What Is The Better Investment, Silver Coins or Silver Bars?

The decision to invest in silver is a solid one. Silver is a reliable way to preserve your net worth.

However, the decision about what kind of silver to buy is a bit more complicated. Though silver rounds are an option, the primary question is whether to invest in silver coins or silver bars.

This page is here to help you make that decision. So, let’s go over the different elements at play.

Purity and Authenticity

Silver Coins

Silver coins are available in a variety of purities. Some of them are 99.99% pure, but others might be 90%, 40%, or 35% pure.

However, one of the advantages of investing in silver coins over silver bars is their guaranteed authenticity. Any object designated a coin is the product of a sovereign mint and comes with the full backing of that country’s government.

It is certified to contain exactly the amount of silver it claims to bear because that’s the law of the land in which it was minted.

Silver Bars

Silver bars are almost always minted as purely as possible. Because their value is entirely a function of their silver content, mints seek to maximize the fine silver they use to make them.

Silver bars are much more likely to be the products of private mints, though. Thus, only the reputation of the company, rather than an entire nation, is in jeopardy if something is amiss.

Furthermore, it is much easier to produce counterfeit silver bars or silver-plated bars than coins, due to the fact that tampering with currency is an added layer of illegality. You may have to go to the trouble of drilling into a bar in order to be sure that it is entirely silver – an act that you would never do for a coin.

Storage and Security

Silver Coins

Storing your silver coins is a bit of a double-edged sword. On the one hand, coins are a standard size and may be significantly smaller and easier to keep than bars.

On the other hand, one of the primary drivers of value of a silver coin is its condition. So, you may have to take additional precautions to store your coins in a manner such that they do not get damaged or worn. A silver coin investment is simply not something you just throw into a drawer or the back of a safe.

Keeping your silver coins secure is roughly the same task as keeping your bars safe. However, you may be at a greater risk to thievery because silver coins are so easy to trade anonymously. So, while you’d want to keep both coins and bars under lock and key, you may have to pay closer attention to the coins.

Silver Bars

Silver bars come in a wide variety of sizes, and you may buy different-sized bars at different points in your investment journey. However, buying different sizes can present a storage challenge to you, as you may struggle to make everything fit into your repository.

Needless to say, storing a 1 oz. bar is a far simpler endeavor than storing a 1 kilo bar. For that matter, you would never have to contend with a 1 kilo coin.

In terms of security, the increased sizes might make it more difficult to keep your collection under wraps. However, you also have some flexibility in terms of the shape in which you keep your silver.

Melting and reshaping it into a more manageable form is possible, though not easy. Melting a silver coin down would be catastrophic to its value.

Liquidity of bars vs. coins

Silver Coins

Silver coins are the clear victor in terms of liquidity. It is far easier both to buy and sell silver coins than it is to buy and sell silver bars.

The only caveat to this statement, though, is that the condition of your coins matters a great deal. You are likely to spend more money to buy a silver coin than a silver bar with the same amount of silver content, and you can hurt the value and saleability of your silver coins if you don’t take care of them.

Overall, however, there is no replacing the instant understanding of value that silver coins give. Nobody questions whether a Silver Eagle or Australian Lunar is a legitimate and worthy investment.

Silver Bars

Silver bars are much harder to move than silver coins for a couple of reasons. For one thing, you may have to clear an authenticity hurdle in a way that you wouldn’t for a known silver coin.

For another thing, the pool of investors on either side of the deal is smaller. Every investor is willing to consider silver coins. Not every investor is interested in silver bars because they can be a hassle to store and resell.

Premiums on coins vs. bars

Silver Coins

As silver coins are more liquid, they command higher premiums and usually have higher costs than equivalent silver bars. Furthermore, a silver coin can have additional value to investors beyond their silver content.

A rare coin or one featuring an error can command a significantly higher price than its silver content alone would suggest. Some 90% silver half dollars regularly sell for hundreds of thousands of dollars due to their historical importance and rarity.

However, you may decide the increased premium is worth the cost because you can recoup your higher price on the backend. As mentioned, silver coins are easier to sell than bars, and you can command a larger sale if your coins are authentic and/or rare.

Silver Bars

Conversely, silver bars tend to have a lower premium than silver coins. The entirety of their value is their mass multiplied by the spot price and whatever premium the dealer is charging (or offering, if you’re selling).

Actually, you can magnify the lower premium and per-unit savings on your silver bars if you are willing to buy in bulk. A 1 kilo silver bar is far less expensive to buy than 1000 separate 1 oz bars.

If you want to maximize the tonnage of silver under your command, there is no question that you need to invest in bars. Otherwise, you may be leaving money on the table.

Are there any differences between silver coins and bars in terms of market trends?

Generally, no. Almost all silver products move according to the overall silver market and its spot price. Even coins, which also trade based on their collectability, rarity, historical significance, and popularity, use the spot price as the basis for their value.

Are there any differences in tax considerations?

No. Although states vary in how they handle sales tax and capital gains tax, we couldn’t find any that treated silver coin purchases or sales differently than silver bar purchases or sales. Both federally and on the state level, silver coins and bars fall into the same basket.

Does the choice matter for diversification?

Only in terms of the different liquidities. If having silver as part of your portfolio is as far as your investment goals go, then it won’t matter if you choose coins or bars. The only way it might matter is if you need to juggle the liquidity of your silver assets against the liquidity of the other items in your investment folder.

Conclusion

The truth of the matter is that there is no wrong answer with either silver coins or bars. You are not making a bad choice with either one, and many investors have both types of silver products.

In general, though, silver bars appeal to the kind of person who wants to pump up the amount of silver that they own as quickly as possible. The exact format of the silver is less important, so long as they are diversifying their portfolio with precious metals.

On the other hand, a silver coin investor is more interested in value. There is an element of treasure hunting associated with coins, and their increased standards of care may appeal to more meticulous investors.

No matter which camp you find calling to you, we’re here to help. JM Bullion has a wealth of knowledge and options for both silver coins and silver bars. We are available to answer any additional questions you have or help you get started with your silver investing. Feel free to contact us.