How to Buy Silver Coins

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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