How to Buy Silver Coins

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Silver is one of the hottest investments this year, leading many investors to ask how to buy silver coins before the white metal soars to new highs.

Indeed, investors have been buying silver coins at such a rapid pace, the U.S. Mint announced Jan. 17 it had sold out of 2013-dated American Silver Eagles – just 10 days after opening sales to authorized dealers.

Opening day sales for the hugely popular bullion coins on Jan. 7 hit a record 3,937,000 coins. The tally of total sales over the 10 days the coins were available exceeded 6 million.

Sales resumed Jan. 28 after the Mint replenished its inventory, but on an allocated basis with limited orders. The Mint used the same method in 2009 and 2010 when demand among people buying silver coins also outstripped supply.

The Mint's early run on the bullion coins – bought as an investment, as a hedge against inflation and as a store of wealth – underscores a growing frenzy for silver.

That's why we asked Money Morning Executive Editor William Patalon III to explain how to buy silver coins.

In the accompanying video he outlined the three ways to buy silver coins: the right way, the wrong way and the intriguing way. 

Now's the Time to Buy Silver Coins

Contributing to the robust demand for the Eagles were a lot of rumblings about tighter supplies of physical silver, mounting fears of inflation and concerns about loose global monetary policies, which have devalued currencies around the globe.

Investors have also turned to other silver price plays. In the first half of January, the iShares Silver Trust ETF (NYSE: SLV), the biggest silver exchanged-traded product, sold more silver than it has in any two-week span over the past five years.

One of the reasons that now's a good time to buy silver and silver coins is the alluring entry point. The white metal has slipped about 9% this year.  

After peaking at $49.79 in April 2011, silver prices began 2013 at around $30 an ounce. But that price is a bargain compared to what's ahead…

According to data compiled from Bloomberg, based on the median estimate of 49 analysts, silver is expected to rise as much as 30% to $40.25 an ounce this year.

The recent weakness in silver – and its sister metal, gold – "has created a great opportunity for true contrarian investors" to add to their positions, according to Money Morning Global Resources Specialist Peter Krauth.

Silver's appeal remains strong worldwide.

Global bullion dealers report healthy demand for the metal. The shift in many Asian and Middle Eastern markets from gold to silver, due to silver's less-expensive price and undervaluation versus gold, has also stoked demand.

"With silver, you can benefit from both sides: its safe-haven status and the fact that it's also an industrial commodity. Given some positive leading indicators, especially in the U.S., investors would probably prefer turning to silver rather than to gold," Frederique Dubrion, president and chief investment officer of Geneva-based Blue Star Advisors SA, told Bloomberg.

And silver's widely used for industrial applications, increasing its demand. About 53% of the white metal is used in industrial applications, including global electronics and solar power, reports the Silver Institute.

For more information on buying silver, check out Peter Krauth's silver price forecast.

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  1. Jim | March 5, 2013

    Very nice overview of how to buy silver coins.

    • (Admin) Bill Patalon | March 8, 2013

      Dear Jim:

      Thank you for taking the time to post this note. This was a pure "service" piece … meaning it's one that we did just to benefit (and hopefully help) our readers.

      Make no mistake … we're in business to make money.

      But we also believe that part of our mandate is to help educate those who are new to investing, and to provide helpful insights to those who are veterans.

      However that might apply to you, I'm glad that you found this package of information useful.

      May good fortune find and then follow you, Jim — now and always.

      William Patalon III
      Executive Editor
      Private Briefing and Money Morning

  2. fallingman | March 5, 2013

    Exactly. Junk. Ask for dimes. Thanks for this Mr. P. You've done your readers a great service.

    Some additional info. Most dealers quote $1,000 face bags. These contain either 4,000 quarters or 10,000 dimes. That's 715-720 ounces of silver. Most dealers will sell you half bags or $100 face bags for an additional flat fee of $10 or so. I think it's worth it to have smaller bags. Gives you more flexibility.

    Don't confuse $1,000 face value with 1,000 ounces of silver. $1 worth of quarters or dimes contains .72 ounces. $1,000 face = 720 ounces and these are circulated coins, so minus the wear, but they trade as bags not on a specific amount of silver content. I mention this so you know how many ounces you have.

    Eagles and other bullion coins are nice, but the premia over are larger and you'll want the smallest coins you can get to use for trading if it ever comes to that, which it very well may.

    Well done guys.

    • (Admin) Bill Patalon | March 8, 2013

      Fallingman … thanks very much.

      As you know from our past exchanges, I know that you're a straight-shooter and a fair guy, which is why I respect you and your opinions very much.

      So know that words like this coming from a reader like you are words that I value highly, and that leave us feeling like we hit the target with this package.

      I hope these words find you well.

      Respectfully yours;

      William Patalon III
      Executive Editor
      Money Morning & Private Briefing

      BTW … as a veteran writer of 30 years, allow me to send some kudos back your way … this was a singularly well-crafted post. Nicely (i.e. deftly) written.

      Well done….

    • dan | April 8, 2013

      what does $1000 face value bag of dimes cost and how do you buy them

      • Ramon | January 10, 2014

        It depends on the years, which equals the amount of silver in each coin as well as the quality and the premium you have to pay. Also, other factors you should consider beside the quality of the company are, shipping and insurance. In addition, consider if you are going through an exchange broker or local dealer. Many other factors to consider, but best of luck to you!!

    • Bill Cravens | June 6, 2013

      Glad you mentioned wear as an issue when buying circulated silver coins, FM! I'm a professional metallurgist, and when I started buying junk silver as an investment, the question of loss to wear interested me.

      To estimate the loss, I took 100 Morgan silver dollars spanning the full range of condition from "About Good" (means "Lousy" in the vernacular of the peasantry), to Mint State 65 – 70 (i.e. glitter-perfect, like just off the press). I used Morgans because, being a large coin (aim wgt. 26.73 grams), the amount lost to wear as a percentage of the total weight would be more stable than with, say, silver dimes.

      I weighed them on an inexpensie US Balance digital scale (accurate to 0.1 gram) in order to initially sort them, and then re-weighed them on an expensive lab-quality scale to four-decimal accuracy. Comparing the two sets of data indicated a near-perfect correlation (R-square= 0.978). The US Balance scale only cost about $60, so I was duly impressed with it's precision when compared to a $10,000 lab scale.

      When plotting weight vs. condition rating, I found a strong but non-linear correlation. From MS-70 down to EF-40 ("Extremely Fine"), there was a slight loss of weight (0.12 gm). From EF-40 down to AG-4, the loss rate was ten times as much; 1.2 gm. (It is common, when using measures based on human perception, to find that they are non-linear when compared to device measurements.)

      The total loss, however, from "MS" down to "AG" was only 1.32 grams (26.73 down to 25.41 grams). This works out to just under 5%. This was less than I expected, and reflects the fact that most of the initial wear on a coin is at the high spots of the surface, and these are usually localized to a small part of the toin's surface area.

      So… how to compensate for this loss when buying junk silver? The "about good" rating is a very worn coin, pretty much too far gone to have any numismatic value (unless it's an extremely rare type). If you can examine the contents of a bag of junk silver, and if you can recognize the outlines of the features at all (the bare outline of Washington's head on quarters, or Lady Liberty on "Mercury" dimes) then you can rest assured that the coins probably have at least 95% of their original weight. On the high side, you probably won't find many coins in a "junk bag" that rate better than "Very Fine" (VF). Coins rated "EF" and better will have been sorted out for sale to collectors at a considerable premium.

      When buying bagged junk silver based on "face value", I assume a 3% to 5% loss of weight at most. The price for junk silver is usually more than this much lower than for, say, new American Silver Eagles (which routinely carry at least a 10 to 15% premiun over junk). Hence, even with wear loss, junk silver is still a better buy for someone who is just 'buying metal".

      Of course, all of this could be avoided by buying junk silver by weight rather than face value. (Which explains why the sellers generally sell by face value rather than weight! ;)

  3. croploss | March 19, 2013

    One caution regarding junk silver coins. Many older coins ("washers") are severely worn and may contain only about 70% or less of their original weight. If you buy on face value you will pay a premium due to excessive ware. You should insist on at least a minimum weight not just face value. Worn coins are truly junk silver.

  4. SH | March 20, 2013

    Mr. Patalon, because of a computer or internet glich I am left hanging on how to buy silver coins the right way, the wrong way or the intriguing way. Its driving me crazy as I'm about to buy more silver coins/bullion. I can only hear your first five words after which the screen repeatedly feezes up.
    Can you or staff send a very brief reply on right way/wrong way or other way. I don't need a lenthy answer as I have purchased silver in recent years but need to know if I'm on the right path. I currently have some coins, new and circulated and a few bars. Thanks for you help.

    SH

    (I already receive your newsletter, signed up a week ago).

    • Editor | March 21, 2013

      SH, here's a quick rundown:

      The right way: Purchasing silver bullion coins. You can get them from the U.S. or Canadian Mints, but they will charge a big mark-up over spot price. Bill recommends going to a dealer – buy it in the aftermarket for a small markup above the spot silver price. The more coins you buy, the smaller you’ll pay.

      The wrong way: Purchasing antique or rare coins. They can be very collectible and thus valuable, but their value can be very subjective, tied to intangible factors like scarcity, rarity, content, and other factors only experts can determine. Not good for beginners!

      The intriguing way: Junk silver. Old U.S. coins minted before 1965. These have been in circulation, are worn, no collector value, but the silver content in them is high, so worth more than the face value of the coin. Dealers will sell you a junk silver bag.

      For more info, take a look at Bill's "Beginner's Guide to Physical Silver." Here's the link: http://moneymorning.com/private-briefings/a-beginners-guide-to-physical-silver/

      Hope that helps!

  5. Johnathan Lloyd | March 22, 2013

    Pushing the technical aside, placing emphasis on acquisition, preparing for piece of mind I suppose? I purchase regularly, only pure 999.99% 1/2 oz. SILVER ROUNDS. Pure SILVER not 49%, or 77% or worn or from some unknown source? I don't care if they have Fidel Castros picture on them, that is the only way I would buy quality silver. ALL of the reputable metal dealers GOV MINT, APMEX , GOLD LINE etc etc. will have access to this product in several different faces, who cares if they have ducks or dogs on the coins. Yes I pay $2.00 above spot sometimes, I don't care. I often walk in to my local GOLD Vendor, supply, whatever, and he orders for me, but I prefer to have it shipped direct to my P.O. from the source. There is coming a time where you will pay $5.00 above spot for these and the 1 oz. and 1/2 oz. Eagles. Where is the argument here? If you are smart and wise, and can read these type of reports you need to do the right thing. I wish I had 500 oz.'s of GOLD but it is too late for those tears. Move now at the price nearest your comfort zone or watch from the sidelines in fear of your financial life, and quite possibly your physical life, seriously ! This action I am speaking of is just a small sliver of the efforts my family and I are engaging in to insure that we are SAFE, what if it, what If it what ? What if nothing comes of it ? I cannot speak the true words here which I need to speak, it is too difficult to verbalize what I fear. So what if the world stabilizes and we all grow old and live happily ever after. SO BE IT. Thank the Almighty ! But He gave me a brain to use to exist. How does anyone react to what we are hearing and seeing abroad. This time is, has already been lived, WWI WWII, the Pre war and Post war periods where we had to hunker down and attempt to survive. These things were done by all of those who came before, an effort to exist and survive. HOW ABOUT THE IDEA, THE ACT OF EATING SOMETHING CALLED HOOVER SAUSAGE. A CONCOCTION OF COOKED BEANS AND VEGGIES STUFFED INTO A ROLL THEN FRIED AS MEAT. THAT WAS THE MAIN COURSE FOR MOST FAMILIES ONCE A DAY WAY BACK THEN, AND THEY WERE HAPPY TO GET IT. WE LIVE IN A MUCH MORE COMPLICATED WORLD, AN UNDERSTATEMENT RIGHT! SO HOW DO WE REACT TO WHAT WE FEEL AND SEE IS OCCURRING AROUND THE WORLD THIS VERY MOMENT. WE STAY CALM DO THE RIGHT THINGS AND SURVIVE. I HOPE AND PRAY I NEVER SEE THE LIKES OF LOS ANGELES DURING THE RIOTS WHICH ERUPTED AFTER THE R. KING VERDICTS. WE CAN ONLY HOPE WE HAVE LEARNED FROM THAT SAD SCENARIO OF HUMAN BEHAVIOR. Yet we see the Arab Spring? They are attempting to do what America did 250 years ago. Some of those countries over there in the Mid East are less that 50 years old. It is going to happen, my fear is what the big 3 or 4 will do to fill the voids. Nation Building is what it is called and it happens, and is happening as we speak. I am a American and desire to see my grandchildren enjoy the fruits of my labors but I am wise enough to see the hand writing on the wall as well. ARE YOU?

  6. bobi 596 | April 18, 2013

    to Johnathon LLoyd band others
    I really pity you Americans. You have lived and are still living way beyond your means for so long now, and it is the fault of your politicians mostly. I just hope and pray that the calamities you are about to suffer dont spread up here to Canada. I realize that we are going to suffer some, hopefully not as much. The politicians and big banks on both sides of our so far largely unguarded border are the ones at fault. I have never trusted any politician. Power inevitably corrupts. May God have mercy on us.
    bobi

    • Fred | June 5, 2013

      And what does your babble have to do with buying silver?
      I am Canadian myself, and I am getting ready to buy some Maple Leafs.
      I guess you just can't help vomiting some anti-American propaganda, so popular up here.
      Are you saying we don't have crooked polititians here in Canada?

      • icetrout | December 2, 2013

        Anti-American babble… I'm an American to the Right of Patton & have the very same sentiments about bankers & scum politicians… you sound like a shill for the FedGov…

  7. Jim | July 28, 2013

    It is now about 1 Aug 2013 – the above was written early this year it appears. How do you feel about Silver (and gold) now. Thanks.

  8. Skptk | August 14, 2013

    I feel really, really good about silver now. I've been buying for the last couple of years, mostly around $30, aiming for the dips. End of April was a joyful time. When it hit $25 I bought 3 times my usual amount; then it kept going down, and I just kept getting happier. My purpose is to have something spendable when the SHTF.

  9. Ramon | January 10, 2014

    I bought silver in 2013 and got killed. I still have it but I have lost at least 55%…ouch!!!

  10. sjas | March 4, 2014

    Im still waiting for silver to rise to $200 an oz

  11. WILLIAM HARNER | March 29, 2014

    Another important aspect of bullion buying is the tax consequences. Most people do not realize that if you buy bullion coins the profit is taxed at a higher rate – comparable to short term gains on a stock – even if you hold for years ( depending on your tax bracket, but most people buying this type of investment will be in the higher bracket I imagine ). A serious consideration should be made then regarding buying metal / mining stocks vs bullion after looking at your particular tax bracket.

    Regarding buying collectible coins – my understanding that the "confiscation threat" comes down to the percentage of cost of coin vs the content of the precious metal.

    Perhaps Bill can expand on this.

  12. rj | March 30, 2014

    why is silver tanking? slv &slw is also tanking. Manipulation???

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