Silver Investors Should Diversify, Too

Diversification is the most important part to any solid financial plan, and precious metals are no exception. Silver investors should plan to diversify within their silver holdings to protect their wealth and to allow for opportunities to profit in the future.

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 coin, bar, or round without effectively diversifying their metal portfolio.

Size is one area where many silver investors fail to diversify. Rather than owning a few 1 ounce rounds, 10 ounce 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. For example, a silver investor who typically buys 1 ounce coins is paying a far higher premium per ounce than an investor who purchases 10 ounce bars.

The same silver investor could easily drive down his or her 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.

Contrary to popular belief, there is nothing wrong with owning junk silver coins from pre-1964 American mints. Although these coins are not 99.99% pure, they are 90% silver and rise and fall in value proportionally with silver prices. For extreme scenarios, these coins also serve as spectacular bartering commodities, having satisfied the need for smaller denominations and weights for small transactions. Since 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.

Although the American Eagle silver coins are not numismatics, and they actually sell for a price close to the current silver spot price, they do have collectable value. If you've ever shopped for bullion, you've found that these coins are often the highest price, but offer little extra value to investors. For this reason, try to avoid coins in which collectors are a large part of the purchasing volume. Collectors are largely disinterested in total weight and instead want attractive pieces that fit into a collection. Other silver rounds, such as presidential rounds or Olympic rounds, also have similar collector appeal, so avoid them if your number one goal is to obtain the most silver for your dollar. There are probably better deals to be found in the same place.

When I was buying (I sold out last week, at a nice profit) I would buy one 10 ounce bar and ten 1 ounce bars every month. Built up nicely!

Now I’ve diversified into just a little remaining silver, more lead, and more brass...;) Lots of primers and more reloading dies as well, even for calibers I don’t currently have. Being able to reload will be a valuable trade...

Great advice. Get one ouncers.... But today's 10 oz bars are very nice looking thus will be very tradable in a chaotic crash. I have an old 10 ounce bar that is plain ugly because it is poured like an ingot. Old fashioned style. These days ten ounce bars are extruded so they have very sharp features like a any coin does. This important beauty feature will help them be tradeable, spendable during a lawless crash. They are roughly $200 today ....while gold is $1230. So obviously a smaller unit to spend thus easier to spend. Easier to "make change" for.

100 oz good but a rational target for counterfeiters. So an assay might be demanded.
No one will fake a ten ouncer or smaller....too much hassle.

Junk silver dimes and quarters have their place too...Small denomination

In a chaotic lawless crash using gold makes you stand out and a target for home invasion. Spending junk silver coins make you look like Joe Schmoe the dope who has silver same as everyone else. You blend in. Gold is a core savings you use after a lawless crash to buy land, automobiles etc. Any gold you buy today is for not spending for a long time. Silver is your spending money during chaos. This is true for the one ouncers......they will be used all over. Ten ouncers less so but still better to spend than gold which is a magnet for thieves. Gold can be spent during a lawless crash but you will have to be very very careful. Smaller gold coins....quarter ounce, half ounce are obviously better.

Go to ebay if you want to see the difference in photos....of ugly old fashioned poured (like an ingot) 100 and 10 ounce silver bars and the new struck and extruded ones. I believe the 100 oz ones are also struck/extruded today.

http://www.cmi-gold-silver.com/photos/images-photos-silver-bars-100-oz-999-fine.html

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