Investing in silver? What do I buy?

[mts]

Dave, you said: "coins still retain some value because collectors are not scared and are collecting based on the same principles they have always had". That's an interesting statement worth pondering. One of the "principles" of coin collecting and assigning values to coins was based on how many of a particular coin were minted and still in circulation. Nobody knows how many silver coins are left in circulation. They have been getting melted down for many years and no records are kept documenting how many of each year are "destroyed". If you apply numismatic mentality to this situation, silver coins would be worth more as a "collectible" than it's silver content but they aren't. According to the Red Book price guide for example, many of the 90% half dollars, in good condition, are valued at $2.50. I can get about 10 bucks for them at the coin shop given the present spot price for silver. Bottom line is, when it comes to gold or silver coins and their values, you can toss the Red Book. As far as looking at numbers minted, at least for silver coins, you can again toss the Red Book.
What does Red Book say that 1954 quarter is worth?

Oh yea, the rub. Well the red book is behind for one. But let's say it isn't. My post said that if silver goes to 3$ an ounce the silver in the half is worth 1.08. And in the 1 dollar coin it is 2.32. But the value to a collector is worth what, 18 for the morgan dollar? But the silver round in this scenario is worth 3?
You are correct that because of melt we don't know how many are left but if we go on the assumption on original mintage you wouldn't lose everything.
BUT, did you get me off my point? What I meant to say is I don't think there is anyway that last part will happen. How can we trust the currency of today when the printer is going full blast. Silver has alot of value in industrial, medical and just being pretty. I personally would be happy with a spot price of 10 if it wasn't manipulated because then we would know our economy is safe.

I don't think the collector value on that morgan will be $18 if the price of silver is $3 an ounce. I think it would be more like $6. But your point is still valid.

 

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[packerbacker]

You're right on Dave. It's a tough spot for a "REAL" collector to be in with silver as high as it is. It promotes the destroying of the coins he/she wants to preserve and collect. I'm not sure the Red Book is "behind". If silver and gold were to loose much of their value, the book would be correct. If they ever change the laws about melting down pennies and nickels, those coins will disappear also and no one will ever know how many are left of certain dates.

 

[Silver Surfer]

My advice is "diversification":

40% in junk silver coins (US halves, quarters, dimes, and some silver dollars) - This gives you silver in a currency form for easy barter if the sh*t hits the fan

40% in silver bars and rounds - This is the best value for bulk silver

20% in Silver Eagles, Maple Leafs, etc. - These are nice looking collectibles that are fun to show off yet with only a small premium

If you follow this strategy you should be able to always find a buyer when you need to.

My opinion differs a bit..... If our currency becomes worthless, US mint would also be worthless... Why? From what I have gleaned, it is because the silver that is in older coins is not easily retrieved. That's why I am sticking with .999 silver bars (or rounds), and especially like the Stagecoach bars- they are scored and marked at 1/4 oz quarters... Very easy to use for buying/bartering, just like way back when people would take pure silver coins and "clip" them..
But if our economy completely collapses and bills/coinage become worthless, even silver and gold will probably be nearly worthless as no one has "money" to buy them... Thats where rice/beans, salt, sugar, and even coffee will have tremendous bartering power...
Just my opinion of course...

I nailed 175 1 oz stagecoach bars at $29.90 each, and in a week I am already up $85 dollars... ;-)

*edit* I forgot to add that a guy on ebay is selling the same bars I bought, and is averaging $34.00/oz for them and the bidding hasnt closed yet.. How can people be so dumb and pay that amount, when they can go to the source and get it for $4-5/oz less I just cant figure that one out at all..

 

[mts]

My advice is "diversification":

40% in junk silver coins (US halves, quarters, dimes, and some silver dollars) - This gives you silver in a currency form for easy barter if the sh*t hits the fan

40% in silver bars and rounds - This is the best value for bulk silver

20% in Silver Eagles, Maple Leafs, etc. - These are nice looking collectibles that are fun to show off yet with only a small premium

If you follow this strategy you should be able to always find a buyer when you need to.

My opinion differs a bit..... If our currency becomes worthless, US mint would also be worthless... Why? From what I have gleaned, it is because the silver that is in older coins is not easily retrieved. That's why I am sticking with .999 silver bars (or rounds), and especially like the Stagecoach bars- they are scored and marked at 1/4 oz quarters... Very easy to use for buying/bartering, just like way back when people would take pure silver coins and "clip" them..
But if our economy completely collapses and bills/coinage become worthless, even silver and gold will probably be nearly worthless as no one has "money" to buy them... Thats where rice/beans, salt, sugar, and even coffee will have tremendous bartering power...
Just my opinion of course...

I nailed 175 1 oz stagecoach bars at $29.90 each, and in a week I am already up $85 dollars... ;-)

*edit* I forgot to add that a guy on ebay is selling the same bars I bought, and is averaging $34.00/oz for them and the bidding hasnt closed yet.. How can people be so dumb and pay that amount, when they can go to the source and get it for $4-5/oz less I just cant figure that one out at all..

I don't believe the statement "the silver that is in older coins is not easily retrieved". Old silver coins have been melted in record numbers. It is very easy for the silver to be retrieved from these coins. It is true that it is harder to retrieve the silver from coins than with pure silver bars. But only marginally so.

I agree with you about eBay though. I don't understand why people are willing to pay so much more for silver on eBay. The bigger problem is though, that people on places like CL expect to sell their silver for the same prices they see people paying on eBay. They just don't get the whole fee structure and why you should expect to sell for less when receiving cash. It's fairly rare that I find someone on CL who has their silver priced competitively so that it is a good deal for both buyer and seller.

Finally, I have started worrying more and more about counterfeits as the price of silver goes way up. Silver bars and rounds are easily counterfeited. You can counterfeit old coins as well but they are more easily spotted in my opinion. Plus, counterfeiting US coins is a federal offense. I'm not sure that counterfeiting silver rounds falls under the same laws. Maybe someone else can chime in on this and set the record straight.

With all of that said, I still think diversification is a good idea. Not just with types of silver but with sizes and suppliers as well. It is easier to drill out or counterfeit a 10 oz silver bar than it is a 1 oz silver bar. So make sure you have plenty of small stuff and buy from a wide array of dealers. That way you are less likely to end up getting burned. I'd feel more comfortable with buying $10K worth of a wide array of different silver items from 10 dealers than buying $10k worth of 10oz silver bars off of some guy on eBay. In the latter case I may be stuck with $10k worth of plated metal.

 

[Silver Surfer]

Why do you disagree about the silver being nearly impossible to extract? By a refiner, sure.... But if you had a bag of 90% coins and tried melting them, how would YOU separate the silver from the copper?
Not easy for the everyday joe... And my opinion is, that in a shiatstorm collapsed economy, I can see it right now... "Oh, you have silver coins", and then, "what am I supposed to do with this, US Currency is worthless"... "Oh, but see mister, there is 90% pure silver in those coins"... "Yeah, maybe, but just how am I supposed to get that silver out of them?... "I'll give you a penny credit for each silver dollar you have"...
Of course, it is all just speculation... But I think back on the days when silver coins were pure silver, and people snipped them for their barter and trade... How could you snip a coin that wasnt pure anything? Just sayin..

 

[blai745]

Why do you disagree about the silver being nearly impossible to extract? By a refiner, sure.... But if you had a bag of 90% coins and tried melting them, how would YOU separate the silver from the copper?
Not easy for the everyday joe... And my opinion is, that in a shiatstorm collapsed economy, I can see it right now... "Oh, you have silver coins", and then, "what am I supposed to do with this, US Currency is worthless"... "Oh, but see mister, there is 90% pure silver in those coins"... "Yeah, maybe, but just how am I supposed to get that silver out of them?... "I'll give you a penny credit for each silver dollar you have"...
Of course, it is all just speculation... But I think back on the days when silver coins were pure silver, and people snipped them for their barter and trade... How could you snip a coin that wasnt pure anything? Just sayin..

But heres the thing.... If SHTF why would anyone extract silver?? for photograph uses? industrial? medical etc.. i think not. Those 90% silver coins are going to use to buy some bread or veggies.. as long as there silver.. I dont think anyone is going to worried about extracting silver or you local butcher having his on refinery... As long as its silver its money.

 

[mts]

Why do you disagree about the silver being nearly impossible to extract? By a refiner, sure.... But if you had a bag of 90% coins and tried melting them, how would YOU separate the silver from the copper?
Not easy for the everyday joe... And my opinion is, that in a shiatstorm collapsed economy, I can see it right now... "Oh, you have silver coins", and then, "what am I supposed to do with this, US Currency is worthless"... "Oh, but see mister, there is 90% pure silver in those coins"... "Yeah, maybe, but just how am I supposed to get that silver out of them?... "I'll give you a penny credit for each silver dollar you have"...
Of course, it is all just speculation... But I think back on the days when silver coins were pure silver, and people snipped them for their barter and trade... How could you snip a coin that wasnt pure anything? Just sayin..

First of all, there are a lot of scenarios in between SHTF and where we are today in which silver coins are going to be accepted. If the stuff really does hit the fan and we go to Road Warrior conditions then people aren't going to want silver either.

Second, as blai745 said, they don't need to extract the silver in order for the silver to have value. People have accepted un-pure silver and gold coins as payment for thousands of years. They've never rejected them just because they couldn't get the gold out of them in a pure form.

I simply think the "90% silver is hard to extract" claim is just people grasping at straws. It is certainly "harder" to extract. But not so hard that it isn't being done on a daily basis. And the need to extract it at all is debatable to say the least.

 

[jim4silver]

Why do you disagree about the silver being nearly impossible to extract? By a refiner, sure.... But if you had a bag of 90% coins and tried melting them, how would YOU separate the silver from the copper?
Not easy for the everyday joe... And my opinion is, that in a shiatstorm collapsed economy, I can see it right now... "Oh, you have silver coins", and then, "what am I supposed to do with this, US Currency is worthless"... "Oh, but see mister, there is 90% pure silver in those coins"... "Yeah, maybe, but just how am I supposed to get that silver out of them?... "I'll give you a penny credit for each silver dollar you have"...
Of course, it is all just speculation... But I think back on the days when silver coins were pure silver, and people snipped them for their barter and trade... How could you snip a coin that wasnt pure anything? Just sayin..

First of all, there are a lot of scenarios in between SHTF and where we are today in which silver coins are going to be accepted. If the stuff really does hit the fan and we go to Road Warrior conditions then people aren't going to want silver either.

Second, as blai745 said, they don't need to extract the silver in order for the silver to have value. People have accepted un-pure silver and gold coins as payment for thousands of years. They've never rejected them just because they couldn't get the gold out of them in a pure form.

I simply think the "90% silver is hard to extract" claim is just people grasping at straws. It is certainly "harder" to extract. But not so hard that it isn't being done on a daily basis. And the need to extract it at all is debatable to say the least.

MTS,

Although I agree with what you have said, I must play devil's advocate on this issue. Like anything there are cons that go with the pros. For example, if the gov wanted to they could ban the melting of US silver coins once again like they did previously in the late 60's, and like they do now with pennies and nickels. If the dollar tanks and silver goes thru the roof they could try and recall silver US coinage without having to do an all out ban or confiscation on all silver bullion. If anything like the above happened demand for 90% silver US coins would drop like a rock in favor of .999 private bars and rounds.

Also, the reason 90% US coins have good resale premiums now is due to investor demand. These coins are resold as junk bags and not melted because they can be resold near or over spot for more profit by the coin dealers. If these coins were being sent to refiners they would not be worth as much. Compare it for a moment with sterling flatware, etc. Right now dealers are paying about 22 bucks per ounce for this stuff from what I see online (it may even be less?), and that is for 92.5% pure silver. If 90% US coinage gets sent in it would theoretically be worth less, since it is even less pure. Just think how much less 40% US coins would be.

If silver goes thru the roof and dealers are inundated with silver like they were in the early 80s and they don't have enough retail buyers, stuff will get sent into refiners and you will not get as much for 90% US coins as you would for .999 bars when you sell to the coin dealer.

All of this is speculation though. I don't buy into the barter, Mad Max scenario so that is not a concern of mine either way. I would be more worried about the gov banning the melting of US silver coins or some type of recall of it, even though I do not really think either of those will happen in my personal opinion.

Jim

 

[mts]

Jim, the idea of a ban is an interesting scenario and should be taken into consideration. However, I personally don't think it is likely. Also, I will stand by my original statement that diversification is the key. That's what protects you from being completely wiped out due to some unforseen ban or drop in prices. My main issue is with the idea that people should shy away from 90% junk silver coins because they are significantly harder to melt or people won't want to buy them because they are "junk". There are definitely scenarios where this could be the case, but there are also scenarios (albeit unlikely) where people will not buy ANY type of silver. But that shouldn't keep us from buying silver to begin with.

Again, I think diversification is the key. If someone doesn't like to buy junk silver coins then by all means, they should adjust the percentages I gave above to their liking. However, I don't think people should shy away from any one type of silver product simply because they heard some con on the Internet. All forms of silver have their pros and cons. All can be decent investments and each has their place in your collection.

That's my two cents. It's worth exactly what you paid for it.

P.S. - For those getting into buying silver, Jim4Silver has a LOT of knowledge on the subject. Don't listen to me. Go back and read his comments over the past year or so. I got into silver only in the past year and Jim was instrumental in helping me learn more about the subject. And I still have a LONG way to go still in the learning process...

 

[jim4silver]

Jim, the idea of a ban is an interesting scenario and should be taken into consideration. However, I personally don't think it is likely. Also, I will stand by my original statement that diversification is the key. That's what protects you from being completely wiped out due to some unforseen ban or drop in prices. My main issue is with the idea that people should shy away from 90% junk silver coins because they are significantly harder to melt or people won't want to buy them because they are "junk". There are definitely scenarios where this could be the case, but there are also scenarios (albeit unlikely) where people will not buy ANY type of silver. But that shouldn't keep us from buying silver to begin with.

Again, I think diversification is the key. If someone doesn't like to buy junk silver coins then by all means, they should adjust the percentages I gave above to their liking. However, I don't think people should shy away from any one type of silver product simply because they heard some con on the Internet. All forms of silver have their pros and cons. All can be decent investments and each has their place in your collection.

That's my two cents. It's worth exactly what you paid for it.

P.S. - For those getting into buying silver, Jim4Silver has a LOT of knowledge on the subject. Don't listen to me. Go back and read his comments over the past year or so. I got into silver only in the past year and Jim was instrumental in helping me learn more about the subject. And I still have a LONG way to go still in the learning process...

Thanks for the kind words MTS. I am still learning too. A person never can know enough when it comes to this subject. Especially in these times.

Jim

 

[oneeye]

Great thread and good discussion. The only thing I would add is that I would not worry too much about the gov't "banning" them melting or owning of these metals. If the SHTF, this will the be least of the country's concerns. I suspect "lead" would be an even more sought after metal, but that is an entirely different subject. I agree that they may try to enact this types of bans, but they have not worked in the past and would be even less likely now.

My great-grandmother told me the stories about the gov't banning the ownership of gold. They kept their gold coins and my grandfather still has them. So much for that ban being effective. The only people it really effected were the sheep that were stupid enough to fall in line.
Dan

 

[Vodka1000]

I am thinking about investing in silver. It is affordable to me in small quantities, and gold is out of reach for us. Another positive side is that our local coin shop will sell small quantities at a time. This is a VERY good dealer, and treats everyone the same, whether you are buying 30 cents worth of cardboard flips or buying $3,000 worth of bullion.

As a side note, I like the fact that I can swing in and buy 2 90% dimes for 4.30, or a JFK half for 10.75, or a Peace dollar for $21...depending on the amount I have to blow that day or week.

The problem is that I don't know what to buy.

Coins? He buys at 20X face and sells for 21.5X face as of 1/3/11

Bullion? He has Silver Eagles, and a pile full of .999 coins. I think common, non proof SE's were
$35 or 36.

Bars?

I am leaning, at this point, towards coins. I like the 90% JFK's and old Peace dollars.
Would you be so kind to help me with this?

Thanks!!!!!

Check this:

http://www.collectons.com/shop/cat/141/index/0/Sale-Specials-Daily-Specials

 

[Dave44]

That is a wild site,, some of the prices are ok and some are Awful!!! There are so many variables in prices I can't even start to explain the bad prices, But arm yourself with info,, look into the going price in your local shops,, NOT just 1 shop. I know of 3 near me that will rip you off!!! and they hope you don't look any further.

 

[Vodka1000]

That is a wild site,, some of the prices are ok and some are Awful!!! There are so many variables in prices I can't even start to explain the bad prices, But arm yourself with info,, look into the going price in your local shops,, NOT just 1 shop. I know of 3 near me that will rip you off!!! and they hope you don't look any further.

So tell me do you know any other site with "ok"
prices than:
"collectons"
I posted in my previous post !!!

 

[Dave44]

That is a wild site,, some of the prices are ok and some are Awful!!! There are so many variables in prices I can't even start to explain the bad prices, But arm yourself with info,, look into the going price in your local shops,, NOT just 1 shop. I know of 3 near me that will rip you off!!! and they hope you don't look any further.

So tell me do you know any other site with "ok"
prices than:
"collectons"
I posted in my previous post !!!


Sorry Vodka,, I don't look online, shipping and other things
but I was talking of storefronts near me. Didnt mean to offend, We are lucky to have some free market competition close to us.

 

[belliott]

I buy 1 Silver Eagle every week. I like them, you know what you are getting and it is easy to calculate what you should paying for them. If silver tanks, the low mintage years have a little collector value.

I pick up any common coins I can get for a fair price. I also have a soft spot for mercury dimes.