Silver is the Best Choice for Precious Metals Investors
It's 2023 and everything that happened in 2022 has you wondering what precious metals investments are best for your portfolio this year. The first thing you need to determine is how diversified is your retirement portfolio. Did you lose over 50% in crypto or 40% of your retirement portfolio investing in stocks? Even now in January of 2023, we are seeing physical assets like real estate start taking a hit in the market.
If you have not yet begun investing in physical assets such as precious metals, then 2023 is the year to get started. Completely new to physical precious metals investing, then check out this article "Beginners Guide to Investing in Physical Gold".
The Federal Reserve is working to control inflation by raising interest rates, the stock market is doing 500-1000 point swings every week, and the future of 2023 speaks of market crashes and employee layoffs.
With all this negativity surrounding you, it's hard for the investor to understand and pinpoint the next best investment in the market. So take a break and look at precious metals as an alternative investment to stabilize your portfolio.
Diversification should be a key driver of your retirement and investment portfolio in 2023!
In this article, we look at 9 reasons why Silver Bullion may be a better choice over Gold in 2023. This article is not saying "buy silver" and not "gold". In a time where everything cost more and there are fewer investment dollars to go around and worst of all your discretionary spending has come to a halt, The Plug wants you to consider transitioning to a physical asset that you can get more of and get a better bang for your buck.
With every investment, you as the investor must do your own due diligence. Consult your tax advisors when necessary and make informed decisions. This article is for information purposes only to wake up the investor to alternative investment choices.
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Reason #1: The Price of Silver is Less than Gold
In the United States, we have seen the dollar lose value over the past year. Some think that inflation will continue and the price of consumables with be high in 2023. As a counter to inflation, the average wage earner needs an 8-10% bump in pay. Many employers are not increasing pay at the same rate as inflation and ultimately there is expected to be little to no change in 2023 in income per household.
Americans are pulling back on their investments to factor in payments for high-priced products and ultimately Americans' savings accounts have shrunk. Quentin Fottrell at The MarketWatch wrote an article in October 2022 about how the percentage of savings has fallen and states "...savings are down 61% than pre-2020 pandemic."
Now maybe with the decline in the stock market and the almost collapse of cryptocurrencies, you are considering rolling over an old 401(k) or just planning on buying physical assets like precious metals. Whatever the reason you need to look at what you can afford and where you expect the price of gold and silver to go over the next 5, 10, or 30 years.
As of this writing the spot price of GOLD is $1,874.45 and SILVER is $24.06 per troy ounce.
New investors need to understand the spot price is not what a buyer will typically purchase 1 troy ounce of gold at. This spot price is based on the market price for bullion if bought in bulk. Bullion is unfinished silver prior to rounds and coins being made.
The retail price for coins and bars includes the spot price + premiums. Each seller will have a different premium based on the price they paid for the coin, round, or bar.
Premiums are the most expensive for U.S. Minted Proofs. Silver Bullion produced by the U.S. Mint will have a slightly less premium than the Silver Proof coins. Rounds, which are typically produced by private mints and do not have a face value, have the lowest premium. Coins and rounds are not the same. Coins are produced by sovereign mints and have legal tender.
An alternative choice from coins and rounds is buying bars. There are a variety of silver bars available and premiums for bars typically are less than that of a coin. Buyers looking for large quantities of silver should consider bars as they take up less space and can save you a few dollars in the premium price over the spot price.
To stretch your investment dollar in 2023 look at the lower cost of silver versus the cost of gold. Gold is an excellent investment and The Plug suggests buying both gold and silver for those that are rolling over into a self-directed IRA.
Here is how the price of Silver vs. Gold looks today! Prices reflect the cost as of the writing of this article.
Example of buying 1 troy ounce of silver vs. gold:
- 2023 Silver American Eagle 1 Troy Ounce, .999 Pure is $37.35 with a $13.29 premium
- 2023 Gold American Eagle 1 Troy Ounce, 22k Purity is $2,044.85 with a $170.00 premium
If your investment dollars have decreased like others, then with a $1,000 investment you could purchase approximately 26 silver coins but only 1 Gold American Eagle Coin that is 1/2 Troy oz.
If you are wanting to STACK your coins then look at Silver as your best option in 2023.
Reason #2: Silver has the Best Upside for the Next 20 Years
Below are charts from macrotrends.net. They produce charts for different markets. You can see that silver over the 20 years has a high of approximately $64 per troy ounce. As of January 7, 2023 the price of Silver is $24.
Gold price high over the past 20 years was just under $2400 per troy ounce. The average for gold over the past 10 years has been flat but there are signs for both gold and silver to be on the rise.
The upside is higher for Silver over Gold. Given that there is a potential for silver to climb higher as demand increases and reserves deplete the price will likely continue to rise. We are not forecasters, but when a product has more buyers than sellers and there is less available raw material to make more, ultimately you will see an increase in demand and price.
Getting in sooner than later you can take advantage of any appreciation in Silver over the next year. When you hold physical silver in an IRA or at home, you have control of that asset. If the prices rise, you have the control to sell and make a profit. If the price falls, you have the ability to hold until that time you need to liquidate for cash.
Canadian Silver Maple Leaf
American Silver Eagle
Scottsdale Mint Silver Rounds or Stackers
Scottsdale Mint Silver Stacker 10oz Bar
Reason #3: Silver is an Inflation Buster!
Financial uncertainty and devaluation of the dollar bring on legitimate concerns over the future of the markets.
When investors look to hedge inflation they need investments that have their own value and can hold that value or even appreciate when the dollar declines.
Physical silver is one of those assets. When you hold physical silver you have control and the power necessary to offset any dollar declines or stock market crashes in your portfolio.
Over time, the hard physical assets have kept nations, banks, and individuals stable in uncertain times. The fiat dollar can be duplicated and when inflation rises governments need hard assets to back the influx of dollars into the economy.
Is Silver an inflation buster? Well, that depends. When did you buy the physical asset, what was the price, and what are your returns now? Don't always consider the larger macroeconomic look at an investment. Sometimes the microeconomic look at an investment (meaning your portfolio) might have a different look than the broader figures.
Wayne Duggan at U.S. News says there are mixed results as to whether silver is an inflation hedge. But he states "...as a rule of thumb is to allocate about 5% of your portfolio to commodities as a whole." Check out his article here.
Reason #4: Demand for Silver and Industrial Uses
Research has shown that inventories of government supply of silver have decreased since the 1970s. Since 2008, the government reserves have stabilized at approximately 50 million ounces.
One such reason there was a downward shift in government holdings is the price and demand. The price of silver rose and governments produced more silver coins and bars for investors. Selling their reserves to produce more liquid cash.
Another reason governments have decreased their reserves is the demand for silver has increased in both investment and industrial uses. The goldsilver.com website talks about how only three countries warehouse silver and they are the United States, India, and Mexico.
Practically every area of our lives we use some form of silver. Here are just a few; cell phones, jewelry, silverware, coins, electronics, solar panels, batteries, electric vehicles, and more...
Demand for Silver will continue to grow. But without Silver mining businesses and investors will be working over the same old silver time and again. Silver demand in China is up 50% over the past 10 years. Based on where many products are made that figure doesn't appear unnatural. Demand is not going away anytime soon so the supply will determine the price.
With the demand for silver in the industrial space, the reserves are dwindling and ultimately in time, the supply will decrease to a point where demand from industrial and investors will push prices higher.
The individual can retain silver coins and bars and use them as a means of payment. Silver is recognized around the world and has a universal value...
Reason #5: It is Real Money and Has a Buyer in all areas of the World
If you are an investor you can buy Silver Coins anywhere in the world. Therefore, we know that you can sell Silver Coins anywhere in the world.
This tells us that there is demand for Silver Coins and while a Silver American Eagle has a face value of $1.00 for 1 oz Fine Silver, we know the spot price is $24.00 (at the time of this writing).
You can sell your 1oz Coin at any coin dealer, online retailer, in the US, or in any other country based on their bid price. You can make more for that 1oz silver coin or since it is real money you can even find a dollar in the cash register at times.
Reason #6: Highly Liquid Asset
The best part of owning physical assets is you have the choice of when to hold and to sell. You own an asset that you can hold. That is a hard asset that you control.
Whether you're buying precious metals within your IRA or paying with cash you control the asset. When times are tough you can sell your assets and have liquid cash. The difficulty of selling is minimal.
When you purchase from reputable online precious metals dealers, they will have a record of your transactions. When it's time to sell your first choice should be where you bought it. Having a record of the sale will help these transactions go smoother because they know what they sold you.
If you hold the Silver Coins personally at home you have the choice to send them back to the original online dealer or you could reach out to a local coin dealer.
Since silver coins and bars are worth less than gold coins and bars you have a higher chance to liquidate quickly. There are several buyers locally and online. The coin value, i.e. Silver Value, is significantly less than gold, and therefore there are more buyers with silver.
When I speak of the liquidity of the Silver Coins I'm speaking about the IRA Approved Coins such as Silver American Eagle or the Canadian Silver Maple Leaf. These IRA-approved coins are the most recognized coins in the market.
Investors buying bulk silver or numismatic or rare coins will find selling their coins to be more difficult as they need to find specific buyers for their assets. They are still liquid but the process and time to sell can be more lengthy.
Reason #7: No Secondary Party Risk
When you own physical silver it is in your hands. There are no outside forces influencing this asset purchase or sale. The spot price can change, but you have the ability to control the asset.
- No CEO or Investors Dictating Decisions
- No Bankruptcy taking away your assets
- No Risk of the Stock Declining
When owning physical precious metals you control who knows whether you have them or not. Government cannot interfere if they don't know you have the asset. We are not saying you shouldn't follow the laws of the land. We are just saying when you buy smaller quantities there are no reporting requirements. Investment privacy can make all the difference.
Reason #8: Investment Privacy
If you want to keep your physical asset purchases and sales private there are no better means than precious metals. Wait, we are not saying don't deceive or break any laws, consult your tax and legal advisor for clarity.
Physical metals purchases within an IRA are not private transactions. There are several steps and people involved. You also want to keep track of your purchases and have records of the transactions for tax purposes. These are not private. But buying with cash can be a private action.
Once you know and understand the market for precious metals you can purchase them down at your local coin dealer. Depending on what you are looking to buy or sell is whether that dealer can meet your needs.
* Check with state and local laws to understand what are the dealer's reporting requirements.
Typically, it is not the gold or silver that the government is tracking. Since 9-11, the reporting is for cash transactions, per se.
Reporting requirements by dealers, from our understanding, is that any cash transaction over $10,000 must be declared. If you remove more than $10,000 from your accounts that information is shared in a CTR form. If you purchase with a personal check there is no requirement for reporting and banks are not required to report checks over $10,000.
Connected or series of transactions must also be reported. Therefore, if you are buying several ounces or selling several ounces and trying to stay under the $10,000 report requirement then you may choose to use several coin shops.
According to John Fisher at Fisher Precious Metals, "Sales of American Silver Eagles, privately-minted Silver Eagles, and 100-oz silver bars are not reportable, no matter the quantity. Other precious metals products are reportable, but they are not covered here because the average investor does not trade them." Get more information in the article "The Truth about Precious Metals Reporting".
Reason #9: Investment Demand
The investment demand for Silver and other precious metals has increased over the past decade. When the market crashed in 2008, the price for a troy ounce of silver was near current levels. But the demand for silver coins and bars increased from late 2008 till 2013.
There was a significant spike in demand for silver in 2020, the initial year of Covid-19. As the stock market crashed for several months the commodities rose. While the world was determining what our future held, governments were sending people home and printing money. The precious metals market surged during this time.
Today the spot price of Silver is off the high of $32.70 in August of 2020. The price bounced around in the high $20/per troy ounce for several months with a sharp decline in March of 2022. Since March, the spot price has climbed again and the expectation of silver is to continue rising over the next several months to years.
There does not appear to be a slowdown in demand from investors. So much so that many precious metals dealers are giving away Silver when investors meet certain requirements.
When you have value investing principles, like Warren Buffet at Berkshire Hathaway, you can find time to invest in Silver or other precious metals. Having physical assets and holding a percentage of your portfolio in commodities is a good choice. But like other investments, day trading can be both lucrative and devastating to your portfolio.
Check out this older article on Warren Buffett buying 130 million ounces of Silver. You might find out why following a plan is a good decision.
How to Invest in Silver
Ready to get started on your precious metals journey? This is not a subject to be taken lightly, there are pitfalls and scammers along the way. Being informed and educated on the subject will help you make the best decisions.
The Plug prides itself on educating the reader to make good choices, but also letting them know it is their responsibility to be educated and ultimately their decision on their investments.
Invest In Silver in Your Self-Directed IRA
A self-directed IRA is similar to a standard retirement IRA other than you are in control. You can choose what assets to buy and sell at any time. Like traditional IRAs you cannot benefit from the investments directly before you reach the age of 59 1/2 years.
When buying bullion in a self-directed IRA here is what you need to know:
- Choose a Custodian - not all custodians work with precious metals so make sure you choose one that does. The Plug has provided information on who we believe are the 5 Best IRA Companies for Gold and Silver Investors. These companies will help with choosing a custodian.
- Choose a Dealer - work with a reputable dealer who has experience with working with custodians. You want to make sure they are familiar with the process of IRA investing and what fees and responsibilities are required.
- Open an Account - now that you have reviewed several Silver IRA dealers now you need to open an account. The customer support and service representatives are very helpful to make this as quick and painless as possible.
- Fund Your Account - The custodian and the precious metals company are the the same entity in most cases. You need to fund your IRA account. Will you rollover from an existing IRA or 401(k) or will you start your Self-Directed IRA with new funds and follow the requirements of funding an IRA.
- Buy Your Metals - now you get to choose the silver and gold for your account. Understand the spot price is not what you will buy your metals at. You will have to pay a premium and between the spot and premium you will have to determine how much you can afford.
- Secure Your Metals - IRA requirement state you cannot store your metals personally. You need to choose a secured storage facility. There are several across the US but your dealer typically has one or two they work with directly to save you the time of research.
- Review Your Statements - This can be difficult, but you are educated on precious metals investing now. Understand your statement might indicate you have lost money but it is not taking into consideration the premiums. Many statements reflect the amount of metal and the spot price. Understanding the statement will help you understand your investments.
Invest in Silver with Cash
Choosing to purchase silver bullion outside an IRA is a good option. You have several sources to choose from to purchase your next coin. Understanding how silver coins are priced will allow you to go down to a local coin dealer and make a purchase without the business owner directing you to something they have a high margin in.
New investors should work with online business that have good reputations. Any business that prefers to educate and inform before they offer a product to purchase is a good choice. Some online retailers offer online purchases without consulting a representative. That is a good option because the pricing is right there on the web and you can compare prices.
Knowing how much you can invest and how many coins or bars you will get is important. For those looking for the best education and support check out our 5 Best Gold IRA Companies. These companies work with gold and silver buyers and can help with both CASH and IRA investments. They offer guarantee buybacks and pride themselves in educating their clients.
Finding reputable dealers can be difficult and understanding prices is tricky. Here are a few additional articles you could read and get a good information prior to purchasing.
- Article - 5 Best Gold IRA Companies
- Article - What Precious Metals Company is Best if I only have $10,000 to Invest?
- Article - Bullion vs Numismatic Coins as an Investment
- Article - Gold Bullion vs Gold Proofs vs Brilliant Uncirculated
- Article - IRA Eligible Silver Review
Always go with this philosophy, "if it's a great deal today - shouldn't it be tomorrow also?"
How to Know if Silver Coins I'm Buying are Actually Legit?
Yep, there are counterfeit and fake coins on the market. Primarily these fakes are found coming out of China but for those uninformed, you could be scammed by any online or storefront seller. If you find a coin or bar and the price appears to be too good to refuse there may be more to the deal than you know.
Working with reputable precious metals dealers will help you make the best decisions. Make sure you check the reputation of the business before making a purchase.
Few Questions To Ask The Silver Seller
- Has the coin been graded? Professional Coin Grading Service, Numismatic Guaranty Corporation, and Independent Coin Graders are the four popular grading services. If you are unsure of the quality have one of these organizations grade the coin before purchase.
- Are the coins in Mint Condition? When working with a company online and you don't see the product before you purchase then know and understand grading. If you can find out if the coins were purchased directly from the Mint or if they are resold then ask what guarantees they have that the coins are of investment grade.
- What's the Purity of the Coin? IRA-eligible coins are the most traded coins in the world. To qualify for IRA the Silver must be .999 or greater in purity.
- Are you Selling Coins or Rounds? Remember Coins are Minted by Sovereign Countries and have a face value. Rounds look like coins but have no face value and are minted by a private mint.
- Is the Silver Bar .999 Pure and Stamped? Bars should be stamped with their purity and who minted them. Check with IRS to confirm the bar is IRA approved.