In this paper, we report the formation of silver–carbon encapsulated metal nanoparticles (EMN's) using a high-current pulsed arc system in an argon atmosphere. The deposits were studied by Optical Extinction Spectroscopy (OES), X-ray diffraction (XRD) and Transmission Electron Microscopy (TEM); the chemical analysis of the deposits was performed using Energy Dispersion X-ray spectroscopy (EDX). Using the total nanoparticle diameter, the bulk crystalline density of silver and an estimate amorphous carbon (a-C) density we have calculated the size of the silver nucleus and the thickness of the a-C coating as a function of the argon gas pressure. The OES spectra of the EMN's exhibited two peaks characteristic of the Surface Plasmon Resonance (SPR) of elongated/very close silver nanoparticles; a subsequent thermal annealing strongly increased the SPR peaks. The double peak SPR spectra were modeled using calculations based on the existence of silver nanoparticles in the form of prolate spheroids. The main advantage of our preparation method is that the metal nanoparticles are encapsulated in a-C from the beginning and this layer acts as an efficient chemical barrier.