Silver Investing: The Poor Man’s Gold

Any investor with half a brain will tell you that it’s important to diversify your portfolio, meaning not putting all your eggs in one basket. One such investment that is starting to gain traction but not quite mainstream yet is Silver investing. With Gold and Platinum trading well over $1000/ounce, and Copper and Nickel trading by the pound (thus requiring a large quantity to make a difference), Silver is poised to be the metal of choice by the everyday investor with the current price around $23CDN/ounce.

Historically, precious metals do very well during financial downturns. If you are someone who believes that our current financial situation is destined for disaster at some point in the near future (I recommend reading Money Uncovered if you want to know more), you could be sitting on a goldmine (no pun intended!) if you hold precious metals.  Below I’ll go over some of my silver investing methods and tips

Circulation Coins Pre-1967

As a coin enthusiast, I have learned that Silver was the primary metal used in quarters, dimes and dollars up to 1967 in Canada. These coins contained 80% silver, making the melt value worth quite a bit more than face value ($1.37 in the dime, $3.42 in the quarter, and $13.70 in the dollar based on Oct. 2016 prices). Governments noticed the rising price of silver and began changing the coin compositions in 1968.

The rising prices did not go unnoticed by entrepreneurs as well. The Government of course were actively removing these valuable coins from circulation, but a lot were still in circulation and snatched up by people that knew the melt value. Today, you will be hard pressed to find any of these coins in circulation, but it does happen. Every once in a while I will find a quarter or dime, but it’s been a few years now since I have.

After you’ve ransacked grandma’s house, the best place to get pre-1967 coins is eBay. EBay has an entire category dedicated to Canadian coins and there are a lot of people who buy and sell on here daily. Look for larger lots, as you will most likely pay less of a premium per coin over the melt value. Chances are very slim that you will find an auction selling for less than melt value, but it does happen as I documented in this post. Be aware that silver prices go up and down daily, so keep up to date on the values per coin before you dive in.

1 Oz. Silver Coins

For silver investing, the best bang for your buck (ie. Lowest premiums per oz.) is will 1 Oz. Silver coins direct from the mint. In Canada they are called Silver Maple Leafs and in the US they are called Silver American Eagles. These coins are one Troy Ounce and are 99.999% pure silver bullion. You will not find a more pure source of silver anywhere. As I mentioned, these coins offer the best bang for your buck because you will generally pay less of a premium per ounce. Typically (as of Oct. 2016) you should be able to purchase a 1 Oz. Silver Maple Leaf for $27 to $28.

Keep in mind that you are purchasing these coins for the silver value, not the numismatic value. You want to buy just the plain Silver Maple Leafs. Don’t get caught up in special editions or the ones with privy marks. If you’re paying more than $28/ounce of silver you are paying too much. Buying in bulk often cuts down on costs as well so save up your money to make larger purchases in order to get lower coin prices and in most cases free shipping.

The best places to buy these coins are from reputable coin dealers such as Colonial Acres and SilverGoldBull. EBay is also a good choice to check out, but don’t get caught up in auction fever!

Sterling Silver

I personally have not tried this method of silver investing, so make sure you do your due diligence before purchasing anything.

Sterling Silver is a popular choice for jewellery and silverware (obviously!). Sterling Silver consists of 92.5% pure silver and 7.5% copper. The copper is added as a strengthening agent to make the silverware and jewellery more rigid.

The best places to find these sorts of items would be Kijiji and yard sales. On silverware, look for Hallmarks denoting it is made of Sterling Silver. It may also be smart to bring a scale with you to weigh each individual item. Say a Sterling Silver fork weighs 24 grams (or .7137 Troy ounces). If you multiply that by .925 for the silver content then multiply again by 22.88 for the spot price, you have a value of $16.33 for that fork in silver content.

In terms of silver investing, you may have the best chance of picking something up for under the spot price of silver with Sterling Silver flatware, but it can be difficult to be sure that it is genuine. Personally I would say the older the better, look for genuine ware, and also look for Hallmarks that should be there for Sterling Silver flatware.