Letter Re: How to Buy Silver?

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Jim,
Why [do you] recommend [serialized] 100 ounce silver bars when 90% silver coins are selling at spot and the bars are at spot plus $.30 (this is from www.cmi-gold-silver.com in Phoenix)? It seems like silver coins would be the better choice because they are cheaper and more versatile than 100 ounce bars. - Springmtnd


JWR Replies: If you can buy circulated pre-1965 U.S. silver coinage at spot, that is fantastic. Even after the recent dip, most dealers currently charge around 7 times face value ($7,000 per $1,000 face value bag.) As a point of reference, a $1,000 bag with typically worn coins contains about 715 ounces of silver. Here is the math: 715 x $9.50 per ounce = $6,792. That--or near that--is what most "storefront" (coin shop) dealers would pay, wholesale. Typically they would then re-sell it for 3% to 10% more. (Closer to the lower end of that range on half-bag or larger quantities.)

I agree that coins are more versatile that bullion bars. I only recommended 100 ounce bars for non-barter investing, because they generally carry a lower dealer premium. Coins only take up a bit more storage space, and they weigh only 10% more that bars, per dollar value. So if you have the opportunity to buy coins cheap, then go for it!  For any of you  reading this who are wondering about size and weight:  A $1,000 bag weighs around 55 pounds, and is about the size of a bowling ball. Like the 100 ounce bars, the bullion bags make great "ballast" for the bottom of a gun vault.

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This page contains a single entry by Jim Rawles published on February 9, 2006 4:39 PM.

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