Silver Coins – Ideal for Investors and Collectors

This white precious metal is much more than the little brother of gold. Silver coins are a popular form of investment and delight numismatists with their infinite variety.

Silver coins are inextricably linked to human history. As early as the sixth century BC, ancient Greeks began to produce the first silver coins, which very quickly spread as a means of payment. Fewer than a hundred years later, metal money made from silver alloys was also to be found in Asia Minor and China, as archaeological findings have shown. Although copper and gold coins were already in circulation, silver dominated the coinage used across the entire European continent from the Middle Ages onwards.

Only with the beginning of World War II did silver lose its importance as coinage currency. Norway and Denmark were the first countries to stop issuing silver coins. Great Britain, Portugal and Turkey abolished them after the war. In the United States, the last quarter-dollar silver coins were used in 1965, followed by France in 1969 (5 Francs), Italy in 1970 (500 Lire) and Austria in 1973 (10 Schillings). In Germany, the 5 Mark coin of 1974 marked the end of silver coin alloys at a relatively late stage. Silver coins were still in circulation in Switzerland well into the 1960s, when the 5 Franc coin was finally withdrawn in 1969. With a bit of luck, however, there are still coins made from silver that remain in circulation as change that appear from time to time.

The front and back of a five Franc coin made of silver dating from 1965
This five Franc coin is made of 83.5% silver.
© Matt Light – stock.adobe.com

The Importance of Silver in Modern Times

Despite the widespread withdrawal of silver as coinage, this did not mean the end of the metal. It continued to be used in jewellery making, for example. Indeed, industrialists discovered it was a versatile raw material that could be put to use in medicine, car manufacturing, solar technology, photography, mobile communications and in countless other areas. Today, industrial manufacturing and jewellery production account for more than 80 per cent of the annual silver production. The rest, around 19 per cent of the world’s total production (the global production volume of silver was 1,023.1 million ounces in 2019), is used to produce investment bars and collector’s items, such as coins and medals.

Silver coins for investors or collectors have only been on the market for a relatively short time. The first silver coin of an ounce weight appeared in 1982. This was the Mexican Libertad. It was followed by China Panda (1983), American Silver Eagle (1986) and Maple Leaf from Canada (1988). The Maple Leaf also marked the world’s first bullion coin since it was minted from almost pure silver with a fineness of 999.9 per thousand. Today, most silver coins for the investment or collector’s markets consist of at least 995/1000 of the white metal. Therefore, their price is mainly based on the current silver price, which is determined daily on the international precious metal exchanges. Sought-after motif coins such as the Australian Kangaroo, the Britannia, the Kookaburra, the Krugerrand Silver, the Lunar series or the Vienna Philharmonic also provide added value.

Embossing Qualities and Degrees of Preservation

In addition to the fineness of its contents, the value of a silver coin is also defined by its minting quality and degree of preservation it therefore has. Most investment pieces are made with stamp gloss quality. These are freshly minted and uncirculated coins without flaws. The English technical term for it is ‘brilliant uncirculated’ or BU for short. In this process, which is usual for mass production, the blanks are not refined before the embossing process. If there are small defects in the surface generated during production, then the coins in question are sorted out and only offered under the quality mark of “uncirculated” or “unc”.

The situation is different with coins intended for numismatists. Before the embossing, a further refinement often takes place, in which both the blanks and the stamps are polished. This highest embossing quality is called “Proof” (PR) and it is used mainly for short minting runs. In a process derived from this, refined stamps are used, but no polished coin plates are used. This so-called proof like quality (PL) is now rarely seen, however.

In the case of circulation coins or historical silver exchange coins, their value often depends on the degree of preservation. This is measured according to the external appearance of the coin and is classified from ‘extremely fine’ to ‘poor’. The latter are coins that have scratches and other surface damage. In addition, the appearance of the coin may be dulled and its contours blurred.

Impaired Silver Sulphide Patina and Milk Blotches

A common issue of wear and tear that affects silver coins is when they are tarnished. This is a chemical process in which the hydrogen sulphide in the air reacts with the surface of a coin and forms silver sulphide. Although what is basically a natural patina can be removed mechanically or chemically, it is often appreciated by connoisseurs as it allows conclusions to be drawn about the age and originality of a coin. In addition, blotches or so-called “milky spots” can influence the value of new silver coins. They often come about directly from the embossing process, but they can also occur due to improper storage.

To avoid the unsightly milk blotches, the Canadian minting company, the Royal Canadian Mint, has developed a new technology called ‘Mintshield Surface Protection’. It has been used on the Silver Maple Leaf since 2018 and reduces the formation of white blotches in an effective manner.

Popular Silver Coins and Their Denominations

The market for silver coins has grown significantly in recent years because demand for them is correspondingly high. Almost every well-known minting company now also issues silver versions of its popular gold coins for investors. There are also numerous special issues in limited editions such as high relief coins, gold-plated (gilded) or coloured editions that are designed to appeal to numismatists.

Silver coins are available in many common units of 1, 2, 5 or 10 ounces as well as 30 grams or 1 kilogram. Ten-kilo coins are also sometimes issued. Analogous to gold coins, the troy ounce of silver is set at 31.1034768 grams. This weight is offered in almost every coin design. This standard denomination enables investors to make a fair price comparison. Silver coins are individually wrapped, encased or packed in coin tubes of 20 to 25 pieces. There are also master boxes that contain in the region of 20 tubes.

Vienna Philharmonic coins set out in tubes in a masterbox
Vienna Philharmonic coins set out in tubes in a masterbox.
© Jaana Lisette – stock.adobe.com

The following chart gives you an overview of popular investment and collector coins with their respective editions in the unit of either 1 ounce or 30 grams.

Silver coin Country Fineness 1990 Edition 2000 Edition 2010 Edition Current edition
Aus. Kangaroo AUS 999.9 4,395,517 (2018)
American Eagle USA 999.0 5,840,110 9,239,132 34,764,500 37,701,500 (2016)
Britannia GBR 999.0 81,301 126,367 100,000 (2019)
China Panda (30 g) CHN 999.0 200,000 500.000 1,500,500 8,000,000 (2015)
Krugerrand ZAF 999.0 20,000 (2020)
Lunar Serie I,II AUS 999.9 118,697 56,077 300,000 (2020)
Libertad MEX 999.0 1,200,000 340,000 1,000,000 636,500 (2017)
Maple Leaf CAN 999.9 1,708,800 703,652 17,799,992 29,245,321 (2014)
V. Philharmonic AUT 999.0 11,358,168 2,101,592 (2018)

 
Notes:
– = not minted this year
Many minting companies do not provide specific numbers of copies these days and instead publish the number of ounces of the precious metal that are produced annually.

The Advantages of Silver Coins as an Investment Vehicle

If you want to put your investable assets into precious metals, you do not necessarily have to buy gold. In addition to other white metals, such as platinum and palladium, silver in particular offers many opportunities for small-scale investments. Thanks to the convenient units in which silver coins are offered, this investment form appeals to beginners and professionals alike. In addition, the investment volume can be adjusted at any time by buying or selling. Since they are often issued by state minting establishments, they are considered legal tender in the country of issue. In contrast to medals, they have a stamped face value.

In spite of the fact that silver coins are more expensive than silver bars, they are easier to sell when necessary – provided that they are among popular coin motif designs. In such cases, awareness of them supports their profile. They can be traded with precious metal traders, at banks or within collectors’ exchanges. Another advantage over bars comes down to storage. Bullion coins made of silver are usually delivered without any certification and can, therefore, be stored in a space-saving manner. By contrast to bars, they cannot be traced because they do not have any serial number.

Turn the Drawback Into a Plus Point by Saving Sales Tax

With all the advantages that silver coins have to offer, there is a downside when buying them. Unlike buying gold, there is a 7.7 per cent value-added sales tax that applies in Switzerland. Anyone who buys in Germany has to add 19 per cent (16% from 01.07 to 31.12.2020) to the net sales price. If you want to get around this, there are various options. For example, silver coin bars are a viable alternative in Germany. Differential taxation can save 5 to 8 percentage points on sales tax, depending on the dealer’s offer.

Another option is to store silver completely free of sales tax or VAT. This can be done via so-called bonded warehouses or open bonded warehouses in Switzerland, such as those offered by Swiss Gold Safe. Investors buy from precious metal dealers in Switzerland, such as Echtgeld AG, and have the goods delivered directly to the duty-free warehouse. This form of investment is particularly suited to investors who do not want to store their silver stocks themselves.

-> Here you can learn more about the sales tax-free purchasing of silver through bonded warehouses in Switzerland and the Principality of Liechtenstein.

Information about silver coins in summary:

  • Silver coins are one of the oldest means of exchange in human history.
  • In Switzerland, silver coins were still in circulation until the end of the 1960s.
  • Only 19% of the annual silver requirement is used for investment products – the majority is used industry and jewellery making.
  • The value of silver coins is determined by the fineness of the content, as well as the minting quality and degree of preservation.
  • Silver coins are ideal investment products and have many advantages over gold bars and other forms of investment.
  • Sales tax can be reduced or even bypassed through differential taxation or bonded warehouses.
US coinage – the American Eagle silver coin
US coinage – the American Eagle silver coin.
© W.Scott McGill – stock.adobe.com
Chinese coinage – the China Panda silver coin
The China Panda silver coin.
© Emporium – stock.adobe.com
An Australian Lunar series silver coin with a horse motif
The Australian Lunar II horse silver coin.
© maexico – stock.adobe.com
The Canadian Silver Maple Leaf silver coin
The Canadian Silver Maple Leaf silver coin.
© Lovrencg – stock.adobe.com
A Vienna Philharmonic silver coin
A Vienna Philharmonic silver coin.
© maexico – stock.adobe.com