COINS VS. BARS
Firstly, let's exclude gold from this discussion as coin premiums are typically very low so the choice is a far easier one. However, coin premiums in silver can range from 25% to more than 100% over spot so the decision is more problematic.
When investing in silver you must consider that you are warehousing silver today for sale at a higher price sometime in the future. Deciding the target market for the future sale has a pretty important influence in your purchasing decisions today.
Some questions you should consider are:-
Owning the products that will have the greatest demand at your exit point is important.
History suggests that investment manias are bid up by the masses. Therefore, if this occurred in silver, it is likely to be average Joe who bids up the price for your warehoused stocks, not a professional bullion dealer. What type of silver will Joe want? 1000oz (30kg) bars or 1oz coins? It seems logical to expect that Joe is going to pay the biggest premium for coins because they are recognisable, divisible, real money, transferrable, trustworthy and guaranteed in weight and purity. Most of those qualities do not apply to large bars.
This outcome was highlighted in the crisis of 2008. Despite silver bullion prices falling, a worldwide shortage of coins meant skyrocketing premiums. In Australia the 1oz silver Kookaburra coins premium jumped from 25% over spot to a near 100% premium to spot in a matter of weeks. This example highlights that coins often have two values: numismatic or scarcity premium and metal value. Silver bullion bars only have metal value.
The equation of buying silver is actually quite simple:
Obviously for these equations to hold true depends on the market conditions, supply demand and a range of other factors but generally the net financial effect of buying coins vs. bars is negligible. It really comes down to your particular goals, circumstances and preferences.
Here are some things to consider:
BULLIONMARK supports the quest to accumulate as many ounces as you can afford, but make sure they are profitable ounces.
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