While no investment is guaranteed to be 100 percent safe (even FDIC insured assets may be fallible in an economic collapse), sometimes there are steps to take to better protect your investible assets.
Investing in physical metals often gets overshadowed by the paper markets. Mining stocks, futures markets, and ETFs make for quick and easy gold and silver buying options; however, this doesn’t get the hard shiny stuff into your actual possession. By buying US silver coins – whether American Eagles or pre-65 dimes, quarters, Ben Franklin half dollars, etc. – there are several layers of protection built into such an investment.
The price of silver
The spot price of silver is the level that’s often look at as the standard pricing level upon which sales and purchases of the physical metal are based. Of course a commission is typically factored into this pricing level, which can change significantly throughout the course of a day.
The problem with this form of protection is that it can fluctuate continuously and is open to volatility based upon inflation, monetary indices (the dollar, yen, euro, pound, etc.), monetary and economic policy, as well as global factors, mining production levels, and even market manipulation.
The next level of protection that works in favor of buying US silver coins is their potential for numismatic (collector’s) value over and above the value of their metal content.
Simply put, a coin’s rarity or uniqueness could inflate its worth far beyond the actual price of its silver content. Just go on eBay or to your local coin or pawn shop if you don’t believe me. You’re bound to find US silver coins that are priced substantially higher than their melt value (what the metals would be worth if you melted the coin down for its metal content). Age, rarity, how many coins of a certain year or from a particular mint were produced, flaws, and other characteristics of the coin can play a part in determining what its numismatic value is.
While I doubt that many – if any – people would purchase silver coins at 10 or 15 times or more their face value in hopes that they would one day be worth just their face value. A 90 percent silver dime worth $1.50 in silver would likely be far less appealing to an investor if it were only worth its face value – 10 cents. However, it’s the last layer of protection built into the investment, since in normal circumstances the value of the coin would never drop below its actual face value. While it might be a poor level of protection, it’s there nonetheless.
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The author is not a licensed financial or numismatic professional. This article is for informational purposes only and does not constitute advice of any kind. Calculations have not been verified by a professional. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.