Silver eagles are among the more popular fine silver coins and are frequently used to store some amount of wealth in silver. The coin format also allows for easy trading and use as an actual currency. But are these silver coins actually a good investment?
Silver eagles are not a good investment – or rather, they are not an investment at all, neither good nor bad. Instead, silver eagles are a speculative asset and can be used as an insurance policy against a financial meltdown.
In this post, I’ll go into a bit more detail if silver eagles are worth buying, whether they go up in value and why silver eagles are not a good investment. I’ll also highlight some alternatives to investing in silver eagles that will increase your portfolio’s exposure to silver.
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Is it worth buying Silver Eagles?
The silver eagle is a standard U.S. silver coin minted in the continental United States. Its relatively low price – compared to other silver mints – makes it an attractive fine silver coin to buy. However, its price does exceed the raw silver value it contains, so is buying silver eagles worth it?
In terms of owning pure silver, buying silver eagles is certainly not the best choice. To buy the biggest amount of silver for the least money possible you would be far better of buying the largest silver bar on the market.
As you can see a silver eagle currently sells for around $33 while you can buy a 10oz silver bar for $233. Thus, by buying silver eagle coins instead of bars you are paying around 30% more per ounce!
In my opinion, this makes buying silver eagles the significantly worse choice if you are thinking about owning physical silver. However, there might be some upside in the increasing value of silver eagles. Let’s look at that next!
Do Silver Eagles go up in value?
While they do offer a significantly higher cost per ounce than traditional silver bars, the silver eagle is a well-recognized coin around the world. It is also valued as a collector’s item which adds to its overall appeal and value.
Over time, silver eagles might go up in value as their demand increase but overall their value will be pretty much tied to the price of silver itself.
With an increase in the spot price of silver, naturally, an increase in the value of silver eagles follows. Thus, the fact that the price of silver eagles has doubled or tripled over the past decades has very little to do with the silver eagle itself and almost everything to do with the silver price.
Should I buy Silver Eagles or silver rounds?
As mentioned before the best way to buy physical silver is to find the largest silver bar available and purchase that one. This gives you the biggest bang for your buck. Silver rounds are simply another U.S.-minted silver coin whose production costs far outweigh its silver value.
So, when it comes to silver eagles vs. silver rounds my answer would be: neither! The only reason to purchase any of these fine silver coins is the fact that you like their design. And perhaps silver coins in general are more useful in a doomsday scenario since it can be difficult to split up large silver bars for payments.
But let’s look at the more important reasons why I believe that silver eagles are not a good investment!
Why silver eagles are not an investment
This has to do with the fact that according to most definitions of the term silver eagles cannot be considered an investment at all. An investment asset should provide safety of capital and also deliver predictable and satisfactory returns. Now, let’s see how silver eagles hold up to that.
- Do silver eagles provide safety of capital? Yes, more or less. The price of silver has remained fairly stable and has done particularly well in inflationary times which makes it a decent safe harbor for capital assets.
- Do silver eagles provide a predictable and satisfactory return? No, absolutely not. Silver eagles are a non-productive asset and don’t produce any income over time.
This second point is crucial to understand in order to become a better investor. An asset that does not produce anything and whose return can only be realized once it is sold at a higher price to someone else is by its nature a speculative asset, not an investment.
Investments such as stocks, bonds, and real estate, all provide ongoing income through dividends and rents. Whenever evaluating an investment opportunity ask yourself if the asset you are buying is productive and delivers cash flow. If not, it’s probably speculative.
With that said, there are some legitimate use cases for owning physical silver such as a hedge against hyperinflation and a total collapse of the financial system. But even then, there might be better ways to gain exposure to the silver sector!
A better way to invest in silver
If owning silver is an absolute must for you, let me highlight some of the better ways to have silver exposure.
- Silver ETFs: Instead of buying and owning physical silver coins how about a silver trust in the form of an ETF? These ETFs provide great liquidity and are easy to buy and sell. The only downside is that you have to trust a third party for the redemption of that silver.
- Silver Stocks: Companies that engage in the production and refinement of silver are another way to get exposure to the price of silver while also providing dividend income along the way.
- Silver Industries: And if you don’t want to own the silver miners or refiners outright there are plenty of other companies that engage in silver logistics and transport and whose profits are also loosely correlated with the price of silver itself!
As you can see there is no shortage of alternatives to silver eagles that all provide more sound investment and much better value. So, are silver eagles a good investment? If the answer has not become obvious thus far: No.
