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Why Hold Physical Gold and Silver?
Although the recent explosion in gold and silver prices has been widely documented in the mainstream media, many traditional investors either avoid metals entirely, or utilize “paper” means for gaining gold and silver exposure.
While purchasing ETFs like GLD and SLV or buying gold and silver “trusts” can provide you relatively direct exposure to precious metals prices, for the most part, those methods do not actually give you a claim on any physical metal.
In a true economic crisis or SHTF situation, holding GLD or SLV likely will render your investments worthless, as your electronic holdings will have no tangible value.
Because of this, many survivalists and preppers advocate holding actual physical gold and silver bullion, which can act as a store of value in times of crisis, or even as an actual form of currency in the future. There are quite a few products that can be purchased, but some of the most popular are gold and silver bars and coins, as well as “junk silver”.
Gold and Silver Bars
One of the easiest and most cost-effective ways to invest in gold and silver bullion is by purchasing pure bars. Gold bars are typically offered in 1g, 2.5g, 5g, 10g, 20g, 1 ozt, 100g, 10ozt, and 1kg weights, with 99.99% purity. Common producers include PAMP Suisse, Credit Suisse, Royal Canadian Mint, and Engelhard.
Silver bars are typically offered in 1 ozt, 5 ozt, 10 ozt, and 100 ozt weights, with 99.9% purity. Common producers include SilverTowne, Johnson Matthey, Engelhard, NTR, and Royal Canadian Mint.
A few of the nicest aspects about physical gold and silver bars are their relatively low cost over spot price of the metal, easy storage, and high liquidity. Buying major brands like PAMP, Credit, JM, or Engelhard ensures that you will never have any issue reselling your metal in the future should you wish.
Gold and Silver Coins
Gold and silver coins are another extremely popular method for investing in physical precious metals. Some of the most liquid gold coins include the 1 oz and fractional American Gold Eagles (22 karat), as well as the 1 oz and fractional Canadian Gold Maple Leafs (.9999 fine gold).
A few major silver coins include the 1 ozt American Silver Eagles and the 1 ozt Canadian Silver Maple Leafs, the former being .999 silver and the latter being .9999 silver.
Gold and silver coins are popular because they are backed by official government mints such as the US Mint or the Royal Canadian Mint, and also carry a face value in their respective countries. Certain coins like the American Eagles also hold tax advantages and are IRA-eligible.
The main letdown of coins is that they typically carry a fairly higher premium over spot price than bars or raw material. This premium is typically recovered in the resale market, but it will limit how many ounces of metal you can buy initially.
A popular form of silver in the survivalist community is “junk silver”, which refers to pre-1965 USA currency coins (think dimes, quarters, etc). Coins back then were made of 90% silver, thus making them quite valuable today based on their metal content.
Junk silver is typically traded in face value lots, such as a $100 bag of 90% silver. This bag would contain $100 in face value of silver coins, which at 90% silver content total out to 71.5 troy ounces of silver, as each $1 of face value includes .715 ozt.
The main advantages of junk silver are that you can piece out such tiny lots like a dime or a quarter, making it a viable potential currency. Also, junk silver typically is much cheaper than refined bars or coins, so you can accumulate more metal for your dollar.