Buy Silver? Read On.

I invest in 1 ounce gold and silver bullion coins minted in the U.S. Maybe you should, too. If for no other reason as a hedge against all the Monopoly money in circulation.
“The demand for American Eagle silver bullion coins has continued to increase throughout calendar year 2015 and remains on a record-setting pace,” (U.S. Mint Spokesman) Stump said. “This demand is a global one and all mints are trying to meet the demand for this precious metal. As of Aug. 24, we have sold 31,283,500 ounces of Silver Eagles. This compares to 27,713,000 ounces for the same period last year. It should be noted that 2014 was a record-breaking year for American Eagle silver bullion — 44,006,000 ounces being sold.”

Long-term increases

“To add further perspective to the demand for silver bullion coins, for the first 22 years of the American Eagle Silver Bullion Coin Program, the Mint would typically sell between 3 million to 10 million ounces per year,” Stump said. “Since 2007, sales have increased nearly five-fold from 9,887,000 in 2007 to more than 44 million last year. The rapid increase in demand for all silver bullion coins has put a severe strain on all global suppliers.”


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Guy
Guy

Agreed. All of the major central banks are printing money like there’s no tomorrow, but you can’t print silver and gold out of thin air. Silver is more of a commodity than gold, so the price tends to fluctuate more, but it’s much more liquid than gold. Gold is a good store of value, but you won’t be using it to buy groceries.

I wonder what the monetary system will look like after the collapse of the current debt based monetary systems. Maybe transactions will be done using a combination of gold, silver, and copper depending on the price of the transaction. Or maybe we will have electronic debit cards which are linked to bank accounts whose values depend on the amount of precious metals we have in our safe deposit box. Or if things get bad enough, we will just trade food, ammo, and drugs.

IndenturedServant

I’m curious what sort of premiums others are paying for pm’s? I just paid 4% on 1oz gold maples yesterday. I was in a hurry so I did not inquire about other products.

I’ve heard that premiums on 90% us coin are running 30%+ if you can find it! Apparently dimes, quarters and halves are becoming unobtanium. Just a few short years ago I was buying it at spot or a few percent above.

Old Morgan and Peace dollars have premiums exceeding 95% right now! Ninety five fucking percent!!!??? I’ll never understand that but I am sorely tempted to sell a bunch to trade for silver eagles. I could nearly double my money based on what I paid before the premiums went full retard.

IndenturedServant

Guy said:
” Or maybe we will have electronic debit cards which are linked to bank accounts whose values depend on the amount of precious metals we have in our safe deposit box.”

There are a number of companies that offer this type of service now. I even have one in the city where I live. I’ve not tried them out because like they say, if you can’t roll around on it naked, you don’t own it. My big issue with the local firm is that the guy can’t seem to give me a definitive answer to: “What happens to MY pm’s if the business or business owners run afoul of the law and assets are seized?

starfcker
starfcker

IS, I have always liked junk silver, seemed like it would be so barterable in a pinch. I know a bunch of these cash for gold guys, and gladly took off their hands any junk silver they got. You’re right, almost none of that trading hands anymore on the melt market. 2 for 1 is a no brainer. Might have to do that myself.

Guy
Guy

“There are a number of companies that offer this type of service now. I even have one in the city where I live.”

That’s pretty cool. I share your doubts about their safety, though I’ve tossed around the possibility of opening one up in Singapore. I bet FATCA added some obstacles to that.

“What happens to MY pm’s if the business or business owners run afoul of the law and assets are seized?”

I know you’re referring to precious metal stores, but from what I’ve read, if it were your normal bank account, it’s treated as a liability, liquidated, and you will now own equity in the bank instead of money. And I know this isn’t England, but I think a few years ago something similar happened there and the bank stole their PMs and gave them electronic funds.

Guy
Guy

I’m sure many of you know this already, but one thing everyone can do is hoard pre-1983 pennies, and nickels. Nickels made in 1982 and earlier are mostly copper and their melt value is greater than their face value (though melting them is illegal right now).

Nickels, though right now their face value is below their melt value, have been over their face value a few times in the past years. It happened often enough that there was speculation that their formulation would be changed to a less expensive one. Kyle Bass, the famous hedge fund owner, ended up buying millions of nickels after he saw where their value was going:

“The value of the metal in a nickel is worth six point eight cents,” he said. “Did you know that?”

I didn’t.

“I just bought a million dollars’ worth of them,” he said, and then, perhaps sensing I couldn’t do the math: “twenty million nickels.”

“You bought twenty million nickels?”

“Uh-huh.”

“How do you buy twenty million nickels?”

“Actually, it’s very difficult,” he said, and then explained that he had to call his bank and talk them into ordering him twenty million nickels. The bank had finally done it, but the Federal Reserve had its own questions. “The Fed apparently called my guy at the bank,” he says. “They asked him, ‘Why do you want all these nickels?’ So he called me and asked, ‘Why do you want all these nickels?’ And I said, ‘I just like nickels.’”

Guy
Guy

Oops, *pennies made in 1982 and earlier, not nickels.

IndenturedServant

Currently 1982 and earlier pennies are worth 1.55 cents each based on copper content. Nickels are worth 3.18 cents based on current nickel content.

I have never thought that hoarding pennies and nickels is a good idea. First off they are heavy, take up lots of space, must be secured and most importantly are illegal to melt and it takes time to sort the pennies. I don’t know how many pennies I could sort in an hour but I’m guessing my labor is worth more than I can gain by sorting them. Next, if you needed to liquidate them it’s going to be a challenge. If Kyle bass thought acquiring that many nickels was difficult, just wait till it’s time to offload them. Finally, and most important, you will get eaten alive by inflation waiting for it to become legal to melt them. Hardly a good investment by any measure.

IndenturedServant

Star, I diversify my pm’s by purchasing generic rounds and bars, old coinage and both domestic and foreign sovereign bullion coinage and bars. An added thing I do for gold due to the risk of counterfeiting is try to buy old gold in original packaging such as credit suisse pamp gold bars. They come in little sealed plastic packages. Actually I try to buy all forms of gold sealed in original packaging. Many sovereign silver coins are available this way as well. I also have a number of graded and sealed numismatic coins but they are more a means of putting a lot of wealth in a tiny package and not for bartering. You best know what you’re doing with numismatics though.

If it ever comes down to bartering, sellers will have their preferences on what is acceptable. I know I would. Having a little of everything is a good idea.

Keep your ear to the ground with regards to counterfeit pm’s as well. I bought a bunch of the englehard silver prospector rounds and a couple of years ago found out that they were one of the first generic rounds counterfeited in quantity by the Chinese so I quietly traded them for something else.

Guy
Guy

Your points are all valid except for the inflation one. Inflation would actually increase their relative value because when considered for their melt value, they’re a commodity and their relative worth would only go up in a high inflation scenario.

I agree that taking the time to sort pennies and package nickels is pretty much pointless, but let’s be honest, most of the way we spend our free time is pointless anyway. I do this once every 6 months or so on a really slow Sunday, and I’m not terribly bothered by it. However I don’t think they’re very heavy or take up much space. My copper penny and nickel stash fits in a small corner of my safe. I know it’s laughable, as it’s MAYBE .01% of my current net worth, but it’s easy and accessible to anyone, and I enjoy it. Think of it as weeding to a gardener. But if we were to experience Zimbabwe-level inflation, that .01% would quickly turn into maybe 20%.

Yea, their melt value is currently low, but you could make the same argument about silver and gold. Nickels are 75% copper. Is copper going up or down relative to the central bank controlled dollar in the next few decades?

But all of those arguments could easily be wiped away by the fact that melting the coins is illegal. True, though that may not always be the case in the future. If there was a severe commodity shortage, the government may be willing to buy up certain coins at a premium. But more importantly, the whole reason you hoard these things is due to lack of trust in the financial system. Why buy silver and gold when it pays no dividend? Precious metals are essentially shorting the central banks. There may come a time when the central government needs certain metals for industry and realizes it’s not worth prosecuting otherwise peaceful citizens for investing in metals that are worth more than their face value. Gold ownership was made illegal in the 1930s. Is our government more or less totalitarian than it was in the 30s? If there is a currency crisis, do you think your gold and silver coins will remain legal? You will hand them over for 10 cents on the dollar? And there may be currencies that are openly convertible in precious metals. Russia and China have bought up huge amounts of precious metal reserves and may make their currencies convertible in precious metals. If that occurs, there’s a potentially huge opportunity there.

It may be a total waste of time, but I think it’s a small price to pay for a potentially very effective insurance in our monetary system.

IndenturedServant

I’m not worried about confiscation. During the last confiscation they paid the then current value, not 10 cents on the dollar. Even if they did confiscate gold again the total monetary value would probably support the current bloated govt for a few hours or maybe days at most. The cost of gathering up the minuscule amount of gold in public hands would be enormous. PM’s would still be good on the black market though. I’d sooner skip gold coins across the surface of the ocean than turn them in. Any confiscation effort today would be purely punitive IMO. I don’t trust Chinese or Russian paper money any more than I trust ours.

I may be wasting my time too but for now, I’m very content and prefer hard money to paper. If it did come down to confiscation I’d still not want their paper money unless I could immediately trade it for something tangible.

Southern Sage
Southern Sage

I buy Morgan silver dollars. Lovely coins. I just like them and I am prepared to pay more than their silver content. They just feel like real money.

IndenturedServant

SouthernSage, are you paying the current 97.6% premium on Morgan’s? That’s not even for the collectible numismatic Morgan’s. I don’t understand why the premium is that high unless the boomers are buying them.

IndenturedServant

SSS said:
“Act now and please send Admin a contribution for this free, no risk, KISS advice.”

Oh yeah almost forgot, a triple helping of fiat is on the way admin. I missed the morning mail pick-up so it will go out Monday.

bb

Don’t forget the pre 1964 quarters .

Brian
Brian

Good lord… $6.49/oz over spot for generic 90% bags? That is fucking insane.
http://www.apmex.com/category/25830/90-silver-rolls-bags-generic

IndenturedServant

SSS, my LCS used to have a wicker basket full of old circulated silver dollars in the middle of the display case. I would buy them for no more than 5% over. Three of four years ago I stopped because the premium went up almost overnight to 20%! Somebody online was calling all the local coin shops offering to buy them as fast as they could acquire them. Premiums have risen continuously since then.

IndenturedServant

Page seven at this link gives a good run down of current premiums. http://libertycoinservice.com/wp-content/uploads/2015/08/libertys-outlook-newsletter-august-2015.pdf This is also a fantastic place to shop online or in person. Long history and great track record.

IndenturedServant

Damn Brian that’s 45.2% over spot!

IndenturedServant

SSS, I encourage everyone to do their own research and develop their own plan. I’m the only one in my family buying PM’s and I only have a few friends that do or that I’m aware of.

I’m not looking to get rich……I’m looking for protection. Too many prepper types are buying because of the hype that pm’s are going to the moon! They’ve been pretty unhappy for a few years now. I’ve never been more content.

starfcker
starfcker

Yes, but turning old silver into new silver at 1 x1.5 or 1x 2 is a no brainer. Play of the month. I’m going to look into that monday. Thx

Administrator

“One important aspect of the physical market that is often overlooked is the premium it commands over spot price. Right before the Global Financial Crisis in 2008, the spot Silver price fell as low as USD 9 per oz., whereas the price of a 1 oz. Silver Eagle was around USD 17 on the wholesale market and even higher on the retail market! That’s a price premium of 188%!

That means that if you had held 100 oz. of paper Silver, you might have had to liquidate that for USD 900 (assuming the market was not halted for trading then), whereas if you had held 100 pieces of 1 oz. Silver Eagle coins, you would have gotten at least USD 1700 for them if not more.”

BullionStar, The Difference in Paper and Physical Gold and Silver in times of Crisis

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