Investing in Silver Bullion Coins

Brian Hicks

Updated July 15, 2011

Silver bullion is one of the most important assets to own right now.

The supply/demand fundamentals behind the metal continue to be ignored by the retail market and silver prices remain at discount levels, creating a perfect opportunity for investors to buy cheap.

We’ve consistently argued that owning physical metal bullion is an important facet in any investment portfolio. But in today’s silver bullion marketplace, buyers need to be careful…

There are many scams and swindles that investors can fall into if they aren’t careful. And if there’s one silver coin scam to avoid, it’s this one.

One of the biggest rip-offs is “commemorative” silver coins, often advertised on TV and in magazines.

Minters have made silver coins to commemorate just about everything and everyone, from Marilyn Monroe to Mickey Mouse. The advertisements for these coins are usually tailored to make buyers believe that they are pure silver, when in fact they are only silver-plated at best.

These coins are sold by companies with cleverly disguised names like the National Collector’s Mint and the Franklin Mint. These “mints” have absolutely no association the official U.S. mint.

Take the Freedom Tower Silver Dollar from the National Collector’s Mint (NCM), for example…

july 2011 freedom tower silver coin

Here’s a bit from NCM’s advertising campaign. Take some time to read it carefully:

Now, you can own this non-circulating Cook Islands legal tender version of the world’s most talked-about commemorative, struck to honor the World Trade Center and the new Freedom Tower being erected in its place. Featuring a new skyline showing the four towers to be erected at Ground Zero, it’s a new dollar from the Cook Islands clad in a full 71mg of .999 Pure Silver miraculously recovered from a bank vault found under tons of debris at Ground Zero.

Issue price has been set at $39 per coin. However, during this limited special release, the “Freedom Tower” Silver Dollar can be yours for only $19.95.

The company says that these coins are “clad in a full 71mg” of pure silver. That’s only 0.0025 ounces of silver in each coin.

In other words, NCM is selling a $20 “silver” coin with less than 10 cents’ worth of actual silver in it.

The company also claims the coins were created using silver that was recovered from the World Trade Center disaster site. This is technically true; but all they have to do for this to be true is melt down one Silver Eagle that actually was recovered from the World Trade Center into a larger batch of metal, and use that silver to make the coins.

The U.S. Mint has issued warnings about this company’s misleading advertisements in the past, specifically about the Freedom Tower coin. In 2004, State Supreme Court Justice Thomas J. McNamara fined the National Collector’s Mint for engaging in false advertising and deceptive business practices when issuing their Freedom Tower Silver Dollar coins.

Other silver coins to avoid are genuine silver bullion coins that have been modified in some way.

Many bullion dealerships today offer silver coins with holographic stickers or coloring and in fancy boxes…

july 2011 color coin 1 july 2011 color coin 2

But these are just peripherals attached to the coin to jack up the price. Some bullion dealers are asking nearly $200 for this set.

What is the Best Silver for Investment?

Keep it simple.

The best silver coins for investment are pure .999 bullion coins in the standard one- or ten-ounce weights, including:

  • American Silver Eagle
  • Silver Canadian Maple Leaf
  • China Silver Panda
  • Austrian Silver Vienna Philharmonic
  • Australian Silver Kookaburra
  • Mexican Silver Libertad
  • British Silver Britannia

Graded bullion coins bring in a much higher premium over the years.

Coins are often graded on a 70-point scale. MS-0 is the lowest grade. At this grade, a coin is basically just a heavily-worn piece of metal. MS-70 is beyond flawless: no blemishes, good strike, great color, and a lot of other really nitpicky stuff.

To give you an idea, the average, brand-new shiny penny from the bank will be graded below MS-65.

MS-70 graded American Silver Eagles are a good example how the grading can really increase the value.

One 1996 MS70 Silver Eagle sold recently for a whopping $5,690! Another 1988 MS70 Silver Eagle was just auctioned off at $3,190.

MS-70 graded silver coins are not as widely available as non-graded coins, but can be acquired through reputable dealerships like First Federal Coins.

I recently picked up some MS-70 Silver Eagles, and they are already my prized possessions in my silver coin collection. Buy your MS-70 silver coins here.

Ultimately, the most important factor when buying silver coins is purity. Avoid buying the “commemorative” silver coins. They virtually contain no actual silver and are just overpriced novelty pieces, aimed largely at tugging on your emotions.

With global supplies of silver dwindling from surging demand, silver offers one of the most attractive risk/reward upsides in the market today.

Forward-thinking investors who take a position today will be greatly rewarded.

Good Investing,

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Brian Hicks
Founder and Publisher, Wealth Daily

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