Information about silver

Additional information > The fundamentals of precious metals – a broad introduction to the basic principles > Information about silver

Occurrence, extraction and professional storage of silver coins and silver bars

In antiquity and during the Middle Ages, silver was mainly used to produce legal tender (silver money) – so-called ‘bullion’ coinage which had to contain precious metal in proportion to its value. And this shiny white precious metal even appears in many stories and legends which date back to mythological times. Although contemporary coins are largely made from other metals, just like gold, copper and bronze, silver still retains a relatively high value. Today, silver is available in forms such as coins, ingots or granules remains one of the most important forms of investment. It is a sought-after exchange commodity which tends to be in high demand during times of crisis.

Silver deposits and world reserves

The earth’s largest silver deposits are located in the continents of North and South America, in places like Mexico, the USA, Canada and Peru. In 2017, more than 25,000 tons of silver were mined worldwide, and Mexico alone supplied 5,600 tons, which is 22.4% of that total. Silver is derived mainly from silver ores, which often occur together with lead, copper or zinc as metal sulphides and oxides. Mexico mostly produces this precious metal from silver mines around Saucito and Penasquito. Saucito produces over 20 million ounces of silver per annum and is the largest silver mine in the world.

Nevertheless, Mexico does not contain the world’s largest silver reserves. Peru heads the list with a volume of 93,000 tonnes, followed by Poland and Australia with 89,000 tonnes each (as of 2017). And Mexico, with its 37,000 tons of silver reserves, lies in fourth place. At that time (2017), the total world silver reserves were estimated to be at 530,000 tonnes. Production and reserves have both declined slightly due to falling demand in recent years, but nevertheless, the silver market still generally commands a lot of investor attention.

Silver as an investment opportunity

Silver offers as many investment options as gold itself, and the acquisition of physical precious metal cast in the form of silver coins or silver bars is a particularly appropriate option for investors. Although silver granulate is actually a raw material, it too is considered an investment.

Silver coins, in particular, are widely accepted by investors, but here their fineness plays a crucial role. However, the higher the silver content of any coin, the greater its value or purchase price compared to its face value. Bullion coins minted at 999/1000 or higher tend to be better investments than those with a lower fineness. They are available in units from 1/2 ounce up to 10 ounces, with one ounce of fine silver weighing in at 31.1 grams. Bullion coins in units of 1/2 kilogram to 10 kilograms are a popular option. Their weight generally equivalent is to their precious metal content.
Silver coins regarded as safe-haven assets by investors:

Name of silver coin	fineness	country
Vienna Philharmonic	999/1000 Ag	Austria
Maple Leaf	999.9/1000 Ag	Canada
Australian Kangaroo	999.9/1000 Ag	Australia
American Eagle	999/1000 Ag	USA
Britannia	999/1000 Ag	United Kingdom GB
Australian Kookaburra	999.9/1000 Ag	Australia
Lunar Series II	999.9/1000 Ag	Australia
China Panda	999/1000 Ag	China

Safe storage of investment silver

Investors don’t just want to invest in individual pieces, many are also keen to know what is the best way to store their precious bars or silver coins. Though silver coin and small silver bars are much easier to accommodate than larger bars, home storage of bars, coins or other formats is out of the question for many investors because they simply don’t have the necessary security measures in place. Furthermore, there are often insurance restrictions which might, for example, make it impossible to store a large volume of 1 kg silver bars.

The professional safekeeping of precious metals is another topic which exercises the minds of investors. Bank deposit boxes or a precious metal account with your bank are an alternative option. However, in the event of a possible bankruptcy or compulsory seizure of assets, your account proceeds tend to flow into the bankruptcy estate and access to a bank deposit box can thus become much more difficult. Bank-independent storage in a privately managed high-security system can remedy this situation – and also includes full insurance cover. This facility would be of interest not only to investors, but also to collectors of rare, special-edition or commemorative coins.

Pros and cons of silver and gold

Many investors are unsure whether to invest in gold or silver bullion. While the ownership of gold was often banned during times of crisis, the possession and purchase of silver has previously avoided such prohibition. Indeed, it has proved to be a stable and sought-after commodity for barter and exchange, especially in difficult economic times. Furthermore, experts also forecast that the world’s existing silver resources will only last for up to 30 years.

On the downside, there have been some marked price fluctuations, which is why speculators in particular are disposing of their silver investments after a short time. Also, when buying silver the surcharges are usually relatively high, so one must expect to have to resell at a discounted price to allow for this. In addition, unlike gold, a silver purchase usually attracts VAT. However, our partner Echtgeld Ltd can offer the opportunity to purchase investment silver without VAT. The silver can then be stored in Switzerland VAT-free in bonded warehouses / free zones.

Pro	Contra
High global liquidity	Higher spread than investment gold
High market acceptance	Higher price volatility
Value stability	Costly to store
A crisis-proof purchase	Purchase often with VAT

Conclusion

Private individuals can invest in silver even with relatively small sums, so the popularity of silver investments is steadily increasing. And whether in the form of silver coins, silver bars or jewellery, there has been great investor demand for this precious metal over many years. However, it does require secure professional storage. Prospective buyers can find out more about current silver prices by checking various online offers. Inspecting gold to silver ratio charts can also help to inform this decision.