Investing in physical silver can be done through buying either silver bars or silver coins. Both have their own pros and cons. Silver bars typically have lower premiums over the spot silver price, making them more cost-effective on a per-ounce basis. However, silver coins tend to be more liquid and have smaller denomination options. When deciding whether to buy silver bars or coins, investors should consider factors like premiums, liquidity, storage and personal preference. There are good arguments on both sides, so it often comes down to individual investing style and goals. Those focused strictly on maximizing ounces acquired may prefer bars, while investors who prioritize liquidity and ease of storage/transport may find coins more suitable. Strategically allocating between both bars and coins can balance these priorities
Silver bars have lower premiums over spot price
Silver bars, because they are simply shaped silver pieces without the intricate designs of coins, have lower production costs for mints and dealers. This gets passed on to investors in the form of lower premiums over the market price of silver. For example, a 10 oz silver bar may sell for $2 or $3 over spot per ounce, while popular silver coins like American Eagles have premiums around $6. This means when buying the same amount of silver, bars allow acquiring more ounces for the money compared to coins. Investors focused strictly on getting the most silver for their investment dollar will favor silver bars.
Coins offer more liquidity and denominational flexibility
On the other hand, silver coins tend to see higher demand from both investors and collectors, giving them an advantage when it comes time to sell. Dealers are easily able to buy back popular silver coins like Maples and Eagles at fair prices, while off-brand silver bars may prove tougher to resell. Additionally, silver coins are produced in smaller denominations, usually 1 oz or less, allowing for more flexibility in building a portfolio or executing transactions. Someone investing $500 for example can more readily hit their target allocation with coins rather than needing to come up with enough for a large, 10+ ounce bar.
Storage and transport considerations differ
Storing a few large silver bars may take up less overall space than the same silver value held in numerous coins. However, the large size and weight of bars also makes them more difficult to transport or conceal. Comparatively, silver coins can be easily moved and even hidden if desired. Both bars and coins should be kept in protective casings to prevent scratching or tarnishing which could negatively impact value.
Allocation between both balances priorities
There are good arguments on both sides of the silver bars versus coins debate when it comes to investing. A balanced approach holding some percentage of a silver portfolio in bars to maximize ounces acquired, and another portion in coins for their superior liquidity, provides the best of both worlds. Investors should consider their personal priorities like anticipated transaction frequency, storage constraints, desire for privacy/concealment and overall investing philosophy to determine the right bar/coin allocation mix for their needs.
In summary, silver bars typically have lower premiums over spot price, maximizing ounces acquired per dollar invested, while coins provide easier liquidity and storage. Strategically allocating a silver investment portfolio between both silver bars and coins can optimize for an investor’s specific priorities regarding premiums, transactionability, storage and overall investing style.