Chapter 3: Physical Silver – To Buy or Not?


Many believe gold is the only asset that isn't someone else's liability, but in our latest installation of the "Guide to Silver Investing," David Morgan argues that not only does physical silver serve the same purpose, it is more liquid. Read on. . .

Many believe gold is the only asset that isn't someone else's liability, but in our latest installation of the "Guide to Silver Investing," David Morgan argues that not only does physical silver serve the same purpose, it is more liquid. Read on. . .

Why Should An Individual Own Physical Silver?

As stated in my publication, The Ten Rules of Silver Investing, the number 1 rule is...

1. When All Else Fails, There Is Silver.

No one likes to be a prophet of doom, but the simple truth is that silver is the world’s money of last resort. Should a severe economic collapse occur, leaving paper assets worthless, silver will be primary currency for purchase of goods and services. (Gold will be a store of major wealth, but will be priced too high for day-to-day use.) Thus, every investor should own some physical silver-and store a portion of it where it’s accessible in an emergency.

So let me expand on this theme a bit. Many state that gold is the only asset that is not someone else's liability, but this is fiction—silver serves the same purpose and I would argue more liquid. By better liquidity I mean silver can be used for a gallon of gas, or a meal out, or many typical daily purchases where using a gold coin for such a purpose might prove more difficult because in many cases the gold coin could be worth more than the item wanted or needed.

Do The Reasons To Own Physical Change With Economic Times?

Yes, they can vary. In good times silver can be a high technology investment that grows in demand along with an advancing culture. In other words, the better the world economy, the better the demand for silver.

What Are The High Level Themes In The Economy That Signal It Might Be The Time To Buy Physical Or Sell Physical?

In the current economic conditions silver serves more like gold as a store of value, crisis hedge, or money of last resort. This is not to say that the high technology applications are important or go away, only that the reason for physical silver investment can vary based upon economic conditions.

What Are The Types Of Physical Silver One Can Own?

Coins or bars. There are several subcategories within these:


  • Junk bags— This is 90% silver coinage that once circulated as money in the world. The U.S. Mint stopped producing in 1965. These are sold in $1000 face value and are dimes, quarters or halves. Other "junk" coins exist from other nations such as Canada, but generally the only coin bag market that exists now is U.S. coinage.

  • Silver rounds—These are typically one troy ounce silver "coins." but are referred to as rounds or medallions. The word "coin" is applied to a round silver disk stamped by a government mint, whereas a silver round is the same amount of silver stamped by a private mint. These usually sell for less than silver coins minted by governments.

  • Silver coins (see above)—Usually one troy ounce silver disks stamped by a government mint, such as the U.S. Canada, Mexico, Austria, China, and others.

Note: there are some other coins from the old silver standard days from most governments around the world and also private minted coins exist that are not necessarily one troy ounce in weight.

What Is The Easiest Way To Purchase Physical Silver?

Find a good reputable dealer, make a phone call and mail in a check. It is the easiest financial transaction you will ever make, but people that have never done it think it must be complicated-- it is not. Anyone that would like to know which dealers I use personally might consider getting on our free email list as I do send offers from dealers that I know and trust from time to time.

What Is The Safest Way To Store Physical Silver To Avoid The Risks Of Theft And Confiscation?

This is controversial. I personally think having some (not all) at home makes sense for many people. A safe deposit box at a bank can be sealed during a divorce or by court order. There are some private vaulting facilities available and I do speak about these from time to time either in the Morgan Report and/or in the free email list. The best place to store is basically different for an individual than an institutional client and of course we deal with both. There are adequate places to store your metal worry free.

How Does One Redeem Or Trade Physical Silver For Cash?

In most cases a simple phone call to the dealer you bought from—everyone that I recommend makes a two-way market buying and selling every day. Or you can sell to a different dealer, individual, go to E-bay, or use on of several Internet-based precious metals sites that make a two-way market. More and more of these are appearing all the time, and I expect to see even more over the next few years. Finding a buyer is not a problem.

Does One Insure Silver The Same Way As Any Other Possession?

If you own your home you can have it as a rider on your homeowners policy. Most legitimate storage facilities carry insurance so that is built into the storage fee.

Ask David Morgan a question about Silver Investing. Send email now!

A precious metals aficionado armed with degrees in finance and economics, as well as engineering, David Morgan founded the website and The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems ahead and reasons for investing in precious metals. In addition to The Morgan Report, David writes Kitco's weekly Money, Metals and Mining Review. His articles have appeared in The Herald Tribune, Futures Magazine, The Gold Newsletter, Resource Consultants, Resource World, Investment Rarities, The Idaho Observer, Barron's, The Wall Street Journal and (of course) The Gold Report.

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