Here’s why we always recommend buying bullion coins or bars. You’ll also learn when there could be an exception to this rule.
A not uncommon question when thinking about buying silver is should I buy numismatic or collectible coins instead of your garden variety bullion coins?
A silver bullion coin is just a coin with a lower premium above the silver spot price. They are widely recognised across the globe and are readily sold and importantly bought back by dealers and refiners in just about any country where silver is bought and sold. You are really just paying for the silver content in the coin.
They include the likes of the Canadian Mint 1 Ounce Silver Maple and the US Mint 1 Ounce Silver Eagle coins.
Whereas a numismatic or collectible silver coin will generally have a price far higher than the silver spot price. Potentially hundreds or even thousands of percent above the spot price.
They will have a “limited mintage”. Meaning only a specific number of coins will be minted and they may be labelled accordingly.
To get full resale value you will need to sell the silver coin back to a knowledgeable coin dealer or collector.
Our general approach and advice is to just stick to buying bullion coins.
That way you are just paying for the silver content of the coins.
This doesn’t require any specialist knowledge or expertise to select a bullion coin, unlike a numismatic or collectible. And you don’t risk paying a far higher price than the coin may be worth.
Because if you are buying silver as wealth insurance, which is how we look at it, then you want to pay as close to the spot price of silver as possible.
So our general advice is not to buy limited mintage silver coins. Unless you have the requisite knowledge and expertise to ensure that what you are buying stacks up.
However others may and do disagree with our assessment.
Their argument is to buy what are still “bullion coins” but those with a limited mintage so they have some potential to gain in value due to scarcity. This way you are still not paying too much above the spot price, but with a possible chance of a further gain when the time comes to sell.
The Bullion Baron (an Australian website) does an excellent job of summarising this argument.
“My basic plan when buying silver bullion coins is to target those with a limited mintage which may attract growing interest over time. So rather than buying a 1 ounce silver bullion coin with a $2-3 premium over spot price (e.g. American Silver Eagle or Canadian Silver Maple, etc), I instead buy coins with a $4-7 premium over spot price (e.g. Perth Mint Silver Lunar, Kookaburra or Koala, etc) with the expectation that the premium will increase along with the coins collectibility. Here’s how it works with $5000 to spend:
Now: Spot price is $25
1: Buy 178 low premium silver coins for $28 each ($4984)
2: Buy 161 high premium silver coins for $31 each ($4991)
Future: Spot price is $50
1: Sell 178 low premium silver coins for $53 each (premium hasn’t increased)
2: Sell 161 high premium silver coins for $70 each (premium increased by $14)
The profit using option 1 is $4,450. The profit using option 2 is $6,279.
This is a pretty conservative example given some of the old Perth Mint bullion coins have attracted even larger premiums.
If spot price falls you may end up with a smaller profit or even a loss, but if you’ve selected your coins carefully then you will find the additional premium achieved provides a better buffer still than if you’d bought low premium silver coins.”
However the difficulty here for the layperson is that you still have to pick the coins which “which may attract growing interest over time”. Easier said than done we reckon.
Luckily the Bullion Baron has some thoughts on what coin may offer some potential upside.
“My next recommendation for silver bullion coin buyers is to hoover up the 2015 1oz Perth Mint Silver Kangaroo Coin. I wrote about the potential for a Perth Mint Bullion Silver Kangaroo Coin in 2014. It arrived a little later than I expected.
This is a bit of a controversial release (see this thread on Silver Stackers) as until recently the 2016 Silver Kangaroo Coin was advertised as and widely believed to be the first in the series. Little did investors know that a small run of 300,000 coins had been minted in 2015 (with a lower finesse of 99.9 & slightly different design/finish differences) with a majority of them shipped over to a coin dealer in the United States. Perth Mint have released 50,000 of the coins to local buyers directly and through their dealer network (see the release from Perth Mint here).
Perth Mint now has higher coin manufacturing capacity and the unlimited mintage 2016 Kangaroo Coin is looking to finish with sales around the 10,000,000 coin mark, far in excess of the 2015’s 300,000. I expect the 2015 Kangaroo Coin will be a ‘key date’ for the ongoing series (meaning the lowest mintage compared to any future years). It is available today at regular bullion coin prices.
To compare with another key date bullion coin… the lowest mintage in the American Silver Eagle Series (bullion) is 3,603,386 in 1996 and that coin now sells for around double spot price. I think the 2015 Silver Kangaroo could achieve a similar premium over a similar time frame if the kangaroo coin series continues and collectors become interested in completing a set. Even if you don’t buy with that sort of time frame in mind, I would be surprised if these don’t quickly achieve an additional $5-10 premium over spot within the next year or two.
If you are currently looking to buy silver bullion coins I would highly recommend you buy some of these before they sell out at bullion prices.”
As luck would have it, we currently have access to 6000 of these 2015 Silver Kangaroo coins. Another benefit is that we have them at a price that is currently similar to other unlimited mintage bullion coins such as the Canadian Silver Maple. But with more possible upside potential.
So even if they don’t achieve any of the possible gains that the Bullion Baron believes they might, these are still able to be bought at a lower price than other similar bullion coins. But you get the bonus of a possible upside due to their limited mintage.
Minimum order to buy is 500 silver coins.
Price today (as of 29 May 2016) for 1000 x 1oz Silver Kangaroos 2015 BU are $28.80 per coin or $28,800 fully insured and couriered via Fed Ex directly to you anywhere in New Zealand or Australia.
Or 500 x 1oz Perth Mint Silver Kangaroos 2015 are $14,600 ($29 per coin)
NOTE: This is currently $170 cheaper for 500 coins, than the similar Canadian Silver Maples.
Another option is to store the coins at SGPMX. Price for 1000 coins would then be = $28,400.
Or for 500 Silver Kangaroos 2015 BU = $14,400
SGPMX storage options are:
Allocated and segregated, fully insured storage facility at 0.7% per year.
Or open up your own private safe deposit box.
Contact us for more information on how to store precious metals at SGPMX in Singapore. Or if you have any further questions on these Silver Kangaroos.