An Investor’s Guide To The American Silver Eagle Coin (SLV)

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July 3, 2012 11:55am NYSE:SLV

Stoyan Bojinov: Silver, the other precious metal, has an appeal all its own. While gold usually takes all of the glory when it comes to headlines and popularity, silver lays under the radar as one of the more unique metals on the market. Aside from its obvious draw as a precious metal,

silver also has a fair amount of practical uses in the industrial world. Though recent years have brought popular securities for silver investing, like the iShares Silver Trust (NYSEARCA:SLV) which has roughly $9 billion in total assets, the original means of silver investing, physical bullion, is still a favorite among many [see also 25 Ways To Invest In Silver].

Get Physical

Investing in physical bullion is the safest way to ensure you receive proper silver exposure. Though a number of investors are comfortable with funds like SLV, others are not so quick to trust the care of their physical bullion in the hands of complete strangers, preferring outright ownership themselves. Stocks, ETFs, and mutual funds can be impacted by factors like trading trends, technological errors, market shocks, problems with the security issuer, and so much more. Physically holding the silver in your hand means the only issue you have to worry about is how to safely store the asset [see also Jim Rogers Says: Buy Commodities Now, Or You’ll Hate Yourself Later].

There are a number of silver bars and such available for anyone willing to purchase, but because the silver comes in such large quantities, the price tag is often well above what many are willing to pay. So steps in the American Silver Eagle coin, as it cracks the silver investing world wide open. Offering one standard size, these silver circles allow investors of all net worth backgrounds to receive a fair allocation to the white metal. For many years now, investors around the country have embraced these coins as their go-to investment for proper silver exposure [see also Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk].

The American Silver Eagle Coin

According to the home website, ” American Eagle Silver Proof Coins are minted at the United States Mint at West Point bearing the “W” mint mark. American Eagle Silver Proof Coins can be purchased directly from the United States Mint until the next year’s American Eagle Silver Proof Coins are released or until all coins produced for the current year are sold, whichever comes first.” The silver eagle comes in just one size, the one ounce coin, which contains 99.9% silver. It has a face value of $1 but a current market value of about $27.50. Each coin is 1.598 inches in diameter and weighs exactly one troy ounce.

Whether you are a collector or an investor looking to make a serious allocation to protect the value of your cash, these coins offer a relatively safe option. It should be noted that there are both advantages and disadvantages to owning physical silver. On the upside, you will never have to worry about market issues, massive trades ruining your positions, or technological difficulties standing in your way. But on the opposite end of that, you do have to worry about things like liquidity. While silver will likely never lose its luster, its not as if you can walk up to your computer and make a sell/buy within seconds like you could a normal stock; selling the coins will take a bit more time. That being said, in times of market stops and trading blocks, your coins are the most liquid thing on the market. The final disadvantage to owning these Eagles is ensuring the safe storage of the hard assets, as it can be a relatively daunting task [see also Ultimate Guide To Silver Investing].

Storing Physical Silver

This may be the most important aspect of physical investing as the wrong decision for storage could lead to the theft of your silver and the loss of thousands of dollars. One of the first routes that many people take is to put the precious metal in a safety deposit box at their local bank. While this will ensure the silver being stored in a secure location, it comes with a fair amount of downside. Investors have only restricted access to their box, as they can only access it during the operation hours of their bank. Also note that these boxes are not insured against robbery [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].

A second, and surprisingly popular option, is to simply bury it. While it may sound ridiculous at first, properly burying the silver can often be the safest way to store it. With the hard asset out of the house and not in a bank, it will be protected from fires, robbery, and the like. Those wishing to go this route will want to take a number of precautions, with the first being to not let anyone see where you have buried your bullion. Make sure you put the coins in something that is airtight in order to keep out the elements, which can damage the coins over a long period of time. And just in case you are extra paranoid, the average metal detector works up to approximately four feet. The downsides to burying your silver are quite apparent; limited access, meticulous planning, not to mention keeping the location a secret while still being able to monitor the land for any kind of natural disturbances or construction projects.

The final option, which seems to have the majority of investors behind it, is to hide the silver in your home. While some stick to floorboards and other crafty techniques, a home safe is probably your best bet. The safe ensures that no one else will be able to get to the commodity, while protecting it from mishaps like natural disasters. Self-installation is usually recommended and you should always make sure that the safe is attached to the ground or another fixture; if it was brought in by hand, it can easily be brought out by hand [see also Gold ETFs Shine, Silver ETFs Shine Brighter].

Where to Buy Coins

Below, we outline several resources where investors can purchase silver bullion.

  • U.S. Mint: Likely your safest bet as it is a government-run website.
  • APMEX: One of the most popular sites on the web for buying precious metals.
  • BullionVault: The world’s largest online bullion market.

Written By Stoyan Bojinov From CommodityHQ  Disclosure: No Positions.

CommodityHQ offers educational content, analysis, and commentary on global commodity markets. Whether you’re looking to speculate on a short-term jump in crude or establish a long-term allocation to natural resources, CommodityHQ has the information you need.

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