I recently received this awesome 2017 1oz .999 silver coin in the mail, thanks to @o07's Simpsons Silver Bullion contest. No this is not a drill. @o07 does regular competitions that are free to enter. Go check him out. Anyway, whilst starring at Darth Vader's shiny silhouette on this coin I started to wonder - is silver bullion a good investment choice nowadays? Silver coins and bars are undoubtedly cool to collect, but are they an easy, cheap way for people to enter the precious metal market?
What is bullion, anyway?
Bullion is a select group of precious metals that are at least 99.5% pure. These metals include silver, gold, platinum, palladium and are often minted into either ingots or coins by mints. The two bodies authorised to make official bullion for Australia are The Royal Australian Mint in Canberra, and The Perth Mint. Both these mints produce 'collector' coins that hold their value very well. Some coins can even sell for more than their material value as collectors will pay a lot for specific coins.
Performance as an investment
Humans have used gold as a currency since around 700bc. It is a valued noble metal because of its rarity and physical properties. Meanwhile, silver is a widely used for industrial purposes and is a valued world commodity. Hence, there is less 'investment-grade silver than gold' available to people. At time of writing, the cost of gold and silver per ounce is $1642 and $20.91 respectively. Silver is generally more volatile than gold, which is attractive to day traders. Meanwhile, both commodities are slow movers when compared to dividends and other investments. If you purchased 10 Apple shares in 1990 at us$1.83 each, that $20 investment would be worth a smooth $1900usd in 2018. By contrast, 10oz of silver would set you back $50 in 1990 and would be worth $150 nowadays. Pictured below are historic gold and silver prices. Indeed, past performance doesn't indicate nor guarantee future performance; however, we can draw the conclusion that silver and gold are certainly a slow moving, long-term investment.
Storing bullion
Metals are heavy. Sure, a few one ounce coins floating around your house may not come with the logistical challenge of storing bullion, but hoarding kilograms of silver isn't very practical. A small, fireproof safe will set you back about $350 and offer sufficient protection for some silver and your other precious items. Mints offer a solution.
The Perth Mint, for instance, currently stores aud $3 billion worth of bullion in its 'secure, state of the art vaults,' on behalf of investors. They charge a 1.9% per annumn fee for storing silver, 1% for gold storage, and 1% transaction fees on all bullion.
Bullion as a currency
Superannuation funds are often criticised as the control fund members have over their money is limited. Similarly, banks are not always trusted - especially the 'big 4' in Australia, who have recently been scrutinised by the federal government's Financial Services Royal Comission Minted bullion is legal tender and a valid alternative to other currencies. Some people favour bullion as it is a commodity currency with 'an intrinsic value', unlike fiat currencies which are given value by government bodies.
Steemit user and Team Australia member @o07 is evidently a bullion enthusiast. While he used to collect circulated coins, he now amasses bullion bars as a way to diversify his portfolio. '[Bullion is] most definitely an investment opportunity,' he said. Additionally, @o07 likes to use bullion as tender overseas instead of hoarding stacks of notes. 'There are a large number of places in South America and Africa that use this as payment for gemstones, land leases,' and more.
Wow! That's awesome. I always worry about carrying too much cash when I travel, it certainly would be a cool way to pay for things, despite its weight. Hopefully no one tries to buy your silver with blood diamonds anytime soon.
The bottom line
Yes, silver is a good investment opportunity. It is a relatively cheap investment opportunity that anyone with a bank card can take up. One attractive factor is that you don't need thousands of dollars lying around to make an investment. Of course, this isn't financial advice. This may not be true for all individual financial circumstances, and any financial decisions should be informed and backed by a professional financial adviser.
Some 'stackers' are optimistic that silver's price will increase in the future. While I'm no psychic, I hope it does for the Steem Silver Gold community's sake. I'll be picking up a few more silver bars in the future as a way to diversify some of my investments. Even if silver does skyrocket tomorrow, I can't say I'll sell my beloved Darth Vader coin. I've done something very out of my nature with it (I'm not usually a very sentimental person) - it now sits on my desk, shining proudly.
Image sources:
- Google Images
- Giphy
If you've enjoyed this post, please consider upvoting, commenting, and following me for more content. Thanks again to @o07 for his contests, and for sharing some of his insights to help me write this post.
What an excellent summary piece! 🙂 #enjoythecoin
Thanks! :)
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Such a gem! 😍
Uhh... thanks? :)