Investing in precious metals is a smart way to diversify one's portfolio. While gold often takes the spotlight, silver is a precious metal that's increased in value dramatically over the past twenty years. It's also far more accessible than gold for those with smaller investing budgets.
Silver coins are considered the best option for investing in silver. Here are some key things to know before buying.
Set Clear Goals
Don't buy silver for the sake of buying silver. Investments should be made with clear goals, including an exit strategy for the future. It's also important to consider your proposed usage of these coins as a part of your portfolio; coin collectors will take a different approach than silver investors.
If you plan on rolling over your investment into a silver IRA, you'll have to follow a specific process with an approved seller and broker. Many new investors learn the hard way that they can't transfer silver they've purchased through other channels. In other words, if you buy silver coins yourself without an approved broker, you can't transfer that purchase to an IRA.
You must also clarify your ideal timelines. Are you looking for a shorter-term investment in which you follow the market to buy low and sell high? Or is this a long-term investment relying on growth over the decades? These considerations will factor into the overall planning process.
Understand the Risks and Rewards
Silver coins are a great investment, but they come with risks and rewards. Understading the pros and cons of silver investments will help you prepare and stay calm during inevitable marketing fluctuations.
Whereas gold tends to be stable and recession-proof, silver is more volatile. You'll often see fluctuations in the market related to economic highs and lows. There was a sharp dip in 1930-31 during the great depression, another in 2008 following the housing market crash, and another in 2022 at the dawn of the post-pandemic recession. This fluctuation creates a profitable opportunity to buy low but can be intimidating to those with low risk tolerance. Despite the fluctuations, silver will retain its value in the long run, unlike stocks.
Silver coins are a tangible asset, which can be viewed as a pro and a con. On the one hand, you'll have something physical as proof of your investment. On the other, you must store it and protect it, which can be costly. The tangibility also decreases the liquidity of silver, making it challenging to offload or secure. However, silver coins are considered the most liquid silver option.
Understand Coin Specs and Pricing
Research and learn the basics of silver pricing and coin specs. When looking at specs, consider the following:
- Composition/ purity – the percentage of silver in each coin
- Weight – in troy ounces
- Diameter and thickness – in millimeters
- Face value – original worth (a silver dollar's face value is $1)
- Mint date – years of circulation
Purity, weight, diameter, and thickness will matter the most to silver investors. The other factors are important considerations for valuable coin collectors.
You must also track silver's cost per ounce as it fluctuates regularly. Keep in mind that you'll also be responsible for fees, commissions, storage, etc. on top of the per-ounce price.
Find a Reputable Source
Working with a reputable seller is everything when investing in precious metals— even if you aren't rolling it into an IRA. Look for a reputable online dealer with proven industry experience and success. If you're interested in a precious metal IRA, work with a reputable broker, custodian, and dealer to handle the transactions.
Clarify the Inventory Destination
Most investors choose to have their inventory stored in a secure location— this is a necessity for precious metal IRAs. Even coin collectors will often secure a safety deposit box or bank-approved storage facility for their assets.
Before you purchase your silver coins, determine where the inventory will be stored. This must be decided before the transaction takes place to keep your investment secure.
It's also crucial to protect your personal information during the transaction. Don't share your banking information, social security number, or credit card information without confirming the validity of all parties.
Silver coins are a great way to diversify your portfolio and add a tangible asset to your net worth. Be cautious and strategic when investing in silver coins, and stay patient as the market fluctuates to get the best possible ROI.
