Your Guide To Buying Silver
Your Guide To Buying Silver
Your Guide To Buying Silver
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Despite the relentless growth in silver demand in modern industrial applications, it is important
to remember that silver also has many desirable monetary qualities as well. Some of these
qualities include:
Silver cannot be created out of thin air. Unlike fiat money, the supply of silver is limited.
It is not subject to the value-destroying sudden and sharp inflations so characteristic of
paper money.
Silver has been prized around the world for thousands of years. Because of its universal
desirability it is also highly liquid, a crucial asset in the event of bank holidays, closures
and the freezing of assetsand against a time when the ATMs stop spitting out cash.
It is fungible. Silver is a chemical element; every ounce of pure silver is exactly like
every other ounce. It is both durable and divisible. And it represents a compact form of
wealth that is convenient in scale for the day-to-day commercial needs of households. In
the event of a currency crisis, it can prevent commerce from deteriorating into primitive
and cumbersome barter.
No wonder silver has provided such a dependable standard of commerce in so many times and
places or why after years of trading quietly in a narrow range, the sleeping giant is stirring and
silver prices are moving to explosive heights.
Investment demand for silver led to the creation of silver ETFs in 2006. But that is still less than
two ounces of silver per American. In fact, if the diversification away from a failing dollar
during a crisis and the spontaneous re-monetization of silver led Americans to acquire a mere 10
ounces of silver per capita, only 40 ounces for a family of four, it would demand all the worlds
mining production at current levels for more than four yearswith no production left over to
meet demand from anywhere else in the rest of the world or for any other uses.
Silver investing is not growing in a vacuum or because of the phases of the moon. It is growing
in response to levels of spending and debt that are no longer manageable. It is responding to
economic conditions that the numbers tell us are not improving, but are worsening. Just as fiat
currencies around the world are beginning to break down, investment demand for silver is
surging in China, India and Europe, just as it is in the United States.
It is the advanced stages of state insolvency that make silver investing imperative. It is the
early stages of the re-monetization of silver that provide you huge opportunity as a silver
investor today.
And I can show you exactly how to start building your stockpile today.
in the 2008 panic, and the counter-party risk more recently evident in the bankruptcy of MF
GlobalI will recommend that all such secondary vehicles be avoided entirely.
That is why today, the best way to invest in silver is real, physical silver.
Owning physical silver, regardless of alternatives, must be your first line of defense, your
first step in protecting yourself and your family from an inevitable currency crisis.
To do this, there are three ways I recommend buying silver
#1: U.S. Silver Bags
First, in a crisis it is important to have a currency unit scaled to the essential needs of daily
human life. Your house payment may be measured in thousands of todays dollars or on a scale
compatible with gold prices. But making a house payment is a lower priority than purchasing a
gallon of gas, a loaf of bread, or a pair of shoes.
In that case you will want small silver coins, a bread and butter currency that can be used
directly in everyday purchases.
That's why I recommend that every family own a bag of U.S. silver coins, often referred
to as junk silver bags.
When the U.S. government stopped circulating silver coinage in 1964 (except for some half
dollars with sharply reduced silver content that were minted until 1969), it issued instead base
metal coins with a thin coating of a copper-nickel alloy to duplicate the appearance of the real
silver coins. Not fooled by appearances, people immediately distinguished between the coins and
began setting aside and saving the real silver coins, which before long were trading at prices
based on the underlying silver content.
When these coins were first put into circulation before 1965, they were delivered by the U.S.
mint in bags of $1,000 face value. Silver bags, bearing coins with a face value of $1,000
dollarsalthough worth more because of rising silver pricesbecame a standard trading item of
the silver market.
Each silver bag contains silver dimes, quarters or half dollars minted before 1965. Please note,
these are not numismatic or collector coins. They are circulated, usually well-worn coins (hence
the name junk) that were an important part of the general circulating currency of the American
people until 1965.
Since those coins were minted with an alloy of 90% silver, they are also referred to as 90% silver
bags. To constitute a face value of $1,000 dollars requires 10,000 dimes, or 4,000 quarters, or
2,000 half dollars. But regardless of denomination, each silver bag has a content of about 715
ounces of actual silver. The price for a silver bag is based on this silver content.
Silver bags usually trade for a small premium of a few percentage points over the spot silver
price quoted on your financial pages. These premiums change with market conditions. For
example, a rush of market demand in 1999 from buyers concerned with the Y2K changeover
temporarily ran the premium up as high as 50%.
If the prevailing or spot silver price were $30 an ounce, then each bag of junk silver, whether
dimes, quarters or half dollars, with a value keyed off of its silver content of 715 ounces, and
assuming a premium of 2.5%, would cost $30 x 715 + 2.5%, or $21,986.
With silver at $50 per ounce and assuming the same premium, a bag would cost you $36,644
($50 x 715 + 2.5%), while at a prevailing silver price of $75 an ounce the calculation yields a
bag price of $54,966 ($75 x 715 +2.5%). The dealer will also charge a few percent as a
commission or markup that will sometimes be explicit and sometimes just built into the total
selling price. Most dealers will sell half bags; some sell smaller fractions.
Personally, I prefer junk silver dimes because they represent a smaller unit of purchasing power.
But to reiterate, the silver content for the same face value of eachfor example ten dimes, or
four quarters, or two half dollarsis the same. Although, if you were interested in purchasing a
bag of junk silver half dollars, be prepared to pay a small premiumrecently about $100. There
were fewer half dollars minted and they are now popular with some buyers.
I recommend buying and taking possession of these junk silver coins, not as a trading item, but
as an essential step in protecting yourself and your family. Just as you have fire insurance on
your home and automobile insurance, you should have insurance against the governments
proven fiscal and monetary recklessness. Each coin provides you with an instantly recognizable
and well-known unit of precious metal purchasing power.
Be sure you are buying 90% silver U.S. coins minted prior to 1965. Often these bags are sealed
by the dealer who will buy them back without inspection and without having to re-count them if
his seal is unbroken. Break the seal anyway and inspect its contents. If you do so in the presence
of the dealer of broker when you acquire the silver, he should be able to have the bag resealed.
#2: Silver Bullion Coins
Nobody under the age of 50 will remember when actual silver dimes, quarters and half dollars
were the circulating currency of the U.S. Because those coins have not been minted since 1964,
other silver bullion coins have been produced.
These have the advantage of being minted in one-ounce and fractional-ounce sizes. Because they
are priced based on their silver content plus a small additional premium for minting costs, their
whole- and fractional-ounce size makes tracking their value easier than tracking the value of pre1965 U.S. silver coins.
Among the mostly widely traded and well-known bullion coins are the U.S. one-ounce Silver
American Eagle coins and the one-ounce Silver Canadian Maple Leaf coins. The coins are
very close in price, although the premium for American Eagles is generally slightly higher.
When you are in the market for one-ounce silver bullion coins, you will likely be offered silver
rounds. The term refers to a wide variety of privately minted one-ounce silver coins. Some are
intended to be art and as commemoratives while others are simply the production of private
mints marketing low premium bullion coins. Some mints produce silver rounds in fractional
ounces: half, quarter, and tenth ounce rounds.
While I dont intend to suggest a preference for state-owned refining and minting, it is my
intention to steer you to only the universally recognized and traded coins and bullion bars. While
the premiums on some of these items will be higher when you buy them, those premiums
generally stay with the product so that you get more for them when you sell them as well. I have
seen times of market chaos with real liquidity challenges that have developed with privately
minted silver coins and other products of perfectly dependable but lesser known hallmarks. By
definition, a currency crisis is a period of chaos. Owning the best-known and most widely traded
coins and bullion bars will help you help minimize problems when it matters most.
After you purchase a bag of junk silver coins, the American Eagles and Canadian Maple Leaf
silver coins are my secondary recommendation.
#3 Silver Bullion Bars
If your silver investing extends beyond the essential silver coins I have described so far, you will
probably want to add silver bullion bars to your portfolio. Silver bullion bars are my third
recommendation and suitable for larger portfolios after you have established a core position in
liquid coins.
Silver bars are widely available in 1,000-, 100-, 10-, and one-ounce sizes of unalloyed silver of
.999 purity. Other sizes to be found include kilo bars (32.15 ounces) and five-ounce bars as well
as various other bars measured in grams.
Bullion bars of 1,000 ounces of specific approved hallmarks such as Engelhard, Handy &
Harman and Johnson Matthey are the standard delivery item on the Comex commodity exchange
and are common in institutional depositories. This is the form in which refiners pour silver
bullion; they are then weighed and stamped with the hallmark of the refinery, weight, and purity.
Besides being approved for commodity exchange delivery, the other virtue of 1,000-ounce bars
is their low cost over the spot silver price.
One inconvenience of 1,000 ounce bullion bars, though, is their weight. The weight of these
large refinery bars are not standard and can vary widely so that the prices have to be adjusted up
or down depending on the variance above or below 1,000 ounces for the specific bars you are
buying or selling. In addition, since 1,000 ounce bare are used primarily in trading and
institutional storage, once a private individual has taken delivery of them and the chain of
custody from industry-approved depositories has been broken, a subsequent buyer may require
the bars be assayed, adding expense and delays to the transaction. Shipping these bars, which
weigh about 68 pounds, can be difficult as well.
You can avoid all those difficulties with 100-ounce bars (weighing 6.8 pounds) which have
proven popular and convenient for most investors. The best-selling 100-ounce bars have been
Engelhard and Johnson Matthey. These bars are of .999 purity, which is the industry standard.
The Royal Canadian Mint seems to do everything exceptionally well. They produce the beautiful
and popular Canadian Maple Leaf one-ounce gold coin, as well as the striking one-ounce
Canadian Maple Leaf silver coin recommend above. Now they have released a handsome, new
100-ounce bar of .9999 purity.
Smaller silver bars of 10-ounce and one-ounce sizes are growing in popularity as well. But
remember that the cost per transaction is higher the smaller the bar, just as oats are more
expensive when you buy oatmeal by the individual serving packet than they are in the stores
bulk food aisle, and less expensive still when you buy them by the railroad car load. 100-ounce
silver bars have proven to be a good trade-off between cost and convenience.
Remember that your objective is to own silver that can serve both as a store of value and as a
currency. That's why I recommended first that you have silver coins in the form of U.S 90
percent silver bags. After you've purchased a bag of pre-1965 U.S. silver coins, and diversified
into American Eagles and Canadian Maple Leaf silver coins, if you are in the market for more
silver, I recommend the 100 ounce silver bars from Engelhard and Johnson Matthey.
And while this should by no means be construed as a recommendation, below are three
precious metals brokerages that I am familiar with. All have been in the business a long time
many decades, in factand have earned their sterling reputations. They do substantial business
with clients all across the nation. And they are knowledgeable businessmen with honest
practices, good, fair prices, and dependable service:
Asset Strategies International (ASI)
1700 Rockville Pike
Suite 400
Rockville, Maryland 20852-1631
800-831-0007
www.assetstrategies.com/
800-528-1380
www.CertifiedMint.com
Colorado Gold
Don Stott
888-442-0994 (Eastern)
888-436-7077 (Central)
888-786-8822 (Mountain)
www.ColoradoGold.com
Let's begin with what many will think of as a secure method of storage: a home safe.
Wall thickness: 2 mm
Door thickness: 2 inches
External dimensions (inches): H 20.67 x W13.78 x D 3.74.
Internal dimensions (inches): H 20.28 x W 13.39 x D 3.35.
Bolts: 2 bolts, 5/8 inches in width; comes with two pre-drilled holes on each side.
Security: 2 emergency override keys (not needed to open safe).
Lock type: Electronic lock with thumb throw latch.
Installation: Retrofits easily between standard 16" studs.
User code: 1 master code, 3-to-8 digits.
Weight: 37 pounds.
Pricing: $199.
Website: www.LockState.com
Due to its size, the LS-52EN can be easily and securely installed behind mirrors, pictures or even
furniture. The inset door and knob allow the safe to sit flush against the wall, which means that it
is out of sight.
3. A floor safe is also a good vault for valuables. There are a variety of floor safes that can be
installed in a concrete, wood or non-concrete floors. There are good reasons to consider steel
floor safes. They are:
Durable and long-lasting; they can be installed in a variety of locations.
Extremely secure. Steel body offers maximum protection against attacks.
Heavy; makes lifting difficult to impossible.
The Hayman FS Steel floor safe is the number-one selling floor safe for these reasons:
Purchasing and installing an at-home safe provides you with a measure of security and the
convenience of accessing your cache at a moments notice.
But having a safe is just one component of securing your stockpile. Always be sure to remember
these two rules if you choose to utilize a home safe:
1. Never tell anyone that you have silver in your home. If you are not capable of installing a safe
yourself, then you will have to find someone to do so for you. Exercise careful diligence in
selecting someone trusted.
2. Keep your standard home safe out of sight and, if possible, bolted in or cemented to your floor
or wall space.
If an at-home safe doesn't best fit your needs, or you find having one unnecessarily complicated,
there are some unconventional methods of storing your silver that are also worth considering.
you have landscapers or workmen doing adjacent work that would allow them to discover your
valuables. And remember that such storage is discoverable by a metal detector.
Similarly, you could simply place a few pieces of silver in a flower pot. It wont go anywhere
and it will always be on-hand, should you need it in a hurry.
Do not forget to share the location with a spouse of trusted family member. At the very least,
note it in a place that a survivor is bound to discover it. Many are the tales of a surviving spouse
who knows there is a hidden stash of wealth about, but cant find it.
Beyond that, be discreet about your ownership of gold and silver. That can be the best protection
of all.
That is why I urge you to follow the product recommendations I made in this special report
junk silver bags, American Eagles and Canadian Maple Leaf coins, and silver bullion bars.
Because if you do, you can ignore aggressive sales tactics and marked-up collector coins.
#2: Buying goods that cannot be delivered right away.
Unfortunately, in recent years, the precious metals business has experienced tight markets and
slow deliveries of coins and bullion. In a monetary breakdown, shortages and tight markets will
be the order of the day. For the time being, the slow deliveries have only foreshadowed the crisis,
reflecting a combination of limited mint production capacity and the surging investor demand I
have described. This has meant delays in the delivery of some items by as much as six or eight
weeks.
Such delays are unacceptable to me and should be unacceptable to you.
It is true that a metals broker, like a stock broker, enters the trading and wholesale markets on
your behalf, acquiring goods for you with your money. Although all must wait for checks and
even cashiers checks from you to clear before making delivery to you, sometimes there is a
short period of days before settlement is made. That is common in the industry. Still, many wellcapitalized precious metal brokers can make immediate delivery to you from among the widely
traded products I have recommended upon their receipt of good funds.
But under no circumstances should you order and pay for precious metals that the dealer cannot
deliver to you within days. If there is a shortage of a particular product, you have two choices:
1.) buy something else that can be delivered right away, or; 2.) ask to be notified when the
product is available and buy it then. The price will have moved in the interim, perhaps against
you, but you will still have your money. Remember, this is the age of MF Global, Bernie
Madoff, and derivative failures. A great deal can transpire in an unstable environment of risks
that cannot be foreseen.
That is why I advised you earlier to take physical delivery of your precious metals and under no
circumstances leave them with the dealer to store for you.
#3: Be sure of what you are buying.
You must beware of products that are similar to my recommendations but do not conform in
some seemingly small way. As an example, a seller on Bay offered a product under the silver
offerings described as 1 Troy Oz. 100 Mills .999 Silver Bar that was apparently nothing but
copper with a thin coat of silver.
But this is a risk you have minimized since you are not buying numismatic or collector coins,
and are following the specific recommendations I have made.