of silver bullion develop a relationship over time with their local coin shop. This can lead to better buy and sell prices, and phone calls when a desired item happens to come into the store.

A local coin shop is the best option for small purchases.

Online Coin or Bullion Dealer - Almost like visiting your local coin shop, you can browse the collections of hundreds of online coin dealers. Look for ones that have reputable appearing websites and appear in Google searches. Noted names include Gainesville Coins, Apmex, A-Mark, Scottsdale, Northwest Territorial Mint, and Sunshine Mint.

Only shop at sites that automatically refresh the price of the product as it fluctuates with spot. Make sure you are familiar with all terms before purchasing, including shipping, handling, delivery time, penalties for cancelled or unfulfilled orders, etc. You should never try to back out of a silver transaction because the price dropped after you bought. This is the mark of an amateur.

For large purchases such as monster boxes, online coin dealers can be the best bet.

Craigslist - If you are careful and diligent, you can find people selling silver items for below spot price. Always meet the seller at a public location with cameras.

Auctions - Many in person auctions have hundreds of coins, and not every one of them gets bought at a high price. Pay special attention when a local auction house has an online only auction, as the older folks who generally dominate auctions will not participate when it is online.

For more information on why physical silver is the best way to go, and the best way to buy silver coins visit MarriedWithDebt.com or check out my other article on the best type of silver to buy.

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    • Blackspaniel1 profile image

      Blackspaniel1 3 years ago

      I like your article. I would just like to say my favorite silver bullion was the Australian kookaburra and the Australian lunar coins. I do not like the koala as much. My favorite United States silver coin, and it is 0.999, is the America the Beautiful 5 ounce silver quarter, which has become my favorite silver coin. You can really see the details on the image.

      Now that Canada has taken the leadership, 0.9999, one extra 9, is the top purity that some others are matching. Yet that is really of little consequence, except to people who do not realize how little that really means.

      Great job on he hub!

    • Cache Metals profile image

      Cache Metals 5 years ago from Toronto, Ontario

      The premium will vary depending on how many ounces of silver you are purchasing. You will see many shops charge over $4 for 1 oz of silver, we do not.

      Here's an example of the pricing structure offered by a lot of dealers: https://www.cachemetals.com/store/items_large.php?...

    • marriedwithdebt profile image
      Author

      marriedwithdebt 5 years ago from Illinois

      Regarding the bullion coins, $2 over spot price is fair for a "circulated" bullion product, and $4 over spot (or more) is common for uncirculated coins right out of the Mint packaging. For junk silver like coins, they should be generally sold at or below spot price.

    • tipstoretireearly profile image

      tipstoretireearly 5 years ago from New York

      I didn't realize there's a difference in silver content between the bullion coins and pre-1965 silver coins. What can I expect as a typical premium for a local coin shop?

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