Wednesday, April 24, 2013

A Basic Tutorial on Buying Silver and Gold

Here you go kids!


Anonymous said...

good info for newer or older investors. i agree about gold, for most people it is waaaaay too expensive to get into, even now during the "dip". i also agree that junk silver is a misleading term, because in a true shtf scenario, good luck explaining to someone the "proof" coin you have is more valuable than the cull with the same amount of silver. about the only thing in stockton worth bragging about is our coin shop, who unlike the gold dealer you dealt with, are extremely helpful and willing to pass on knowledge. last time i went in and asked them about the "dip" they said what dip, since physical gold and silver are still very sought after, just look on ebay, nearly all silver bullion auctions are still going for atleast 10 bucks over spot, which is about 23 at this moment. i have noticed these bidding patterns have been pretty consistent in the last week for gold and silver despite the supposed dip...but anyway yea, buy culls if you can, or junk halves...most coin shops that do sell "junk" won't be charging too much over current spot so i would buy now if you were new, put it in your safe and forget about it for a year or so

NormalGuy said...

Heh, talking about coins. In my collection I found quite a few old Boer Republic(Zuid Afrikaansche Repuliek or the Transvaal, take your pick) shillings. Which, as they date back to the 1890s are almost 100% silver. Found some silver rands, each rand is 2 ounces I think, with a ton of old copper coins in the mix. Have to go through the lot, as they've been sitting in a moldy draw for many years.

Pity, my parents used to have kruger rands but sold them when the gold price skyrocketed.

Literally got a box full of heavy plastic bank packets that have coins from every country on the globe. Even found some old New Zealand pennies and some old Rhodesian coins, from when they became independent till when they became Zimbabwe.

Guess I'll go have to go here to purchase some more.

Gold is way too expensive for my taste and as you say you cannot really use the gold coins for exchanging items unless those items are of high value.

Unknown said...

Thanks, Captain! This is useful AND reassuring.

James Wolfe said...

I stopped investing in the stock market and I have no 401k. Every month, or when the price drops significantly, I buy silver. I own some gold, but as you stated it's too expensive, too concentrated a value for most every day use. If things get bad and cash money is frowned upon as if it were a bad check (which it is) then for every day purchases, or I guess you would call it barter, you won't be trading a gold coin for a dozen eggs, or a side of beef. You'll be using silver. Gold is like carrying hundreds to a McDonalds. They won't want to make change.

I started out buying coins minted by the US and I sampled some from other countries like Mexico, Canada, China and the UK, but all of those, including the US have much higher markup, often $2 or more over spot price. A $2 fluctuation in silver price is a big deal, so you definitely don't want to over pay.

So then I started buying coins from private mints, like Sunshine Mint and generic rounds made by the companies that sell the metals, like APMEX. They usually sell for less than $2 over spot, sometimes even under a dollar. Companies like Sunshine mint use a security device stamped on the back side of their coins that require a polarized lens to read, so that you know they are authentic. But also you can tell by the ring of them that they are real.

But even with the lower premium there are still a lot of additional costs involved, such as shipping and credit card fees. If you buy a Big Mac with a credit card McDonalds eats the credit card fee, which is between 50 cents and 10% of the total, depending on if its a debit or credit charge. They pass it on to you in other ways or take it out of their employees' pay checks. But no precious metal dealer is going to eat 10% of a lot of money. They already have to charge a premium to cover price fluctuations. So to avoid this you can pay by check. Yes this is a primitive form of exchange, it takes several days for the check to arrive and the dealer must wait several more days for the check to clear. But you are guaranteed the price on the day you placed the order online and what's the rush if it saves you 10%?

I also stopped buying coins and started buying bars. There's really no point buying a 1oz bar. It's pretty much the same price as a 1oz coin, maybe the premium is slightly less, but when you buy 10oz silver bars with the sellers mark on it (like APMEX or NTR Metals) rather than some boutique named private or govt mint the premium is much less.

And be sure to shop around. You would be surprised how much premium some places charge. The place I currently do business with charges about half the premium the more well known places charge. And when the rush on gold and silver cleaned out the well known places I was still buying my silver at bargain basement prices at 12:05 am the day after the PM market crashed.

Having coins and bars is a good way to "diversify" in a cashless society. Coins are the small change for every day use, and the bars a store of wealth and are easily stackable. But even if you are invested in stocks I've been told that it's still good to invest up to 10% in precious metals. You don't buy and sell them to make money like stocks, you hold onto them. In the end it's not how much you paid for each oz but how much you have that counts. The value is in having them physically (as opposed to worthless paper).

Lucas Darr said...

I found this very helpful, thanks.

Dr. Coyote said...

On a related note, here's a useful site giving the current value of various U.S. coins:

Modern pot metal coins are at the top. Scroll down to get to the good silver stuff.

Paul M. Jones said...

Regarding jewelry, Fernando Aguirre wrote a book called "The Modern Survival Manual: Surviving the Economic Collapse" about the 2001 Argentina collapse, which he lived through personally.

He suggested gold jewelry, specifically rings and necklaces, to be sold for currency during an inflationary event. The take-away was that precious metals themselves did not become currency; instead, one sold a small amount of metal for enough currency to get through the next week or so. I like his narrative because it is a real example of a collapse.

Anonymous said...

It would be nice to have some good historical examples to study of the use of precious metals in post-SHTF survival scenarios.

Know of any, Cap'n?

It does no good to have insurance if people don't accept the insurance money.

I'm almost persuaded to get into precious metals, but for the far-side risk that there are several SHTF scenarios (robbery, executive orders, flight to safety, crossing borders, and the like where even precious metals are there to be taken by others. And in a staying-local SHTF scenario, could you really get the local farmer to trade foodstuffs in return for a piece of silver?

Your thoughts?
Bill K.

Theo P. said...

For a split second, I thought that you were about to elaborate on something called "moron silver."

That "tink tink tink" sound that you were talking about is where the term "ring of truth" comes from, usually bouncing a coin on a table. If the shit really does hit the fan, that's an important thing to recognize.

Anonymous said...

The only modern nickels with silver were minted for only a few years during WWII. The rest, those not dated 1942-1945, are made of copper and nickel. Dimes and quarters, though continued with silver until 1964 as you mentioned.

Claudius_II said...

The silver nickels (35% silver) were minted during WW-2 and are identified by a large mint mark over the building. Issued 1942-1945, regular nickels (no silver) were also issued in 1942.

Also for US half dollars ONLY, from 1965 - 1969, these were made in debased silver i.e. 40%. Dimes and quarters of this period were not silver. In 1971 the halves were also made copper/nickel. 1970 (40%) were only made for collector sets & are rare.

Copper cents (95% Cu) were discontinued in 1982 & replaced with Cu plated zinc. Both types were made in '82 and are hard to tell apart. Currently about 5- 10% of the cents in circulation are the old copper ones.

At local coin club shows they often have auctions where oldsters are selling off 90% US silver coins at around what dealers pay for them. Thus you can buy them more cheaply than at retail.

Also there is a plethora of foreign silver types made in the 20th century from pre-WW-1 British (sterling or 92.5% silver) to Mexican silver plated pesos of the 60's (net 10% silver).

Hamista said...

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