Silver Coins vs. Silver Bars
Contributed by Joshua McMorrow-Hernandez
What’s better, Silver coins or silver bars? Does one have a clear advantage over the other? Are they both advantageous to collectors and investors? Do silver coins and silver bars differ in the benefits they offer?
These are some of the burning questions to consider when buying silver coins or silver bars. We’ll examine each of these points in detail in this article.
How Do Silver Bars & Silver Coins Differ?
Silver coins and silver bars are different both in physical shape and in purpose.
Coins are, by definition, legal-tender money. Bars are made and distributed purely for their bullion merits. The government does not legally define them as money.
There are several other ways in which silver bars and silver coins differ, including:
While silver coins come in various sizes, with pieces such as the dime weighing as little as only a few grams. The vast majority of silver bars weigh in at about an ounce apiece and up, with many bars weighing a kilo. That’s 1,000 grams—or 2.205 pounds!
Coins are generally circular, while most bars are rectangular. There is no rule dictating that silver coins have to be round or that bars need to be square.
Historically, circulating United States silver coinage contains a 90% silver composition. Since the inception of the American Eagle bullion coin program in 1986, the U.S. Mint has struck silver coins that are 99.9% pure. Meanwhile, the vast majority of silver bars from the leading refineries are 99.9% pure or purer.
Designs and inscriptions
Depending on the nation that struck a given coin, silver coinage will contain a variety of inscriptions. These clarify the coin’s monetary value, the country in which it was minted, a date, and other legally mandated inscriptions. Conversely, silver bars often contain only a refinery logo and marks declaring the weight and purity of the silver content.
So, What’s Better? Silver Coins Or Silver Bars?
There’s no clear answer here because both silver coins and silver bars have their own sets of advantages.
Silver coins have fantastic crossover appeal between both investors and coin collectors. Even silver bullion coins—minted expressly for precious metals speculators—are sometimes collected.
Pre-1965 silver coins are extraordinarily collectible. This includes 90% silver dimes, quarters, half dollars, and silver dollars.
These older silver coins are often referred to as “junk silver” when grading below a threshold of Good to Fine. They are very popular with silver stackers. You find the occasional low-mintage or scarce coin in a bag of old 90% silver coins.
However, pre-1965 junk silver coins generally sell for a fair deal more than their spot value. This is known as a numismatic premium. It's the amount of money these coins sell for over their actual silver value.
In most cases, it's significantly higher than the premium on American Silver Eagles. That's because modern bullion coins generally aren't as scarce as pre-1965 silver coinage.
They do carry an advantage over silver bars, though.
Silver Eagles are still technically legal-tender money, as they have a nominal face value of $1. Even then, American Silver Eagles sell for a decent premium over spot value.
That's in part why many budget-conscious silver stackers opt for buying silver bars. This offers virtually pure silver at a smaller premium over spot than silver coins.
Silver bars are also easier to stack than coins. This is due to their rectangular dimensions and low-relief stampings.
Gram for gram, you can buy more silver for the same price when you choose bars. Moreover, due to the geometry of bars versus coins, you can fit more silver in bar form within the same vault space.
One could make the argument that, in an emergency, many people would accept silver bars in barter. This is despite the fact bars, or other types of precious metal ingots aren't legal tender money.
Resorting to a bullion-based form of barter could happen in several circumstances. It depends on the matter at hand and the philosophies of those involved with such a hypothetical transaction.
Then again, if silver prices ever plunge to historic lows (anything is possible), one safety net is no matter what coins will be worth at least face value.
If the price of silver drops to less than a dollar per ounce, suddenly, the silver in a 90% silver coin is worth less than the face value of that coin! But that’s an unlikely scenario in the 21st century.
Is There A Better Buy?
As you can see, silver coins and silver bars offer their advantages and disadvantages. So, which option is right for you?
Silver coins can be more inexpensive in the case of junk 90% silver dimes, quarters, and halves. Yet you'll get more silver for the same price if you buy it in bar form.
You can stack more silver for less money buying bars.
But silver coins guarantee the option of spending them if times ever get tough. That's something you can't easily do with silver bars.
Silver coins share at least two markets: the investor circle and the numismatic arena. Meanwhile, silver bars do claim a small share of collectors, too.
There's no "perfect" answer to the question, silver coins or silver bars?
The best buy for a particular collector or investor may be a matter of subjective preference.
Some folks would rather have silver coins. Others would prefer having silver bars.
It depends on all the weighing of pros and cons.
The only occasion when one might need to make a move toward one or the other is when purchasing bullion for an individual retirement account (IRA).
In that case, pre-1965 silver coins aren't generally accepted in an IRA. By contrast, .999-fine silver bars are permitted.
However, many popular silver bullion coins are allowed in such plans.
In that case, one must decide as to what selection is more financially prudent.
When it comes to silver investing, the hope is always to choose the product that yields the best return on investment.
Both silver coins and bars perform well in bullish bullion markets.
Those who do buy silver coins and silver bars must remember only to purchase them from reputable dealers. You should also buy the best quality within your budget.
Bear in mind that the bullion market can be a finicky matter. There is no such thing as a "guaranteed" investment. That mantra very well applies to silver, too.
Use your best knowledge and due diligence in buying low and selling high. (This involves excellent timing and a bit of good luck!)
So long as you do the proper research, silver coins and silver bars can both prove to be extraordinary investments.
Joshua McMorrow-Hernandez is a journalist, editor, and blogger who has won multiple awards from the Numismatic Literary Guild. He has also authored numerous books, including works profiling the history of the United States Mint and United States coinage.
More from the author: