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Silver Coins

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Silver Coins

The People's Store Of Wealth Throughout History

Tower of Silver Coins

Silver coins have been used by the common man to preserve his wealth since the days of the ancient Greeks. Long considered a precious metal, silver was the main vehicle of commerce throughout antiquity. The Greek tetradrachm and the Roman denarius enjoyed widespread use in Europe and the Middle East. It is no surprise that silver coins later became the monetary standard of the 19th century, when the global economy was first beginning to take shape. Since many different countries issued legal tender silver specie, it was rather easy to establish a “silver dollar” standard: Austria's Maria Theresa taler, Spain's eight reales (or Pillar dollar), and Britain's crown were all coins containing roughly the same amount of fine silver content, a standard later followed by the American silver dollar.

When the idea of “trade dollars”—international money—was being floated in the latter portion of the 19th century, it stands to reason that silver was the most obvious choice. Trusted coins like the eight reales and the taler were de facto trade dollars, as they were recognized and used by societies far flung from the issuing nation. (Reales were the preferred currency of the American colonies, while the Maria Theresa taler was the favored money of Arab traders.) This is emblematic of silver's universal appeal as money.

No matter where you go in the world, silver is recognized as intrinsically valuable. While it is among the most useful industrial metals, and is frequently used in the fabrication of jewelry and similar ornaments, the argent metal is best known for its monetary uses. Rising silver prices during the 1960s and 1970s, however, spelled the end of circulating silver coinage in virtually every corner of the globe. It vanished from money, replaced by fiat paper notes and copper-nickel tokens.

Even with the removal of silver from circulating coins, the public still demanded the white metal, now seen as a “safe haven” investment that that can help protect your wealth from the ravages of inflation. As an illustration, consider the amount of silver in a pre-1965 U.S. dime. In 1964, the last year such dimes were minted, the value of the underlying silver (.07234 troy oz, or 2.25 grams, of pure silver) was roughly equivalent to the coin's face value of 10 cents. Today, the metal in that dime is worth about $1.25.

Because inflation causes the value of commodities to rise relative to the dollar (or any fiat currency), many astute investors are now choosing to purchase silver coins as a way to safely store their wealth. Government mints annually produce silver bullion coins—highly pure, modern silver coins that are bought and traded as an investment rather than spent for their face value. In addition, there are also limited edition collectible silver coins featuring special finishes and commemorative themes that are produced for avid coin collectors. With its contemporary rebirth as an alternative investment, silver is once again in the hands of the average citizen, used as a bulwark against the debasement of our paper money.

The first silver bullion coins made for investors were introduced during the 1980s. The Chinese Silver Panda (1983), the American Silver Eagle (1986), and the Canadian Silver Maple Leaf (1989) were the first such coins to debut on the international market, following the model of South Africa's gold Krugerrand. The Perth Mint (Australia) followed with a number of bullion coins, including the Silver Kookaburra (1990), Silver Koala (2007), and the popular Chinese Lunar series (1999). Europe entered the market during the late 1990s with the Silver Britannia from the U.K. (1997) and the Vienna Silver Philharmonic from Austria (2008).

Anatomy of a Silver Coin: Government Guarantees come in all sizes

All legal tender coins are designated with a face value. In the case of bullion coins, this denomination is entirely symbolic, as the value of the coin's underlying metals far outweighs its monetary value. Ascribing a legal tender face value to a silver bullion coin is simply a mechanism for the issuing government to guarantee the authenticity of the precious metal. Moreover, because they are technically valid currency, the purchase of legal tender bullion coins is not subject to sales tax within the country of issue.

The obverse, or front, of a coin will generally include the name of the issuing country and the face of a famous leader, whether that is the reigning Queen of England, a past U.S. president, or otherwise. (This is why the obverse is called the “heads” side.) The reverse, or “tails” side, will often have a more artistic design, usually a national coat of arms or a commemorative subject. Most bullion coins also feature an edge design. The most common type of edge is reeded (serrated), but there are also coins with edge inscriptions, decorative edges, or even blank, flat edges. The origin of the edge design was a measure to deter “clipping,” or removing small bits of metal from a coin's edge in order to debase it and profit from the metal. Edge designs made signs of clipping more obvious, and such coins would not be accepted at full value.

Silver bullion coins can range in size from fractions of a troy ounce (sometimes as small as 1/10 oz) to as large as a kilogram or more. Although a wide variety of proof and special collectible coins are released each year, the standard 1 oz silver bullion coins are purchased in far greater numbers. Because premiums over spot are calculated on a per oz basis (since the spot price is expressed in terms of one oz), you can always have a good idea of how much extra you're paying over the intrinsic value of the metal, no matter how large or small.

How Silver Coins Are Sold

Silver Bullion Coins

Silver Bullion

As mentioned above, investment-grade silver bullion coins comprise the largest segment of the silver coin market. Bulk purchases can be made for mint tubes of twenty or twenty-five coins or mint-sealed “Monster Boxes” of 500 coins. Buyers of these coins are generally only interested in adding government-guaranteed silver to their holdings, and thus these coins are priced close to the melt value (or spot price) of their silver content. Bullion coins are produced by many of the world's leading government mints, giving investors several different options to choose from.

Proof Silver Coins

Proof/Collectible

Hundreds of special proof and collectible silver coin designs are made every year. These can range from new issues within an annual series, to limited edition series that may run for only a couple of years, to one-time commemoratives. These coins utilize special minting techniques and may include extra treatments such as embedded gemstones or mint-applied colors. The most common special device is the proof finish, which imparts a mirror-like background and frosting effect to the coin. Collectible silver coins carry premiums above those for generic bullion as a result of both their limited numbers and the expense of the extra labor needed to mint them.

Old Silver And Junk Silver Coins

Old/Junk Silver

Some people prefer to buy the antique silver coins which circulated as currency in the past. Depending on the country of origin, these coins will be about 90% pure silver. (Pre-1965 U.S. silver coins are almost always 90% pure, while many Canadian coins are 80% pure, and Britain used 92.5% pure sterling silver.) Worn, damaged, and otherwise unappealing examples of these old coins are purchased not for their antique or collectible value (which, due to their poor condition, is zilch) but for their silver content. Colloquially, these coins are known as “junk silver.” Gainesville Coins carries old circulated silver currency from many nations around the globe, from Europe to Latin America to Asia.

Silver in Self-Directed IRA

Ira Eligible

You can include precious metals in your retirement plans by opening a self-directed IRA. Uncirculated government-minted silver coins of .999 fineness or better from many countries can be included. Bullion from COMEX, NYMEX, and LBMA-certified "Good Delivery" companies, as well as from ISO 9001:2008-certified refiners, are eligible for inclusion in your precious metals IRA. For more information about how to start a new self-directed IRA or rollover an existing IRA, call us at (813) 482-9300.

Date Modified: November 21th, 2014

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