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Silver

By Edited Aug 11, 2015 1 0

Silver is used as an industrial metal, in making jewelry, for serving utensils, and as a decorative plating material. Silver is also used in making coins and as an investment. Silver is sometimes referred to as "poor man's gold" since it costs less than the same weight of gold.

Silver makes an interesting investment play for people who would like to participate in the precious metals arena but can't really afford to purchase large amounts of Gold or Platinum. Silver is a tangible asset. It is something you can hold and look at. It has weight and takes up space.

Throughout history, U.S. currency coins have used silver in varying amounts. Prior to 1965, U.S. silver coins (half-dollars, quarters and dimes) contained 90% silver. From 1965 to 1970 half-dollars still contained 40%. After 1970, coins (except for half-collars) did not contain silver. Beginning in 1986, the U.S. mint began minting silver bullion coins. Bullion coins are coins that are made as a mechanism to own the underlying metal. That is, if you buy a 1 oz. coin, the value of the coin is based on the amount of silver in it, and it will be more than the face value of the coin.

Small investors who are interested in purchasing silver as part of their portfolio can purchase the actual metal, or they can purchase stocks in silver mining companies and other related ventures. It is relatively easy and low cost to get started purchasing silver for investment purposes. If you are interested in actually possessing the metal itself, the small scale silver investor is typically best off to purchase silver bullion in the form of coins (either 90% silver coins or bullion coins) or silver bars.

American Silver Eagles are bullion coins that are made from .999% pure silver. Each silver eagle contains 1 troy ounce of metallic silver. Though a silver eagle has a face value of $1, the price for the coin is higher than that, because the value of the metal is worth more than that.

You can also purchase silver in the form of ingots or bars. Silver bars are available in many different sizes ranging from 1 oz. through 1000 oz. A common size is the 10 oz. bar and the 100 oz. bar.

Bullion coins and bars are purchased based on the current price for silver. Beyond the price of the silver, there is also a premium charge, so it is wise to compare prices between dealers. Some people say that coins are somewhat more liquid (easy to sell) than bars, so that is a factor to keep in mind. Also, if you have silver coins, it is easier to sell a portion of your holdings by selling a few coins than to try to sell a partial bar if you only have large bars. Keep in mind that premiums can add up, so it might be significantly less overall cost to purchase a 10 oz. bar than 10 1 oz. bullion coins.

Silver bullion coins can be purchased at coin dealers, and at many banks. Bars can be purchased from dealers. The most important consideration on where to buy your silver is the reputation of the dealer. The secondary consideration is the price. Some dealers will also guarantee that they will buy your silver back from you if you decide to sell. Keep in mind that the price of silver fluctuates, so you could gain or lose money on your investment at any time.

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