What is Fine Silver?

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Investing in fine silver is popular as a way to diversify portfolios and act as a hedge against inflation. While fine silver investments take many different shapes, they share certain properties that make them investment grade. They are all constituted of fine silver, which ensures their quality.

What is Considered Fine Silver?

The system for grading silver purity is called millesimal fineness and is expressed as a decimal. Fine silver is defined by its purity. Any silver used for investment or trade on metal and commodities exchanges must be 99.9 percent pure, or .999, sometimes referred to as “three nines fine.” Investment grade fine silver is stamped with a hallmark certifying its purity.

  • Sterling silver used in jewelry, for example, has a purity of 92.5 percent. Thus, silver jewelry is often stamped with 925.
  • Silver coins minted for general circulation generally use silver with a purity of between 80 and 90 percent.
  • Only fine silver is used in silver bullion and bullion coins; only silver stamped 0.999 purity has value on the trade markets.

The Royal Canadian Mint produced a silver maple leaf coin utilizing ultra-fine silver (99.99 percent or .9999 pure), but most mints do not use such highly refined silver.

What Types of Items are Made with Fine Silver?

Fine silver is reserved for bullion investment products; it is generally considered too soft for industrial, commercial, or jewelry use. The most common forms of silver bullion are silver bullion ingots, or bars, and silver bullion coins.

Common sizes for silver bullion bars are 1 ounce, 5 ounces, 10 ounces, and 100 ounces (by far the most popular size). Silver bullion bars considered “good delivery” for international exchanges are usually 1,000 troy ounces in size.

Silver bullion coins, or rounds, are very popular for investment purposes. Coins command a higher premium over spot price because of the complexity involved in minting them and because of their value as collectibles. Unlike silver bullion bars, which can be minted anywhere in any quantity, silver bullion coins and collectibles are specific to each particular mint and issued in limited quantity, adding significantly to their value over time.

Most of the world’s large mints have a signature silver coin. The US Mint issues the American Silver Eagle, the Royal Canadian Mint issues the Silver Maple Leaf, the Royal Mint in London issues silver Britannias, for example. The Perth Mint in Australia issues a very popular Silver Kangaroo.

Non-government mints also issue silver bullion rounds. Rounds differ from coins in that rounds have no face value and cannot be used as legal tender. Private companies like the Sunshine Minting Company, the Highland Mint, and the Northwest Territory Mint all issue investment-grade silver bullion rounds.

Silver coins used in general circulation are not considered fine silver for investment purposes, but some do have value as collectibles.

How is Fine Silver Produced?

Silver is rarely found in its native nugget form; it most often occurs in various ores such as argentite and galena, a lead ore that contains a large amount of silver. Once silver has been mined from the earth, it must undergo a number of processes to be refined into fine silver.

Since most silver exists in ores and is combined with other elements, it must first be extracted using processes like electrolysis and amalgamation. When silver is extracted from lead ores, the Parkes process, a liquid-liquid extraction process is used.

Once silver has been refined to 99.9 percent purity, it is ready for use in ingots, bars, coins and rounds. Some mints make ingots in the old-fashioned way, pouring molten metal into molds. These are easily identified by their chunkier appearance and somewhat uneven finish.

Most mints, however, produce silver bullion bars using a minting technique similar to one used for making coins and rounds. Metal strips are milled using a rolling mill and then uniform pieces, or blanks, are cut from the strips. The blanks are then stamped with the mint’s design. These bars have a shiny, crisp appearance.

Silver bullion coins and rounds have a more detailed production process, which starts with an artist designing and rendering a large plaster model of the coin. The model is used to create a die that is used to stamp silver metal blanks into coins or rounds. Most mints have very intricate designs difficult to forge.

Why is Fine Silver Used in Silver Bullion?

The London Bullion Market Association, one of the premiere metal exchanges, issued a list of requirements for silver bullion that would be accepted as settlement in the London bullion exchange. These requirements, known as “Good Delivery,” specify the size, weight, markings, and fineness, or purity, for bullion bars used on the exchange. Good Delivery bars must be .999 pure at a minimum.

Good Delivery is the standard for all the major international financial markets like Zürich, Tokyo, Hong Kong, and Sydney, as well as international governments, the IMF, and central banks.

Silver bullion bars and coins have been a popular investment choice for decades. In fact, in 1977, Congress approved silver bullion for use in Individual Retirement Accounts (IRAs), and many people now hold silver bullion in their retirement assets. All of JM Bullion’s silver bars and rounds are certified as at least .999 purity in most cases and can occasionally be as high as .9999.

Some people believe silver investments are superior to other precious metals, even gold. There is a huge industrial demand for silver, which underpins its price. Mine production has failed to meet industrial and commercial demand since 1990, which drives up silver’s value.

Experienced and first-time investors alike choose fine silver because of the many different sizes of fine silver bullion bars and coins, as well as silver’s low price relative to gold. Silver bars stack neatly and are easy to handle; you can store a great deal of wealth in a relatively small space with silver bullion. Silver coins are very portable and make great gifts, too.

JM Bullion has an extensive selection of fine silver investment products, including silver bullion bars, rounds, and proof coins from the world’s finest mints. Be sure to check out our selection for your investment needs today.

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.