Silver

Those of you who invest in precious metals probably already know that silver is trading well below $18 per ounce at the moment. For those who don’t follow the market, it was over $40 per ounce briefly, less than two years ago. To me, the current price represents a buying opportunity.

The problem is that everyone has increased the premium for everything silver that they are selling. Ungraded bullion coins like the US silver eagle or the Canadian maple leaf have always commanded premiums of two to three and a half dollars over spot. Rounds, on the other hand, have historically gone for a dollar or less per ounce over spot.

Not now. Rounds are going for $2.50+ over spot, right beside coins. Presumably because most of the current inventory was acquired when the spot price was several dollars higher, and they are trying not to lose their ass. But such is any commodities market.

In order to take advantage of the current price, and offset the purchases I made when spot was $37+, I bought 100 some RCM Maple Leaf coins. I paid right at $3 above spot, which is a dollar more of a premium than I’ve paid in the past. That was the best current deal that I could find, though. A couple years ago, the US mint went up on their premium for silver eagles, and since then I have bought more silver maple leaf and Austrian philharmonic coins than eagles.

I’ve bought rounds in the past, but got away from it several years ago. I figure that if I ever need to do casual exchanges, most folks would be more trusting of a highly recognizable government (spit!) minted coin than a round, even if it was from a well-known private mint. Plus there is the whole conspiracy theory of them outlawing private ownership of bullion again. Although it would be easy enough for any such law to be written in a way that ignored the fact that these coins are technically legal tender. It’s already been done, in the absence of any lawful basis. But such is the abuse we’ve come to expect from our overlords.

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2 Responses to Silver

  1. Keith Kopecky says:

    So do you think there’s an advantage over one coin, rounds, place of stamping than another? It looks to me as if they all go for a few cents one way or the other. Obviously gold is way down from where it was. And silver can be had at some place for about .80 over the oz price….if you buy enough. I think “hard” currency in hand is the way to hedge against the collapse of the nation. Tell me your thoughts. k

    • alaskan454 says:

      Thanks for taking the time to stop by and comment.

      I don’t think that there is a significant advantage between bullion coins. This is why I buy which ever one has the lowest premium at the time I’m ready to purchase.

      As to bars/rounds, I’m unsure. I had a local dealer tell me that he wouldn’t give me any more for coins than he would for rounds, so as far as he was concerned, my decision to pay extra for coins was a waste of money.

      But that is the opinion of only one person. I seldom deal locally. I use APMEX almost exclusively, both for buying and selling. they are up front with their pricing, and are competitive with every other dealer I have been able to find, both buying and selling.

      I try to put myself in the shoes of a potential buyer. If I were buying from an individual rather than a dealer with whom I had an existing, proven relationship, I would be more comfortable buying rounds/bars from well-known manufacturers like JM or Engelhard – or a government mint like RCM. I have no solid logic behind this, though. Silver is silver, and it’s not easy enough to counterfeit to make it worth the effort.

      I remember about ten years ago, a co-worker offered me two one-ounce gold Maple Leaf coins for $400 each (the spot price at the time). This was before I started investing in PM, and I passed. It’s hard to believe that, even after dropping roughly 25% in the last year or two, they would still be worth three times that amount today.

      Most of my investment portfolio is in real estate or similar assets that are difficult to convert to cash quickly. But I keep almost all of my semi-liquid assets invested in PM. I’ve seen what happens to fiat currency first hand, via the Ukraine crisis, so I try to keep less than a thousand dollars cash on hand at any one time. If I need cash quickly, I can get 90% of spot or better on either gold or silver immediately locally, and if I can wait a few days, 100+% of spot. Sure, the market is volatile. The tube of 2008 first strike silver eagles that I bought at $37+ per ounce a couple years ago is worth less than half what I paid for it. But it’s only a paper loss until a sale is made.

      None of us really know what is going to happen with the economy. But, like you, I prefer to have my wealth in the form of something more substantial than a piece of cloth/paper, just in case.

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