Here’s why we always recommend buying bullion coins like Canadian silver and gold maples 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?
What’s the Difference Between a Bullion Coin and a Numismatic Coin?
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.
Why Buy Limited Mintage Silver Coins?
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.
You may also be interested in: What Use Will Silver Coins be in New Zealand in a Currency Collapse? >>
Here’s a Possible Benefit to Buying “Semi-Numismatic” Silver Bullion Coins
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.”
Why You’re Best to Stick to Buying Bullion 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.
So overall we’d say it’s safer to stick with well know bullion coins like the silver maple leaf. That way you’re just paying for the silver content.
But from time to time we do have limited mintage coins available. To be advised when these limited mintage coins are available sign up to weekly newsletter. You’ll get the latest gold and silver news, but also access to subscriber only special deals on clearance products and limited time offers.
Read more on silver coins: Should I Buy Legal Tender (Face Value) Gold and Silver Coins? >>