Silver Coins As An Investment
There are a few different ways to look at silver and specifically silver coins like the silver quarters we talk about a lot here. Some people buy silver coins as an investment, others as collectibles and still others as a form of savings.
Each approach has some slightly different reasons behind it as well as it’s potential for profit or loss -however you choose to measure that metric.
Since I don’t really know much about buying silver coins as a collectible item we won’t discuss that here but I am more familiar with buying silver for investment or savings purposes.
Buying Silver Coins as an Investment
If you are buying silver coins as an investment then you may have more of a short term outlook and/or are willing to trade in and out of the metal as the price rises and falls.
You probably should only take this approach if you have the time and inclination to keep up with the latest news in the silver market and plan to check the price daily.
There have been some pretty wild swings in the price of silver in the past couple years which gives quite a bit of opportunity for speculation and profit but you have to get the timing right and not doubt yourself too much in order to be successful with this approach.
Just in 2011 we saw the price of silver move from the low 30s per ounce up to nearly $50 per ounce and then back down to around 32 dollars and it’s current low of below $29 an ounce.
Obviously there is a lot of opportunity to pick up some cheaper silver and sell when the price rises by $10 an ounce or so.
If you have plenty of cash to work with this approach might work OK as long as you don’t find yourself in the position where you must sell your silver when the price is lower.
Silver Coins as a Form of Savings
This approach is a bit more down my line and works well if you don’t feel the need to constantly check the current price of silver but believe that over the long term the price of silver in dollar terms is trending up.
Again, you don’t want to have too much of your savings in silver such that you run short on cash and need to sell silver at an inopportune time which would cause you to lose money.
The advantage of using silver coins -or some other form of silver- as savings is that you can help protect your savings from the erosion in value you would otherwise experience due to the devaluation of the dollar.
As you may know the Federal Reserve in the United States has taken up a policy -really since it’s inception- of creating new money sometimes at a faster rate than at others but always to some extent.
This constant drip (or flood) of fresh money has resulted in a consistent fall in the value of the dollar when compared with real goods since the Federal Reserve was established in 1913.
Since governments generally follow a similar playbook when they get themselves in trouble we can look at the current financial problems of the Untied States government and expect that they will resort to more inflation, capital controls, wage and price controls and other damaging measures to try to “fix” the economic problems we are in.
Because of what we can expect from the government in the U.S. and other governments and central banks around the world we should all be interested in precious metals to some extent.
You’ll have to decide whether you view silver coins as an investment or a form of savings and proceed accordingly. Whichever decision you make owning some silver -whether silver bullion bars, Eagles or scrap silver coins- certainly seems better than owning none.