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Written by CMI Gold & Silver Founder William Haynes in June 2012 and updated in 2025.
Understanding the purpose of your investment in silver and gold is crucial. Investors typically buy silver coins, silver bullion coins, and coin silver for one of three purposes: as an investment, as an inflation hedge, or for survival purposes. Those who buy for investment purposes are usually looking for price increases due to silver’s supply/demand fundamentals. For instance, in 1998, Buffett purchased 129.7 million ounces of silver for Berkshire Hathaway, a holding company he leads.
Buffett’s silver purchase, which became legendary among silver investors, was probably for investment purposes. However, it may have been an inflation hedge, Buffett did not say. Even after he disposed of it, Buffett said very little about his silver investment. One thing is sure, however, that Buffett did not buy 129.7 million ounces of silver for survival purposes.
Investors who buy silver and gold for survival purposes are often preparing for worst-case scenarios. These scenarios could include the Federal Reserve printing so many dollars that the dollar becomes worthless, a situation that has historically affected all paper currencies not backed by gold or silver. Another fear is a financial meltdown, which could lead to bank closures, as seen in Argentina and Paraguay in 2002.
Argentineans and Paraguayans who had the foresight to bail out of the banking systems and convert their assets to gold or coin silver were protected. Not only did banks close, but depositors were also limited in the amount of money they could withdraw when they reopened. Meanwhile, the Argentinean peso and the Paraguayan guarani sank in value. Shortly after those crises, Brazil defaulted on its international debt, and its paper currency, the real, sank.
Those are the kinds of situations that investors who buy coin silver and small gold coins for survival purposes want to protect against. In doing so, these investors buy silver and gold in forms that can be used for money or barter goods and services.
The best forms of silver for survival purposes are pre-1965 U.S. 90% silver coins and 1-oz silver rounds.
The most valuable forms of gold would be fractional-ounce gold coins, such as the 1/10-oz Gold Eagles, the 1/10-oz Krugerrands, the 1/4-oz Gold Eagles, and the 1/4-oz Krugerrands. But, before going forward, we must discuss which coins to avoid. That is because hundreds of web pages promote numismatic and collector coins and foreign coins. Such coins are simply wrong for survival purposes.
If the time ever comes for silver and gold coins to be used again as money, they would be worth only their metal content. Numismatic (collector) premiums would disappear. Anyone using gold or silver coins to buy goods or services would not be asked, “What’s the mint mark on your coin?” Nor will they be asked, “When was it minted?” The question would be, “What’s the gold content?” Hand someone a St. Gaudens and tell him it contains .9675 ounce of gold, and it will be difficult–if not impossible–to convince him to accept it at more than .9675 times the price of gold.
Numismatic premiums are fleeting in typical markets. (See our Double Eagle coins page.) You may also want to read our Myths, Misunderstandings, and Outright Lies page, which exposes the tactics used by telemarketers. Additionally, The Dangers of Buying Gold is a short warning about buying from telemarketers. Numismatic coins are bad investments for the average investor at all times, and for survival purposes, they are simply wrong.
If you ever need to use silver and gold to buy goods and services, you will want silver and small gold coins. Additionally, those coins should have specific characteristics to ensure they are readily accepted. First, survival coins should be stamped in English. Most Americans do not read foreign languages.
Second, coins should have their gold or silver content stamped; except for modern bullion coins, most do not. Having the gold content stamped on a coin in an emergency could help convince someone to accept it.
If your furnace goes out in January, the local heating guy may have never seen a gold coin. If you hand him a $20 St. Gaudens, how does he know it contains a little less than an ounce? If you try to get him to take British Sovereigns, how can you prove they contain .2354 ounces each? Try convincing the auto parts store guy that a French 20 franc contains .1867 ounces of gold.
Third, the coins you buy for survival should contain amounts Americans are comfortable with. Americans understand one-ounce, 1/2-ounce, 1/4-ounce, and 1/10-ounce coins. Americans do not quickly grasp the concept of .2354 ounce or .1867 ounce.
For survival purposes, avoid arcane foreign gold coins. (Although more British sovereigns are minted than any other coin, sovereigns are not well known in the U.S.) Instead, simply buy the popular modern bullion coins. Krugerrands are the cheapest and best-known. American Eagle gold coins are also readily recognized in the U.S. but carry higher premiums (markups over spot) than Krugerrands.
Krugerrands and Gold Eagle come in four sizes: one-ounce, 1/2-ounce, 1/4-ounce, and 1/10-ounce. For more information, visit our Modern Gold Bullion Coins page. (If you have been told that bullion coins are subject to confiscation and that old U.S. gold coins and/or foreign coins dated before 1933 are exempt, you must read Myths, Misunderstandings, and Outright Lies.)
Another plus for Krugerrands and Gold Eagles is that both are essential bullion coins and sell at small markups over the value of their gold content. Generally, however, Krugerrands carry lower premiums than Gold Eagles, but both Krugerrands and Gold Eagles carry smaller premiums than foreign coins of comparable sizes. And indeed, Krugerrands and Gold Eagles are cheaper than old U.S. gold coins.
Finally, the question arises whether to buy silver or gold. Both, but if you invest $10,000 or less, go exclusively with one-ounce silver rounds or circulated pre-1965 UD 90% silver coins. Pre-1965 U.S. 90% silver coins are commonly called junk silver coins because they have no collector value and trade for the value of their silver content. You may want silver and gold if you invest more significant amounts, say $30,000.
If conditions were to deteriorate so that silver and gold re-emerged as the preferred forms of money, you would want lots of small silver coins. If you were buying canned food, you would need silver coins because gold coins, even 1/10-ounce ones, would have great value. If you have only silver coins and need to buy something of high value, you simply trade a more significant number of silver coins.
At current prices, an investment in silver results in about fifty times the bulk and weight of gold compared to gold. Therefore, significant investments in silver create storage and handling challenges for some people. If storage and handling are problematic, use 1/10-oz Krugerrands or 1/10-oz Gold Eagles for the first $10,000. Still, try to have some silver coins on hand.
When buying for survival purposes, many investors have difficulty choosing between one-ounce silver rounds and junk silver coins. Rounds have their silver content and purity stamped on them. However, it circulated pre-65 US. 90% silver coins once served as money in the US and could do so again.
In the US, 90% silver coins were used for money as recently as the late 1960s, and many Americans remember using them. Yet pre-65 silver coins do not have their silver content stamped on them, but if the dollar were repudiated, people would quickly learn the value of pre-1965 U.S. 90% silver coins.
Another difference between 1-oz silver rounds and junk silver coins is that you get many more pieces of silver with junk silver coins. For example, a $1000 face-value bag of junk silver contains 715 ounces. Buy a bag of dimes, and you get 10,000; buy a bag of quarters, and you get 4,000 quarters. Buy 715 one-ounce silver rounds, and you get 715 pieces of silver.
If you are considering buying silver and gold for survival purposes and want to discuss the matter, or if you would like to know more about silver and silver bullion coins, call one of our non-commissioned brokers today.
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