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Why Is Silver So Cheap?

Ever wondered why is silver so cheap to buy? In this article we will answer the question, “why is silver so cheap?” In addition, we discuss the best silver coins to buy, the history of silver, why you should own silver and how to buy silver coins.

If you are thinking about buying silver, then it may be a good choice. Compared to the price of the US Dollar and many other asset prices, silver is at a historic low. In fact, many commodities like gold and silver are priced low and are considered to be at discount prices. Many investors recommend including precious metals like silver in your investment portfolio. Commodities such as silver (and gold) have stood the test of time. In fact, silver has been used as money for thousands of years. So why is silver so cheap?

To answer the question, “why is silver so cheap?” we must understand how silver is traded. Physical silver, like silver coins and bullion, are not actually traded in most cases. Instead, Wall Street traders buy and sell futures contracts for silver.

Why is Silver So Cheap?

“A precious metals futures contract is a legally binding agreement for delivery of gold or silver at an agreed-upon price in the future. A futures exchange standardizes the contracts as to the quantity, quality, time, and place of delivery. Only the price is variable.” – Investopedia

Silver Price Manipulation: Reason #1

In fact, the “paper” contracts on silver and other precious metals are many times greater in value and size than the overall physical silver market. Furthermore, for every ounce of silver mined, there are many more “paper” contracts acting as derivatives – distorting the market price. In addition, although the contracts may be settled in physical silver, this is normally not the case. Instead, contracts are settled using dollars and very little physical delivery of silver occurs. As a result, the price of physical silver is heavily influenced by the millions of outstanding silver contracts that trade hands on Wall Street. This is one answer to the question of “why is silver so cheap?”

Silver Price Manipulation: Reason #2

The second answer to the question of “why is silver so cheap?” is market manipulation. Many traders considered silver market manipulation a conspiracy theory until recently. To many traders, it seemed impossible that silver price could reach lows like $5/oz in the early 2000s. In fact, such a low price appeared counterintuitive to most people, given that silver is a limited supply commodity with many uses including coins, jewelry, industrial and electronic uses.

In the past few years, US regulators must have been asking “why is silver so cheap?” Because, the CFTC and the US Justice Department have been conducting investigations of traders for a number of years. At first, regulators could not prove that the silver market was manipulated. Finally, things began to change a few years ago.

However, in September 2020, JP Morgan was fined $920 Million for manipulating silver markets. One of the trading tricks used is called “spoofing.”

“Spoofing typically involves flooding derivatives markets with orders that traders don’t intend to execute to trick others into moving prices in a desired direction. The practice has become a focus for prosecutors and regulators in recent years after lawmakers specifically prohibited it in 2010. While submitting and canceling orders isn’t illegal, it is unlawful as part of a strategy intended to dupe other traders.” – Philadelphia Enquirer Article entitled, JPMorgan pays $920 million, admits misconduct over market manipulation.

In August 2020, The Bank of Nova Scotia was ordered to pay $127 Million regarding a precious metals pricing scheme.

-New York Post Article, April 11, 2010

More articles on Silver/Metals Price Manipulation:

The Undeniable Manipulation of the Silver Market, by John Adams

Scotiabank Fined $127 Million for Price Manipulation, False Statements

Deutsche Bank Fined for Market Manipulation

How Two Wealthy Traders Cornered the [Silver] Market – The story of how Nelson and Herbert Hunt used billions in oil money to manipulate the silver market.

Now that you understand why silver is cheap, it is important to understand that all things must come to an end. Many investors believe that silver market manipulation will end and right now is a great time to enter the silver market. In fact, many investors are calling this a buying opportunity. Silver has been a store of value for centuries and can easily be purchased in the form of coins.

History of Silver Coins

For thousands of years, silver coins have been used as trading currency. Silver has the properties of money, which are portability, divisibility and tangibility. In fact, the US money was backed by silver and gold until 1933.

Five Reasons to Buy Silver Coins:

  1. Silver is a store of value. National currencies (even the U.S. Dollar) come and go. But Silver has been around for thousands of years as real money. 
  2. It is a very liquid asset. Silver (and other metals) can be easily bought and sold in most large cities around the world. It is exchangeable for most currencies this way.
  3. Silver is a tangible asset. You can hold silver coins in your hand or put them in your safe. No waiting for the bank to open to get them. No worrying about destruction by fire or a hacker.
  4. It is a hedge against inflation. Silver tends to thrive during a crisis. Investors tend to jump into silver when stocks go lower.
  5. Silver is private. No other asset offers privacy like a silver coin. A transaction in silver between you and another person is truly a private affair.

Silver Coins in Your Portfolio

It is common to hold anywhere from 5-10% of investment portfolio in silver. In fact, there are some very large international investment portfolios that hold even larger amounts of their assets in silver.

Why Everyone Should Own Silver Coins

Silver Maintains Value, is Secure, Private and is Real Money

Silver is real money, which is tangible and is backed by something of value. Moreover, you can hold it in your hand. Silver cannot be taken from your bank account, like cash. In addition, hackers cannot steal silver from your computer, like Bitcoin. Finally, silver can be kept safely and privately in a secure location.

Real money is resistant to inflationary forces and has a value that is based on demand. First, silver has a long history of maintaining its value against the currency of the day. No matter what the value of a dollar is, a one-ounce silver coin is always equal in value to one ounce of silver. In addition, silver maintains a special balance with the value of gold, which fluctuates.

Silver Coins Are Affordable and Practical

Purchasing silver, one-ounce coins, such as the American Silver Eagle, is one of the cheapest ways to buy silver. In addition, the Silver Eagle is arguably one of the best silver coins to buy. Currently, silver one-ounce coins sell for approximately $25. Additionally, silver coins can be purchased in smaller denominations. They easily fit in your pocket or purse and could be used for trading, gifts or even to exchange for cash.

Silver Has a Limited Supply and Growing Demand

A Finite Supply of Silver Exists worldwide; It is Mined for Use in Jewelry, New Technology and Medicine

There is a limited supply of silver on Earth. Consequently, silver miners throughout the world have a finite quantity of silver available for mining. At some point, the amount of silver removed from mines will diminish and become zero.

At the same time, silver demand continues to grow. Silver has many uses in technology, jewelry, medicine and money. Jewelry made of silver has been popular for millennia, and continues to grow in demand. Moreover, there are many industrial uses for silver including batteries, solar panels and electronics. In fact, more than 50% of silver mined today goes to industrial use. And of course, silver coins remain in demand all over the world.

One other important point about silver coins is that they have traditionally outperformed gold in bull markets. For example, from 1970 to 1980, silver increased in price (compared to US Dollar) by over 3,000%.

Real money is sound money. Consequently, a silver coin is real, sound money.

How to Buy Silver Coins

Buying silver coins has never been easier. As a result, many silver sellers are competing for your business online and at your local coin shop. We’ll discuss coin shops in more detail. We won’t discuss purchasing paper contracts or electronic funds. obviously, buying funds or shares of silver is not recommended because you cannot hold it in your possession like a coin.

Finally, another option for finding the best silver coins to buy is buying online. Buying from a website has become more secure in recent years, but you must do diligent research to verify the buyer. Only buy from established suppliers that have been around for a long time and have positive feedback. Preferably you can get a recommendation from a friend.

Silver Coin Dealers and Coin Shops

There are several methods for finding the cheapest way to buy silver coins and bars. The first option is to search for reputable coin dealers near where you live. Ask friends or look online for reviews of the local shops that buy and sell silver coins. Next, visit several coin dealers or coin shops in your area and get to know who they are and what they offer. Find a dealer who you enjoy dealing with and who is knowledgeable about silver and silver coins. They can be a great resource for learning about the best silver coins to buy. Ask questions, like how they determine silver spot price or how to determine the best silver coins to buy. Get comfortable with whom you are dealing and get to know them.

Best Silver Coins to Buy

The Best Silver Coins to Buy Are Trusted, Universally Recognized and are Safe

Now that you understand the history and significance of silver and why buying real silver coins is important, let’s explore the best silver coins to buy. This is the cheapest way to buy silver. It’s also one of the easiest ways to stock up on silver.

There are five important one-ounce silver coins that are best silver coins to buy. The five most highly regarded silver coins that are considered the best silver coins to buy:

  • American Silver Eagles
  • Canadian Maple Leaf
  • Austrian Philharmonic
  • Chinese Silver Panda
  • British Silver Britannia

These are the best silver coins to buy because they are recognized and trusted around the world. These coins are minted with precision and integrity. The minting is overseen and secured by the respective governments who are involved. When you travel around the world, all of these coins are well-known and recognized universally.  Buying any one of these is considered to be a relatively safe bet and they are clearly the best silver coins to buy.

Best Junk Silver Coins

One often over-looked market for buying silver coins is the junk silver market. Junk silver coins are simply used silver coins that show wear and have no numismatic (collectible) value. Buying junk silver coins can be fun and rewarding, and tends to be low risk. Junk silver coins are typically sold near their silver melt value; however, recently, junk silver has traded at a premium because of higher demand for metals.

As a general rule, most pre-1965 silver coins in the United States are at least 90% pure silver. The most popular junk silver coins in the United States tend to be:

  • Morgan Silver Dollars
  • Peace Silver Dollars
  • Franklin Half Dollars
  • Walking Liberty Half Dollars
  • Roosevelt Dimes
  • Washington Quarters

Market Bubbles Historically Destroy Markets and Smaller Investors

In 2000, Many Retirees Lost 50% of Their Investments When the Dot Com Bubble Burst

The Dot Com Bubble that began in March 2000 caused the S&P 500 Index to drop almost 50%. This bubble bursting lasted until 2007. That means that if you were planning to retire in 2000, and the majority of your investments were locked into a Wall Street 401(k) that fell 50%, you couldn’t retire. Many people at this time actually went back to work because they couldn’t afford to retire.

Currently, Wall Street stock prices are at record-breaking levels. Prices are high, interest rates are low and everyone is cheering the mania. The question is whether or not markets are overpriced in a bubble.

The Future of Silver Coins

Silver Coins Have Historically Been a Solid Hedge Against Bubbles and Market Crashes

In 2021, the S&P 500 Index hovers around 3,800 points, the highest it has ever been. As a result, the U.S. stock market is literally at its peak right now. In addition, real estate prices are at record highs in many places in the United States. Despite official statistics posted by the US Government, many experts are concerned about inflation, which equates to higher asset prices.

Most investors devote a small portion of their portfolio to precious metals. Precious metals like silver coins can provide a hedge against market catastrophes like the one that happened in 2000 and in 2008.

The Bright Future of Silver Coins

We at Piggy Bank Coins believe that silver has a bright future. Holding a tangible asset such as silver will always be highly regarded by investors. Having silver in your investment portfolio is considered by many to be a safe and secure option. It’s important to grow your wealth, but retaining a portion of your wealth is critical too. Silver coins are a real, tangible money that can be a store of wealth for a lifetime. We believe demand will continue to grow and that investors should continue to hold silver coins.

Wrap Up: Why is Silver So Cheap?

Hopefully we have successfully answered the question of “why is silver so cheap?” Several large trading institutions have been charged with market manipulation over the past few years. In addition, derivative trading of silver paper contracts heavily distorts the silver markets. As a result, this may be a great opportunity to buy silver.

Get a copy of the “Free Gold and Silver Buyer’s Guide” today. It’s free and has some great information in it about investing.

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Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, in order to help you make the best choice for you.

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