Silver Investors Should Diversify, too


"Size is one area where many silver investors fail to diversify."

The variety of silver products available to investors is unreal. From junk silver and American Eagles to the generic silver round and bars, silver investors have more choices than any other kind of investor. However, despite having numerous choices, silver investors often choose to buy only their favorite type, without effectively diversifying their metal portfolio.

Size is one area where many silver investors fail to diversify. Rather than owning a few 1oz. rounds, 10oz. bars or bags of junk silver, many investors just buy the same kind of silver week after week, year after year.

Most investors would be better served with at least some size diversification to protect themselves from surging premiums or a shortage of a certain type of silver.

The same silver investor could easily drive down the cost per ounce by making larger purchases, as well as purchasing small coins. The same is also true for buyers of large silver pieces; they fail to account for the times when small coins or rounds may be suitable for barter, or when they can make a few dollars in times of crisis premiums. When fears about Y2K emerged, premiums on small silver coins skyrocketed, while the premiums on bars remained mostly flat. In that case, an investor could have easily sold or traded his small coinage for larger bars, increasing his net silver holdings.

There is nothing wrong with owning junk silver coins from pre-1964 American mints. These coins are 90% silver and rise and fall in value proportionally with silver prices. For extreme scenarios, they also serve as spectacular bartering commodities, having satisfied the need for smaller denominations and weights for small transactions. As many investors tend to look over silver that is not 99% pure, bags of junk coins sell at a discount to other products with the same weight, making them a great bargain for an investor.

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