Investing in silver? What do I buy?

[clovis97]

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!!!!!

 

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[Goose-0]

Clovis, check your dealer tomorrow for better prices because silver took a hit today and went from $31.20/oz down to $29.80/oz .... a 4.5% decline. If your stated prices are correct, buy the Peace dollars at $21, even though silver is at $29.80/oz. Peace dollars (and Morgans) have .7734 ozs of silver in them....and at $29.80 (today's price), a silver dollar has $23.05 worth of silver in it. IF they WERE selling for $21 ea, try to talk him down a $1 or so for each and mention that silver dropped around $1.40/oz. I'm a silver nut, I love silver, I buy silver!! I started to collect coins over 3 score yrs ago, and now only buy silver.

You mentioned he sells at 21.5 X face....why the silver dollar going for 'only' 21 X face? I can see that the common U S silver coins selling for 21.5 X face, but the silver dollar has more silver in it per coin (6.9%) than the other silver coins. An example: The half is 90% silver and weighs 12.5 g....the dollar is 90% silver and weighs 26.73 g. The half - 12.5 X .9 = 11.25 g of pure silver / The dollar - 26.73 X .9 = 24.057 g of pure silver. Divide the 11.25 and the 24.06 by 31.1 (grams per troy oz) and you get .35oz silver in the half, and 24.057 divided by 31.1 = .7735 (The guv'ment says .7734 oz). Buy, buy, buy!

 

[JD-GA]

Personally im liking silver eagles. They are all guaranteed to measure 1 troy ounce and as pure as they get .999. They are newer unlike old 90% coins and likely have no wear also unlike 90%. I picked up a peace dollar and merc dime the other day for $18 but they are both worn so it wasnt like a hot deal. Had a gotten a silver eagle a couple bucks under melt i would consider that a good deal.

 

[Goose-0]

JD, IF you can get ASEs for the true silver price or under, by all means buy them. Most ASEs have a premium (the price over the silver price) on them when sold, normally around 10% .... $3 if silver is at $30/oz.

 

[clovis97]

JD, IF you can get ASEs for the true silver price or under, by all means buy them. Most ASEs have a premium (the price over the silver price) on them when sold, normally around 10% .... $3 if silver is at $30/oz.

I think that ASE means American Silver Eagle, right?

The Silver Eagles he had were $35 to $36 each. These at $35 are loose SE and show some signs of wear, as if they had been carried as good luck tokens. The real pretty and undamaged ones in the plastic flips were priced even higher.

I started to get confused while in the shop...I'm not a coin guy...so I thought I would ask you fine folks.

I do appreciate the help. I'm getting a better grasp of what to buy, so THANK YOU!!!!!!

 

[Red James Cash]

There use to be a coin dealer down the street from my house. I use to buy the old coins, plus the common dates,from him that were to worn to be of value to collectors.I got some good deals back when silver was 4.20 an ounce.

 

[blai745]

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!!!!!

for me I am one of those gold and silver buyers who pay cash for people who want cash for gold...and since I started a year ago I saved about 1500 grams of sterling jewelry...now I pay about 40 cents a gram and ill probably get around 77 cents per gram...SO that better than any coin or bullion..but what I do is more of a buisness than a investment...I suggest going around garage sales or even put on craigslest that you buy gold or silver.

 

[Silver Surfer]

For what it's worth, here's my take... Silver Eagles, Krugerrands, etc., are all fine and dandy. But remember, they are "collector" pieces and therefore you pay a premium that theoretically, you will get that back plus some as your coins age (but not tarnish.. lol), become rarer, and so collectors will pay more for them..
But here (for me) is the kicker.. The silver or gold in them is no more valuable than a simple round or bar that is certified pure... BUT... Coins (especially old 90% silver coins) are NOT even in the ballpark.. It is very hard to extract the silver from them (except maybe for trained refinery types) and therefore, when you just want to buy/barter with precious metals in the future, and when (not if, it WILL happen) the economy collapses, the only thing worth value will be the pure stuff.. What good is a walker to someone in the dire future, when they cant retrieve the pure silver from that old coin? And of course, when the economy collapses, coin collecting will be a thing of the past, imho..

So for me it is bars or rounds... Worth spot prices as they are, maybe no collector value, but I am planning on having something I can buy/barter with when nothing else will work.
Check on Germany in the early 30's when a wheelbarrow load of money was not enough to buy a loaf of bread... Only thing worth anything then was precious metals, and sadly, people were pulling teeth just to have the gold to buy food for..
My Grandpa actually sold his upper partial plate (had a lot of gold on it for framing) because his money was worthless...

Just my two cents... But I just bought 175 oz of Silver bars that are section'd in 1/4 oz mini-bars for $28.70/oz and mean to hold on to them for the time when it will be the only thing I have (aside from ammo/weapons) that I KNOW will be worth a lot in the future..
I also am stocking up on things like sugar and salt, rice and beans, etc., because again, in a worst case economic scenario, they will be worth as much or more than even precious metals..

 

[clovis97]

Thank you again for the replies. These are some great perspectives to ponder.

I've still not bought anything as of yet, but I might next week.

 

[packerbacker]

I think he is a bit high on the Silver Eagles. Silver right now is at $29.44 and fluctuating. At that price I might pay around $31.50 to $32.00 for an Eagle. On the other hand, a common 1-ounce silver round would cost around $30.00. You said you wanted to "invest" in "silver" so, if I were you, I'd buy silver rounds. You won't pay the premium like you do for an Eagle and it is still one full ounce of silver that is very liquid and can be cashed in easily. I would start by finding another source for my silver or negotiate better prices with this guy, he's too high. A long time ago I sold some 40% silver half dollars but I went to 2 different shops. The first guy offered me $1.50 less per coin than the second guy. It's worth shopping around.

 

[clovis97]

Thank you again for the replies.

Packerbacker...what exactly is a silver round?

I haven't had a chance to call to see if his SE's have dropped with the price of silver. When he priced them, silver was $31 +.

Thanks!!!!

 

[packerbacker]

A silver round is the same as a Silver Eagle; it's a one-ounce silver coin made by various private mints. They don't command the Silver Eagle premiums because they aren't minted by the US Mint but they are a full, one ounce of silver worth every bit as much as the spot silver price. I have both, Eagles and rounds.

 

[Dave44]

I agree that the cost is a little too high on the silver eagles, they do get a premium but that is too much and is because they are from the U.S. mint. So if you think that silver and gold are all that's left, then the place of origin is not important.
So here is my strategy. I have the hope that the government will all of a sudden understand they are idiots and we will only go through major inflation. Use the trashed old silver coins you have and most commons, Then the silver rounds. If we are lucky the rest will then be worth something to collectors again and we all live happy ever after and have made bunches of money because the silver appreciated so high.
Then the obvious that the government dummies didn't figure it out and the whole system collapsed, well then your silver gets spent as needed to help survive, because when China owns us even they understand the worth of silver and gold.
The last seems the most highly unlikely scenario,,,, I hate to even broach this because it is nonsense given our newfound ability to borrow. That is - all is right with the world afterall. The price of commodities drop, gas is back to 1.00/gal, there is no cap and trade and energy prices didn't "necessarily skyrocket" on someones vision. Gold goes back to 100/ ounce. Silver goes back to 3/ounce. That means your silver rounds are worth 10 times less. Even the eagles take a Huge hit (except rare ones), But hopefully the antique coins still retain some value because collectors are not scared and are collecting based on the same principles they have always had.
That there is my strategy if I had money to invest. Hope I was clear enough cause that's all I am gonna say 'bout that.

 

[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.

 

[Dave44]

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.

OOPs, Ok what mts said. In less verbage, less murky. My final answer

 

[clovis97]

I really do appreciate all of the replies!!!!!

This is starting to make some sense.

FWIW, I bought my first investment of silver today, a single silver 1954 quarter. Okay, I admit, the post office clerk got it in change, and I paid well over face.

While silly to tell that, it is one more piece of silver to add to my small pile.

 

[Dave44]

I really do appreciate all of the replies!!!!!

This is starting to make some sense.

FWIW, I bought my first investment of silver today, a single silver 1954 quarter. Okay, I admit, the post office clerk got it in change, and I paid well over face.

While silly to tell that, it is one more piece of silver to add to my small pile.

Worth $5.35 usd

 

[packerbacker]

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?

 

[Joe Hoo?]

Time and time again i go to my local coin shop, and my dealer is always offering to buy any and all silver eagles that i have gotten in the past... he knows what i have i try to buy one from every year when they come out... i have been buying proofs since 1986 and sometimes i double them up... about 15 yrs ago i started buying 2 or even 3 because silver was cheap... i just recently bought 2 2010 BU eagles..... HERES A LINK YOU MAY WANT TO VISIT.... HH

http://www.pcgs.com/prices/PriceGuideDetail.aspx?ms=1&pr=1&c=939

 

[Dave44]

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.