Bullion investors buy silver for one of three reasons: As a safe was investment, a hedge against runaway inflation, or for survival. Silver investors who buy for investment purposes expect price increases due to supply/demand fundamental factors.
Investing in silver bullion to protect against inflation
Investors seeking inflation protection buy silver bullion to hedge against inflation. In the 70s, the price of gold soared to incredible highs since the 13% rise in inflation. The popular precious metals investments included 1oz silver rounds, 100oz silver bars and 1oz Krugerrand gold bullion as well as pre-1965 90% pure silver coins. When central banks controlled inflation in the 1980s, ma lot of the of the silver bullion bought in the 70s was sold for more paper assets to be bought.
For the worst-case scenario, silver coins
Some investors who purchase silver and gold because they fear that something is about to happen to the economy – These are the survivalists. Among those fears is that the government will print so much money that their currencies would become worthless. Another factor is the fear of a financial collapse, like the one which forced bank closures in Paraguay and Argentina in 2002.
People who had the foresight to get their money out of the banks and get their stocks back before everything plummeted managed to keep their wealth safe in silver and gold investments. The South American banks did more than close their doors but they began to limit the money people could withdraw out of their own accounts when they did manage to reopen. Shortly after the Argentinean crisis, Brazil failed to honour its foreign debt and the country’s currency tanked.
These are the different situations that those who invest in silver bullion coins and small gold bullion coins for survival want to avoid. These buyers buy silver bullion and gold in usable or acceptable forms of bartering for goods or services. This means that they will have silver bullion that they can carry or have stored nearby. Gold coins like 1/10oz Gold Eagles, 1/10oz Krugerrands, 1/4oz Gold Eagles, and 1/4oz Krugerrands, are the most useful forms of gold. These are popular forms of bullion coins acceptable anywhere in the world.
If conditions declined to a level where precious metals such as gold and silver were once again favoured forms of currency, you’d want a lot of small silver coins. You might find silver coins more convenient for buying the small things like canned food because gold bullion coins, even the fractional sized ones, are extremely valuable.
At current prices, an investment in silver yields roughly fifty times the weight of an investment in gold. As a result, large silver bullion pose storage and handling challenges for some people. If you’re worried about storage and handling, go for 1/10-oz Krugerrands or 1/10-oz Gold Eagles. If you have say, $10,000 to invest in gold or silver bullion the best way to go about it is to invest in fractional-ounces of gold or silver coins.