Silver has been considered to be a valuable precious metal worth investing in and has been mined for five thousand years or more. Geologists found that for every ounce of gold in the earth’s crust, there are 17 ounces of silver. Yet, the price parity between gold and silver is altogether different and currently stands at approximately 85:1. That means it takes nearly 75 ounces of silver to buy a single ounce of gold. While this may seem like the scales are tipping in favour of gold, in reality, it’s one of the reasons that silver appears attractive to investors who want to invest in precious metals but have limited funds to do so. So, if you think that adding silver to your investment portfolio is a good idea, then read on.
Silver prices have seen their ups and downs over time
Determining the price of silver
The price at which silver is bought or sold is called the “spot price.” Since this precious metal is traded round the clock on every major market exchange around the world, a ‘live’ price of silver is always available. The centres of silver trade today are in London and the New York Mercantile Exchange (NYME). The NYME has a division called COMEX and the spot price is determined by COMEX.
What else do I need to know…
There are two prices to consider when purchasing silver – bid price and the ask price. The bid price reflects the highest offer and the lowest offer is the ask price. However, in markets today, real supply and demand aren’t required to affect the spot price. Shifts in global currency values, rising and falling interest rates and inflation levels all have their influences on the price of silver.
Looking back over the last 20 years
Today silver is trading around the $17.00 per ounce mark. Yet, in 2010, not so long ago, the price of silver was $30.60 per ounce. When we see the cycle of movement in spot prices of silver, we can see 5-year swings that go up or down. The price of silver per ounce doubled during the period 2006-2010.
Silver appears to be hovering around the $17 an oz mark over the last two years
A close look at the chart below tells us the story of silver prices over the last 15 years since 2002. It is apparent from the chart that silver has clearly had more good years than bad. Infact, it was only 2013 – 2015 that silver took a beating and closed lower than it’s previous years percentage annual change in prices. We can see this trend repeat consecutively over these three years. The greatest fall year in 15 years is 2013, where silver fell a whopping 35.9%, followed by annual falls of 19.6% and 11.5% over 2014 and 2015 respectively. The two other years of decline were 2008 and 2011. 2008 was, of course, the great global market crash with the financial crisis spreading rapidly across the world. 2011 registered a fall of 10.2%, owing to a market correction. The previous year had seen US investors investing heavily in gold and silver to hedge against the rapid fall in the dollar’s buying power. So, when they dumped their positions in precious metals the following year, the prices crashed. In fact, when we correlate by looking at the chart below, we see that the price of silver rose in 2010 by 83%, the single highest rise in 15 years.
Interestingly, the fall in prices in 2013 saw a surge in fabrication and coin demand. Global demand for silver coins went up to 136 mn ounces in 2013, compared to 105.9 mn in 2012, while fabrication demand rose 6.3% to 865.8 mn ounces in 2013. In summary, silver prices have been through 11 good years over the last 16 years and risen at an average of 12.4% over this period. It remains a great choice as an asset class when included within a diversified portfolio with a long-term view.
Silver prices have seen 11 good years and 5 bad years over the last 16 yearsGet in touch with us to discuss your investments
If you’re considering adding silver to your investment portfolio, you can benefit hugely from a wide range of advice that’s available on our website. Our gold and silver buying guide can guide you on how to invest in silver bullion. You can also find out the latest industry news, read articles from experts and find out more about the history of this precious metal.
Watch our video, which answers a frequently asked investor question – “Should I invest in gold or silver?”
Maybe you’re interested in investing in precious metals as part of your investment portfolio. Or perhaps you’re a gold and silver coin enthusiast, or just someone who’s curious about precious metals and wants to know a bit more. Well, you’ve come to the right place. Our team of experts can guide you through your purchases in our online shop. If you just need to speak to us, we’re a phone call away. Simply dial 020 7060 9992 or email us right here.
Globally, silver is sold as per its spot prices. So, can you buy it any cheaper? Well, the only way to do that is to buy junk silver coins. These coins are often sold below their spot price, and so can be considered as one of the cheapest silver buys on the market. Although the percentage of silver in these coins often vary, investors do buy these as a form of speculation. It’s just like buying junk bonds. In this case, speculators get more silver for their money.
What are junk silver coins?
Junk silver coins are world coins with absolutely no numismatic value. Therefore, the only value it could possibly have is the value of the amount of silver it contains. The most popular coins within this category are American silver coins that were minted prior to 1965. The US government minted several coins during this period using alloys that contained silver. However, the purity of silver in these coins varied from 35 to 90 percent. So, these coins command a market value based on what is known as their ‘melt value’. Many of these coins are very attractive to investors as they present a way for them to buy silver at low prices.
“Gold & silver investment jargon explained” – Just one of our YouTube videos.
Bullion coins such as the American Silver Eagle command a ten to fifteen percent premium over the spot price. However, junk silver coins can be bought at only 1-3 percent over the spot. So, this means it’s important to identify specific junk silver coins that have no value to numismatists and also trade at low prices – just over the spot or sometimes even below.
Bags of junk silver coins need sorting to pull out 80% silver coins
Identifying the right coins
If you’re going to spend your money buying junk silver coins, you’d better get a decent amount of silver from it. What you don’t want to do is spend your money buying large amounts of base metals, which are worthless. So, the rule of thumb is to avoid coins that have 35 or 40 percent silver only. Many of these are around, so it’s important to do your research well. There are US half dollars with the head of JFK and there are wartime nickels that are simply called Jefferson war nickels. These have no value.
Unlike the US Morgan Dollar above, junk silver coins have no numismatic value
The cheapest way to buy silver
Circulated US junk silver coins are sold in assorted bags with little or no premium over the spot price. Typically these contain silver coins with varying levels of purity and can be found at different prices ranging from 100 to 1000 dollars. This is literally the cheapest way to buy silver. You can find 90% silver coins in these bags as well. However, investing in these bags requires a large amount of investment, as one cannot strike lucky by buying just one bag. Only after buying several bags can one extricate enough silver to justify the investment. Additionally, as a speculator, you would need to go through the bags and segregate the coins to identify the ones with the highest amount of silver. So, it may not be the smartest and the best way to buy silver, in spite of the prices.
Call our precious metals team to discuss your silver investments
Investing in silver coins may be attractive, but there are certain important points we need to consider first. In this article we explore “Are silver coins a good investment?”
Size and investment options
Silver coins are available in a variety of sizes. Apart from the normal sizes up to an ounce, they are now available in larger versions of 10 ounces and 1 kg. There has been speculation in the market for a while that the prices of silver are likely to go up significantly. With the spot price currently hovering around £11 per ounce, there are great profits to be made if it rises threefold. The other reason that silver is attractive to investors is that it is 85 times cheaper than gold. Gold can be prohibitively expensive for retail investors. Silver offers access to the precious metals market at an unbelievable price point.
The industrial demand for silver
Silver has a huge industrial demand. It is widely used for the manufacture of electronics, computers, solar panels, and has a range of other industrial applications. Reducing supplies of the white metal has prompted investment experts to speculate about a possible hike in prices. If you are thinking of silver coins investment and taking a calculated risk on its price, you may have to wait for at least 3 to 5 years before you can get a reasonable return.
They can be a great investment if bought in the right way at the right time. Silver is significantly undervalued compared to historical levels, so a medium to long term holding is advised to maximise returns.
Silver coins can be a great investment if the right coins are chosen
Need for liquidity and buying coins which can be resold
Your investment is only as good as its liquidity. If you cannot take advantage of the right price point in the market by selling easily and quickly, the investment is useless. Therefore, always buy silver coins with a mass appeal and avoid purchasing obscure and rare coins. Well-known coins enjoy a vibrant secondary market, which makes it much easier to sell when the time is right. 1-ounce silver coins like the silver Krugerrand is an ideal choice.
How about collectable coins?
You may be able to extract better value from your investment if you choose a collectable coin. The premiums on these coins usually rise very quickly and investing in them can be an excellent strategy to get quick returns. Likewise, a popular coin like the 1-ounce silver Britannia makes an excellent addition to your investment portfolio. It ticks all the boxes for divisibility, liquidity and collectability. So, it’s evident that investing in silver coins can be a great idea as long as you plan properly and buy the right coins which are likely to meet your investment goals.
Understand purity levels
When choosing coins, purity is an important factor. Many silver coins are available with 95.8% purity. But, if you do your research well and choose a coin like the Canadian Silver Maple Leaf, you have a coin with 99.9% purity. There can be different strategies for choosing the right silver coins for your investment. Purity, divisibility, variety and value are important considerations.
Tax advantages and efficiencies
From a tax perspective, silver coins which are legal tender in the UK will automatically be CGT free.
Prior to the UK leaving the EU, Physical Gold were the only silver dealer in the UK who could provide VAT free silver. Post-Brexit this is no longer possible. Due to the following reasons though, we are able to sell silver coins and bars at similar “all in” prices to previous:
Free delivery – we can now provide free delivery, previously this was chargeable
Reduced product range – we now provide a reduced range of silver products. This means we have negotiated better prices for the products we supply, we pass this discount on to our customers!
The overall net result is that the price difference when you buy silver coins and bars the price difference even with paying VAT is negligible and certainly competitive with other UK dealers.
We also can now accept orders for mixed gold and silver purchases, whereas previously we could only process “silver only” orders to obtain VAT free silver.
Contacting Physical Gold for Advice
Please visit the Physical Gold website for more information on how to profit from your investment in silver coins. Speak to us today on 020 7060 9992, leave an instant message or complete our contact form. We look forward to being of service and support.
When investing in any form of silver, it is recommended that you always go to a reputable broker. Lots of companies offer similar deals or services and it’s easy to be swayed by promises of deals that are more often than not too good to be true. A reputable broker will have extensive knowledge of the market and will able to properly advise you on the right investments for your requirements. Here is an idea of what to expect from a reputable broker.
Transparent pricing
A reputable broker should always be transparent about their prices. Before working with any broker, you should make sure there are no hidden costs involved as some brokers will charge extra for insurance and shipping costs. You may also want to find out what rates they charge to cover their admin costs, as well as these, can vary a great deal from broker to broker.
They know the market
If you’re planning to invest your hard-earned money on something, then you want to make sure you’re getting the best possible deal. A reputable broker will know the silver coin market inside out and will be able to tell you valuable information such as how you can make the best possible return from your investment and the most tax efficient ways to invest in silver.
They’ll act in your interest to ensure the safety of your investment
A reputable broker will ensure safe delivery of your goods by providing insured shipping and real-time tracking. They may also offer you secured storage of the goods in their own vaults or secure delivery to a vault of your choice. Some brokers may even have a physical office or premises where you can personally take delivery of the goods by arrangement. Before purchasing silver coins through a broker, you should first make sure of their policies with regards to access to your goods. For example, can you access the goods at any time? Are you able to withdraw the goods whenever you wish? These are all questions you should be asking your broker before investing with them.
1887 Queen Victoria double florin
Access to a wide range of suppliers
A reputable broker will have access to the best suppliers. As an investor, this means you will benefit from the best selection of goods at the best possible prices. At Physical Gold, for example, we offer a huge selection of silver in a variety of forms including bullion coins, semi-numismatic coins, and silver bars.
2oz silver Queen’s Beasts coin
High standard of customer support
When dealing with any broker, good customer support is essential. A reputable broker should be easy to contact whilst also being able to offer you the investment advice you need. You also may want to check that they offer some form of telephone support, particularly if you don’t have much previous experience of investing in silver.
How to check whether a broker is reputable
Before buying through any broker, you should first do a bit of background research to check that they are who they say they are and that their services are legitimate. There is a lot of bait and switch companies out there, particularly online, so you need to make sure of their authenticity. A good place to start is by checking review sites and reading what other people have said about them. If they are an established broker and have been about for some time, then they should have accrued a fair amount of reviews allowing you to make an informed decision over whether or not to go with them. The top dealers will be members of the British Numismatic Trade Association (BNTA) as well as other smaller society’s such as The Royal Numismatic Society.
Purchase silver coins through Physical Gold
Physical Gold is one of the UK’s leading dealers in gold and silver. We offer a range of tax-efficient ways to buy precious metals at market leading rates. Should you require our assistance, Physical Gold’s brokers can offer you their valuable expertise, helping you put together a portfolio of hand-picked, high-performance silver coins. To speak to one of our experienced advisers today, please give us a call on 020 7060 9992.
Live Gold Spot Price in Sterling.
Gold is one of the densest of all metals. It is a good conductor of heat and electricity. It is also soft and the most malleable and ductile of the elements; an ounce (31.1 grams; gold is weighed in troy ounces) can be beaten out to 187 square feet (about 17 square metres) in extremely thin sheets called gold leaf.
Silver Information
Live Silver Spot Price in Sterling.
Silver (Ag), chemical element, a white lustrous metal valued for its decorative beauty and electrical conductivity. Silver is located in Group 11 (Ib) and Period 5 of the periodic table, between copper (Period 4) and gold (Period 6), and its physical and chemical properties are intermediate between those two metals.
not so long ago, the price of silver was $30.60 per ounce. When we see the cycle of movement in spot prices of silver, we can see 5-year swings that go up or down. The price of silver per ounce doubled during the period 2006-2010.
