Types of Silver
If you are planning on investing in precious metals such as silver – and in today’s unstable economic climate, these metals are both a reassuringly solid island of reliable value in a shifting sea of inflation and global financial shock, and a way to earn money through buying and selling – then it is a good idea to learn what varieties of silver are available at the current time, so that you can place your funds wherever it most benefit your limited situation.
Like all choices, this one is a judgment call that you will need to make, based on your circumstances, your beliefs, the resources available to you, and even just your tastes. However, you can make your choice more easily if you are informed about what you are choosing between, and have a solid basis of data as well as a more or less complete list of the options open to you.
One of the first concepts you should be aware of when examining types of silver is the idea of fineness. Fineness refers to how much silver is in the metal which you are buying. In some cases, the fineness is high enough so that you know the silver is almost pure, except for a few impurities which it is impossible to remove in this imperfect world. In other cases, the fineness is lower, and this indicates that the silver has been alloyed with another metal, usually copper.
Fineness is typically .999, or 99.9%, for most silver bullion coins, although the United States and China occasionally issue alloyed coins instead. The Canadians enjoy a comparative advantage in fineness, offering silver which is .9999, or 99.99% pure silver, .09% finer than competing types. Alloys are typically anywhere from .900, or 90% pure silver, up, though the exact proportion depends on the choice of the minting authority.
Varieties of Silver Coins
Ever since governments got into the business of minting silver coins to sell to the general public, beginning in the 1980s and partly based both on the lesser strategic value of silver reserves and on the success of gold coins among numismatic collectors, certain types of coins have appeared. Although many of these types are ancient and have been minted for collectors for several centuries, the approach today is far more systematic, since striking coins for the people to buy has become big business.
One distinction you will frequently encounter is that which divides bullion coins and commemorative coins. Bullion coins are coins which are issued mainly as a silver investment – that is, the purchaser is theoretically supposed to be buying them mostly for their intrinsic silver value. These coins are made out of silver of either .999 or .9999 fineness, in the vast majority of cases, since they are literally supposed to be stockpiled as bullion.
Bullion coins, however, have been made increasingly attractive to collectors by governments because many of them now issue these coins with unique, non-repeating designs on the reverse each year. For example, the Silver Panda of China has a different picture of a panda on the reverse annually, while highly imaginative variations of kangaroos appear on the reverse of Australian Silver Kangaroos. As such, many of these coins are likely to acquire a premium quite a bit higher than the spot value of the silver they contain, and will be bought and sold among collectors on this basis.
Commemorative coins are special one-time issues which bear an image and sometimes a legend which refer to the unique event they are celebrating. The anniversary of a nation’s founding, the fiftieth or hundredth occasion of a politician’s or warrior’s birth, or some other famous event can all be used as the basis for a commemorative coin. The primary aim of these coins is to be collectible – though, ironically, many of them end up being worth little more than their spot value!
The commemorative coins issued by some countries have less than .999 fineness, probably because these governments deem their collectible value will make up for the lessened melt value of the coin. Many United States of America commemorative coins, for example, have a fineness of .900, or 90% fine silver, with the remaining 10% being copper alloy.
Silver coins come in many different sizes, though 1 troy ounce is the most typical weight for both bullion coins and their commemorative brethren. Other common sizes include 1/10 ounce, ¼ ounce, ½ ounce, and 10 ounces. A few enormous 1 kilogram and even 10 kilogram coins have also been struck.
Read more about silver bullion coins.
Although governments have a monopoly on the minting of legally valid tender, and anyone who attempts to mint coins with actual monetary values on them will be arrested and jailed, it is perfectly legal for private companies to produce coin-sized and coin-shaped pieces of silver, weighing 1 troy ounce and with a fineness equal to anything produced by governments.
These coin-shaped and coin-sized silver bars are technically known as silver rounds to distinguish them from actual silver coins. They bear no monetary value, and are worth the current spot value of a troy ounce of silver, plus a very narrow margin above spot. They are not useful for investing in the sense of appreciating swiftly in value because of their collectible qualities, but they are an excellent choice for people who are interested in silver chiefly as a way to store value in a stable form, since their premium above spot value or melt value is usually lower than that of even bullion coins.
Silver bars are the final form in which you are likely to encounter the argent metal during your investing career. These bars come in a multitude of different sizes and shapes, including many of the sizes found in coins, as well as huge 1,000 ounce bars and the like. Some are fairly crudely cast, while others are highly polished works of art. Some bars, such as Johnson Matthey, have gained a market value close to double the spot value of their constituent silver. This is because they are no longer being produced and because they often have unique designs, such as the “koalagram” or “shipwreck” bars, the former bearing the image of a koala, and the latter having been produced out of silver recovered from a historic shipwreck.
Silver As A Commodity
Silver is the most common of the precious metals – a group of metals which is defined mostly by its rarity. All precious metals are much more rare than “base metals”, though not all rare metals are precious, as those which are too dangerous to be kept in close contact with humans, such as radium, are excluded from the category.
Interestingly, many of these rare metals have properties which they share with each other but not with base metals. For example, all precious metals resist chemical reaction very effectively, meaning that they do not rust or corrode under normal conditions found at the Earth’s surface. Most of them are quite soft and easily worked, but have very high melting points. They also have a natural shimmering appearance which makes them beautiful in human eyes and prized for jewelry and decorations.
Another interesting fact is that if silver were more common, it would likely be used in place of copper for our electrical wiring, since it is a superior conductor of electricity. It is too rare and too valuable to be strung between the world’s utility poles, however, though this superb conductivity helps to explain why silver is used for a large number of industrial applications, including electrical contacts.
Silver, prior to the machine age, was used exclusively for monetary and aesthetic purposes, and these uses continue vigorously today. Although silver is being steadily mined all over the world, and new methods have been developed to recover it from other minerals, this precious metal retains its value and status, and is still an excellent store of value in economically uncertain times.
The governments of the world are minting bullion coins as fast as their treasuries allow in order to take advantage of this major market – a good way to give their citizens a stabilizing financial asset and for them to earn money without raising unpopular taxes at the same time.
The History of Silver as a Commodity
Silver was used for transactions for several thousand years before coins were minted, in the relatively clumsy form of silver ingots. Due to the relative illiquidity of a good sized ingot of silver, its use as money was limited to those who already had a lot of resources. The typical Egyptian peasant probably occasionally saw a silver bar or two at a distance, changing hands between merchants or royal officials in the market, for example, but very likely never owned one himself. Soldiers and artisans were paid in kind – with food, cloth, or other commodities – but not silver.
Partially silver coinage – and, probably, coinage itself – appeared in the kingdom of Lydia, located in the western half of what is today Turkey, minted in the capital of Sardis around 600 B.C., during the reign of King Alyattes. The coins produced by this monarch were made of a blend of electrum, which is a naturally occurring alloy of gold and silver, and silver and copper added by the Lydian mint to extend their supply of the metal.
The king’s son, Croesus, has become synonymous with wealth, supposed by legend to be able to turn everything he touched to gold, but this attracted the attention of the predatory Persian Empire, which invaded Lydia, overwhelmed it, and took it as a vassal kingdom. However, this ensured the spread of the concept of coinage, as the mighty Persian Empire began to strike coins and the other kingdoms of the Middle East, and then the Mediterranean region, followed suit.
For a long time, through human history, silver was the preferred coin for most economic transactions because it was rare enough to have value, but common enough so that there was sufficient coinage in circulation to keep the wheels of commerce turning. Gold was used less precisely because it was so valuable – it was employed as a store of value by the wealthy, and for large scale transactions by powerful merchants, lords, and princes rather than an item of everyday buying and selling.
The Lydian invention of coinage, as well as the increasingly effective mining techniques developed over the millenia and the discovery of new lodes of the precious substance, revolutionized commerce because it allowed the minting of pieces of silver small enough for ordinary people to use them.
Monetizing the economy down to the lowest levels allowed the development of greater economic activity as well as greater diversification in trades, since it was no longer necessary to try to figure out the barter value of a pair of sandals in terms of chicken eggs, for example. Creating an abstract, universal unit of barter value was an interesting step, in that it allowed greater diversity of goods to be offered without running into barter problems, and it also allowed the storing of a stable value over time.
Although silver values fluctuate over days, months, years, and centuries, the relative rarity of the metal means that it keeps a certain amount of intrinsic value no matter what. Thus, it became possible for people to save up money, either to use in an emergency or to make a large purchase that would have been totally outside their reach under a barter economy. This, in turn, stimulated further economic development, technical advance, and a more varied array of trades and products.
Silver in Rome and the Medieval Period
The silver denarius was the literal backbone of the Roman Empire, though its origins lie in the days of the Republic, because this coin, with its valuable precious metal content, was used as the standard pay for Roman legionaries, ensuring their loyalty to the Emperor whose face the coin bore. The literal connection between the effigy on the coin and the man who was the paymaster of the powerful Roman legions underlined the direct link between silver and power during the period of the Roman Empire.
Although the denarius was the standard coin of the Empire, the need for smaller denominations – since one denarius was roughly equal to a day’s wages for a legionary – caused bronze and copper coins to be minted as well, to allow smaller transactions to go smoothly, as when someone wanted to buy a loaf of bread or a cheap knife.
Nevertheless, the timeless value of silver is clearly indicated by the fact that while the bronze and copper coins could be minted anywhere in the Empire by local authorities, silver denarius and gold aureus coins could only be legally minted in Rome, under the control of the Emperor and his immediate retinue of friends, relatives, and trusted generals.
The Romans suffered from one of the limitations of a currency based purely on precious metals, however – they eventually ran out. The Imperial government gradually mixed more and more base metal into the silver, which prompted people to hoard the remaining pure silver denarius coins, and contributed to falling wages and rising inflation. Even worse, much of the metal was sent overseas to India to buy imported goods, depleting the Empire of silver still further.
It is possible that the Empire fell not only due to plagues, destructive wars, and the greed of its plutocracy driving the ordinary Roman out of work with huge slave-operated plantations, but also from the limits of its silver supply, which forced the Empire to debase its own currency and thus create a hopeless mire of economic problems in which its citizens became trapped.
Shortly after the fall of the Roman Empire, a new coinage was issued by Pepin the Short, the father of the famous Emperor Charlemagne, founder of the Carolingian Empire. Using silver reserves, he minted “novus denarius” coins, called “deniers” by the Franks. This word transformed into penny, pfennig, and other coin names that are still familiar today.
For the next thousand years and more, the burgeoning European economy was one based on the silver penny in its many forms. The period was filled with economic turmoil, problems with counterfeiting and coin clipping (despite unspeakably cruel and shockingly disproportionate punishments for these crimes, including death by torture in England), but was based essentially on silver currency. The 16th and 17th centuries witnessed the opening of New World silver mines which greatly increased the world supply of this metal, leading to yet more massive economic expansion.
The Silver Standard
The silver standard was adopted officially in a number of countries in the post-medieval world. However, as more and more silver was discovered, governments preferred to make gold the fixed part of their coinage, beginning with the British at the end of the Napoleonic Wars. The British adoption of the gold standard possessed immense clout in the world economy due to the British Empire’s control of trade through its mastery over the world’s sea lanes thanks to its formidable navy, which was one of the best in the world despite the fact that its sailors were essentially slaves, subject to the tyranny of their captains and granted no legal rights whatsoever after their capture by the dreaded “press gangs”.
The United States persisted in keeping a silver standard for decades after the British move, which resulted in large amounts of silver entering the young republic, while its gold – undervalued on the world market – took wing overseas. The U.S. government changed its mind spectacularly several times in the succeeding years. In 1873, gold was adopted as the standard, and silver was “demonetized”, meaning it could no longer be legally used for purchases. The outcry over this was so massive that silver was added back in 1878, making a double metal, or bimetallic, standard.
Eventually, gold was demonetized instead, in 1933, returning America to a pure silver standard. In a strange move for a free nation, ownership of gold itself was made illegal, and the government coerced gold owners into turning in all of their gold currency for silver or paper equivalents. The silver standard, too, was also abandoned in time. Since the U.S. was then one of the world’s most powerful economies, this moved the rest of the world to imitation, with the Swiss being the last holdouts, only demonetizing gold and silver in the year 2000.
Silver in the Age of Technology
Although silver is no longer used directly as currency (though it is theoretically legal tender at its face value in many countries), silver retains its ancient use as a store of value, just as much as it did in the age of the Caesars, the Vikings, or Napoleon and Beethoven. Today, the governments of the world issue millions of beautifully made silver bullion coins, proofs, and commemorative coins annually, catering to the market of people who mistrust the value of their paper money over time.
Silver has many industrial and medical uses as well, which also helps to ensure its continuing value. Its softness made it unusable for most purposes throughout history – for example, a silver plow, besides being incredibly expensive, would have simply curled and folded in the ground, while silver armor would part beneath the stroke of a high carbon steel sword.
However, its other properties – such as its high electrical conductivity and its resistance to corrosion – make it superb for many high technology applications. One of the most dramatic of these is in cooling rods for nuclear reactors.
Buying silver today is a great way to ensure that you have a store of value that has stood the test of time over 2,600 years, since the first coins were minted in long-fallen Lydia through all the changes and tumultuous years since, up to the present day. There are also exciting investment possibilities in buying and selling coins that have a value above their spot value because of their rarity, beauty, or other qualities. And, beyond all that, there is perhaps also the timeless lure of treasure, and the mix of joy, horror, and adventure that its history is laden with – for the whole panoply of human endeavor, conflict, and striving has been laced through with a bright thread of silver.