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    Should I buy .999+ Silver Bullion or 90% Silver Coins?

    Posted on October 12, 2015

    The views and opinions expressed in this article are those of the authors and do not necessarily reflect the policy or position of JM Bullion, Inc.

     

    Choosing which types of silver items to buy will depend a lot on your objectives and world views.

    PREMIUMS aka PRICE ABOVE SPOT

    Many silver buyers still prefer 90% Constitutional Silver because during times of low-to-normal public bullion demand, these older, circulated silver coins typically carry lower premiums in comparison to other forms of modern bullion (especially .999+ Sovereign Silver Coins, which tend to carry the highest premiums of all).

    Below is an overview of current melt values of some of the 90% silver coins which used to circulate within the USA.

    melt values

    SOURCE: Coinflation.com

     

    In recent years, as the bullion market has traded at normal supply-and-demand rates, 90% Constitutional Silver trades at about 10% above silver’s spot price while .999 American Silver Eagle Coins trade at about 15% above silver’s spot price.

    Recently, though, both 90% Silver Coin & .999 American Silver Eagle Coin premiums have roughly doubled in size.

    See the following 2 charts below for a perspective on these items’ recent price-over-spot escalations:

    90-silver 

    silverchart 

    SOURCE: http://goo.gl/fpsD9j

     

     

    100% PRIVACY or IRS 1099 REPORTED?

    According to current IRS silver and gold dealer reporting requirements, every sovereign .999+ Silver Bullion Coin struck by a government mint is exempt from dealer reporting. This means you or I could theoretically sell millions of ounces of American Silver Eagle coins, Canadian Silver Maple Leaf coins, Australian Silver Kangaroo coins, etc. … and the bullion dealer would not have to report the transaction to the IRS (this privacy exemption, of course, doesn’t exempt individual investors from declaring any capital gains on their personal income tax statements).

    On the other hand, when one sells large volumes of privately minted bullion rounds, bullion bars, and/or $1,000 face bags of 90% Silver Coins, dealers are required to fill out the IRS 1099B form informing the powers that be of the transaction.

    You can learn more on bullion buying and selling privacy facts here.

     

    FOR BARTER or HIGHEST BID PRICE?

    Your decisions on which types of silver to buy may also depend a lot on your ultimate goal.

    Are you looking to hold silver to use for direct trade, or are you speculating silver will appreciate in value in the future and hope to ultimately trade it for other investments, for instance, real estate, businesses, or equities?

    In terms of silver for barter, some survivalist “preppers” imagine future scenarios where the financial system completely breaks down. Many buy 90% Silver dimes, for instance, to enhance their ability to trade in what I believe is an unlikely long-term scenario.

    Some simply buy 90% Constitutional Silver coins because they find these older coins aesthetically pleasing.

    I suggest investors take heed to the fact we are facing a potential real world shortage of investment grade .999+ silver, which is absolutely imperative by the world’s manufacturing industries to make electronic items, medicines, solar panels, etc. Industry must have .999 fine silver, whereas 90% silver needs to be refined.

    In the last 1980 silver bull market, if you brought junk or scrap silver to a coin shop that wasn’t exchange-ready (for example, COMEX-approved), first you would wait in line for hours, and then be lucky to get a bid price offer near $30 an ounce. Back then, investors got nowhere near the 1980 record of just over $50 an ounce unless they had old, privately minted, .999 fine silver bullion bars, like Engelhard or Johnson Matthey (note: back then, gov’t mints were not striking millions of .999 fine silver bullion coins like they do today; in fact the 22k gold South African Krugerrand coin was one of the only gov’t bullion coins being struck).

    For example, Robert Mish, a coin dealer who worked in the last silver bull market in 1980, gave vastly lower bid prices for non-exchange-ready silver (items which were not .999 fine, like old 90% silver coins or silverware).

    dialog

    SOURCE: http://goo.gl/Wkq5oe

     

     

    If you’re looking to hold silver bullion items for long-term value appreciation, I suggest a varying mix of .999+ Sovereign Silver Coins and some well-respected Silver Bullion Round/Bar hallmarks.

    What mix?

    Well that ultimately depends on your privacy objectives versus your aversion to paying higher premiums or prices above silver spot.

    If privacy doesn’t matter to you, you may simply want to get the lowest-cost privately minted bullion bars/rounds available.

    Trustworthy private bullion hallmarks with the largest two-way markets include some of the following private mint brands (in no particular order):

    Sunshine Mint, Johnson Matthey, Credit Suisse, Valcambi, Ohio Precious Metals (OPM), SilverTowne, Heraeus, NTR, Engelhard, Rand Refinery, Degussa, Pan American, Scotiabank, Geiger Mint, A-Mark, PAMP Suisse, Asahi

     

    BOTTOM LINE

    Ultimately granny and grandaddy’s 90% silver pocket change is nostalgic and, certainly, Constitutional. But given the current rules of the game, and the fact that real world products demand .999 investment-grade silver, I allocate the vast majority of my silver bullion buying between .999+ sovereign silver coins and highly respected, private mint hallmarks of silver bullion bars/rounds.

    Until next time, all the best to you and yours.

    james 

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    Research provided by James Anderson on behalf of JMBullion.com.

    All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.