1 oz Coins or 1000 oz bars

One of the most common questions we get at Bullionmark is should I buy 1000oz bars or 1oz coins? Logic suggests you should buy maximum number of ounces as close to spot as possible. However in most cases this approach does not maximise your returns.

When investing in silver you must consider that you are warehousing silver today for sale at a higher price sometime in the future. So deciding the target market for the future sale has a pretty important influence in your purchasing decisions today right?

If an investment mania in silver occurs it will be the average Joe who will bid up the price for your warehoused stocks. Average Joe is going to pay the biggest premium for bullion coins because it is recognisable, real money, transferrable, trustworthy. Most of those qualities do not apply to large bars. You are an early entrant into this investment opportunity, just be smart about your choices today and you will do well. This is a business not just a fun hobby, so think clearly about your exit plans. Think about who will buy your silver in future and plan your mix accordingly.

As an example right 1oz silver coins are selling at over 100% premium to spot up from 50% 6 months ago and 25% in 2007. It is not your buying price thats critical its demand potential and selling price (margin) that counts. Coins have and will continue to provide the best margin potential and greatest demand. Alternatively if you buy a 1000oz bar today I pay $15.50 but only get $13 in resale a 16% decline versus spot. Why because the only demand is from a dealer who has to make his own margin at your expense. I know paying such high prices over spot is somewhat counterintuitive but owning the products that will have the greatest demand is the best route to profitability.

1. Coins are portable for trading goods & services and resale to joe sixpack at some date in the future
2. Mid sized bars are a good convenient store of value easily go in safety deposit boxes or safes. Are reasonably easy to trade with Joe sixpack if branded by recognisable mint.
3. 1000oz bars are for your families store of wealth & security if you can securely store them and transport when necessary. Strategically safe and accessible storage is critical, but very expensive and complex. Due to a limited target maket they are difficult to offload and likely to be the worst retun on investment

Whilst I support the quest to accumulate as many ounces as you can afford, make sure they are profitable ounces.