When a precious metals investor decides to “get physical”, he often begins with a silver purchase, even before getting to gold. The low price of entry (relative to other precious metals) makes a physical investment in silver possible even with a very small amount of capital. And with a first investment in physical silver, a popular choice is, of course, the silver bullion coin. But which silver coin is the most popular?
If you answered my question with “the American Silver Eagle!”, I won’t argue with you. The ASE enjoys wide popularity, accessibility and market liquidity. But there are other options, too–a plethora of them, in fact [See: 25 Ways to Invest in Silver.] We’ll consider just the silver bullion coin market, for now, though.
While the physical silver market goes far beyond APMEX, both domestically and especially internationally, the buying habits of the (large) APMEX client base could be considered as a decent proxy for the overall retail market. The APMEX Top 40 Best Sellers page lists several silver coins and rounds, along with gold, palladium and platinum products. Disregarding fractionals, the silver coins and rounds were listed in the following order, as of 5/25/2012:
- APMEX Silver Round (Legally, issues by private minters are not considered “coins” at all and must be referred to as “rounds”.)
- Silver American Eagle
- Silver Canadian Maple Leaf
- Silver Mexican Libertad
- Morgan / Peace Silver Dollar
The first coin (sorry, ’round’!) on the list may have surprised you. While many investors prefer to limit their coin purchases to legal tender issues (for valid reasons), APMEX has a large footprint in the retail market and thus its coins enjoy relatively good liquidity. Additionally, the APMEX Silver Round’s premium over the spot price is low, relative to that of the other silver bullion coins on the APMEX list. So if you’re a stacker trying to maximize the height and weight of your stack, the APMEX Silver Round may be the way to go.
Other, more conservative investors–such as myself–may prefer to stick mainly to the legal tender silver bullion coins, due to the stable premium and deep liquidity they enjoy. As the phrase goes, “Nobody ever got fired for buying IBM,” and in the physical silver market, the same could probably be said about the Silver American Eagle and the Silver Canadian Maple Leaf.
The low price per ounce for silver, relative to gold, does however allow it to be more easily “collected” in a multiple of issues in coin form. The pricing also makes diversification among bullion issues possible even with a small amount of capital. So if you’d like to diversify beyond the ASE, no one will blame you. As for me, as I said last week: I like bears. So give me a Silver Chinese Panda. And while we’re at it, a stack of ASE’s!
Disclosure: The author is long silver.