Bullion Coins: Silver Investment Strategy For Beginners

Silver bullion coins are a popular way to invest in silver, but is it a good investment? Silver is widely considered a safe-haven asset, similar to gold, and can be a good investment option in times of economic or political turmoil. Silver is also a good option for investors looking for an affordable entrance into the precious metals market. However, silver is a volatile investment option and is subject to market fluctuations.

Silver bullion coins are not legal tender

The term "legal tender" is used to describe a specific type of coin, minted by official sources, and recognised by a legal system as currency. Legal tender coins are often of a higher purity than those produced by private mints, and their reputation and recognisability can make them easier to sell.

In some countries, legal tender bullion is exempt from capital gains tax, and there may be sales tax advantages. Commemorative coins, however, may not be legal tender, even if they are minted by official sources and carry a face value.

Silver is a safe-haven asset

Safe-haven investments are expected to retain or increase in value during turbulent market conditions. They are uncorrelated or negatively correlated to the general market during times of distress. Precious metals, including silver, have been identified as safe havens in the past.

Silver has historically been a safe-haven asset, with investors flocking to the precious metal in times of economic and political turmoil. Silver is also seen as a hedge against inflation and a cushion against declines in purchasing power over the long term.

Silver's safe-haven status is further supported by its role as a critical industrial commodity with indispensable utility. It is the best conductor of heat and electricity and has unique reflective properties, making it essential for solar power.

Additionally, silver is often viewed as a "poor man's gold," offering a more affordable entrance to the precious metals market. It is more flexible and divisible than gold, making it a practical and versatile investment, particularly for everyday investors who need flexibility.

However, it is important to note that even safe-haven assets like silver can be subject to collapse during severe crises, as seen during the coronavirus pandemic.

Silver is a tangible asset

Silver is a highly desirable tangible asset due to its affordability and diversification potential. Silver is much cheaper than gold, making it more accessible to investors looking for an affordable entry point into the precious metals market. Silver is also a “critical industrial commodity" with "unparalleled utility", according to the Silver Institute. Its unique chemical properties, such as being a strong thermal and electrical conductor, make it indispensable in electronics, automobiles, mirrors, water purifiers, solar panels, and electric vehicles.

Silver's industrial use is expected to increase with the energy transition away from fossil fuels, creating a new source of demand. This makes silver a good hedge against inflation. Over the very long term, silver has historically served as an effective hedge against inflation. Since 1915, the inflation-adjusted price of silver has risen more than 40%.

Silver is also a good investment because of its finite supply. According to the Silver Institute, more than 95% of the silver mined throughout history is gone forever due to industrial use, unlike gold, of which most of the gold mined throughout history still exists in one form or another.

Silver bullion coins are a popular way to invest in silver. They are available in various finishes, such as Brilliant Uncirculated (BU) or Proof, and in a range of designs. Silver coins from sovereign mints are particularly sought after due to their government backing and guaranteed silver content.

However, it is important to note that there are risks associated with investing in silver bullion coins or any other form of physical silver. These include the danger of theft, illiquidity, and high premiums.

Silver is cheaper and more flexible than gold

Silver bullion coins are a good investment for those looking for an affordable entrance to the precious metals market. Silver is significantly cheaper than gold bullion, making it more accessible to investors. This also makes it easier for investors to build up a portfolio over time.

Silver's lower price point also makes it more divisible, giving investors the flexibility to convert smaller portions of their precious metals into currency when needed. For example, selling a portion of an ounce of gold bullion can be challenging, just as breaking a $100 bill can be difficult. In contrast, silver bullion is more practical and versatile, especially for everyday investors who require flexibility in their investments.

Silver also has a range of industrial applications that make it a valuable commodity. It is used in electronics, automobiles, mirrors, water purifiers, solar panels, and electric vehicles. This industrial demand can help silver act as an inflation hedge, as rising consumer prices often accompany economic growth and an increasing demand for goods that use silver.

Additionally, silver has a long history as a legal tender, having been used as such for thousands of years. This lineage lends stability to the metal, and many buyers find comfort in knowing that silver has been recognised for its value throughout history.

However, it is important to note that silver is more volatile than gold, with price swings that can be two to three times greater on a given day. This volatility can present greater short-term opportunities for profit but also comes with higher risk.

Silver has higher returns than gold

Silver bullion coins are a good investment for those looking for a safe-haven asset to protect their wealth. Silver is a precious metal that is viewed as a hedge against inflation and equities in uncertain economic periods.

Silver has historically offered higher returns than gold. Since 1915, silver's inflation-adjusted price has risen by more than 40%, outpacing inflation. In comparison, gold has returned 4.87% compounded annually since 1925, only slightly above the inflation rate of 2.9% over the same period.

Silver tends to move in tandem with gold, but because it is currently worth around 1/86th the price of gold, investing in silver bullion stands to see much bigger percentage gains if the silver price goes up. Silver has outperformed gold in bull markets, making it a good option for investors looking to hedge their bets.

Silver is also more affordable than gold, making it a cost-effective way to invest in precious metals. Its lower price per ounce makes it more accessible to investors looking for an affordable entry point into the market. This flexibility can make it easier for investors to build up a portfolio over time.

Additionally, silver has higher industrial demand than gold. It is used in electronics, automobiles, mirrors, water purifiers, solar panels, and electric vehicles. This industrial demand can help silver as an inflation hedge, as rising consumer prices often accompany economic growth and increased demand for goods that use silver.

However, it is important to note that silver is more volatile than gold due to its lower liquidity and higher industrial use. Silver's price can fluctuate quite a lot in the short term, making it a riskier investment option.

In conclusion, silver bullion coins can be a good investment, particularly in uncertain economic times. Silver offers higher returns than gold and is more affordable, making it a viable option for investors looking to diversify their portfolios and take advantage of potential gains in the silver market.

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