Silver Thoughts For The Beginner, by Jay in Missouri

Facebooktwittergoogle_plusredditpinterestlinkedintumblr

One doesn’t have to look far in the news today to catch a conundrum in any article talking about precious metals. If you read the news shops you will have noticed articles crowing titles like “Silver and Gold Have Lost Their Shine!” and “The Precious Metals Market Tanks!”. The strange thing is if you are to walk into any coin or jewelry shop tomorrow and ask to buy a few coins, you will most likely be told the wait time is several weeks, and you’ll be paying prices above the current silver price. While the news outlets are singing the death knell of precious metals, truth is the demand for physical is higher than it has ever been, and is far outstripping the market prices. This happens when people remember their history lessons from school and determine to not get Weimared into trading a wheelbarrow of greenbacks for a sack of ‘taters. My article hopes to inspire you be a canny investor, and buy on the dips to create a shield for yourself. 

Well, perhaps I am getting ahead of myself. I will reel things back a bit and go over a some goodies I have leveraged in order to stack a little more argentum, and to be a little more prepared in the task of saving a portion of my family’s hard earned money.

First of all, the web is your best friend. What better resource available to you, short of the library, where you may research any given topic and educate yourself. You are on the right path in checking out Survival Blog. In addition to Survival Blog, there exists a ton (troy, not avoirdupois; ha-ha) of other resources out there, so much so that it all can be a bit intimidating. Before one simply throws their hands up in frustration, or is afraid to start something new, I’d like to flatten out some of the bell in your learning curve and link you up by and by to a few resources (as well as offer a few ‘why’s’).

First things first. Let’s turn to the Good Book:

I take great comfort in Luke 12:32: “Fear not, little flock; for it is your Father’s good pleasure to give you the kingdom.”

And in 2 Timothy 1:7: “For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind.”

Acknowledging God, I believe we should move forward in faith.

Here are those web sites I mentioned earlier. I check these on a daily basis:

The first resource I check is one called Coinflation. It is an easy-to-read site which strictly talks coin values. They have an up to the minute feed on US coins, and you will see later why this comes in handy. They list each denomination, list it’s face value, it’s silver value, and the silver % against face value. Right here you need to know a couple of things; these coins are called ‘junk silver’, not because they are junk, but because they aren’t desirable from a collectable aspect. The ‘junk coins’ are the normal run of the mill coins our grandfathers used to to pay the shoe shine guy, to buy a slice of pie and a cup of coffee, and to lend to the fella who asked “Hey brother can you spare a dime?” This old pocket change was in circulation before someone set it aside realizing the silver content made it worth more than the .05/.10/.25/.50/1.00 stamped on the reverse. You see, in the US, nearly all minted coins (except for pennies and nickels) prior to 1965 had silver content in them. Congress in 1964 passed an act taking silver out of all the coins except for a few. We’ll get to that in a wee bit. If you’d like to do a bit of light reading, you can read the address from President Johnson. (Please note he calls the material ‘valuable’ in his address). 

As you can imagine the value of these pre-1965 coins far exceeds their face value, meaning that a 1964 quarter is worth far more than the .25 marked on it. These coins are made of 90% silver. The other key date to keep in mind here relates to half-dollars (a.k.a. fifty cent pieces). The next time you are in line at the grocery store, ask for your change in any ‘odd coins’ if they’ve got them. The cashiers count their till before and after their shifts, and know when they get a ‘weird one’. In looking at halves, certainly look for pre-1964 dates, but don’t forget the 1965 to 1970 dates either. Those years of Kennedy’s are 40% silver and still fetch far more than fifty cents at the coin shop (presently the 40% ones are going for $3.58). Now, armed with the numbers from the Conflation calculations, it is easy to do a little math in your head before you go into your brick and mortar coin shop. If you have a cell phone with a data plan, check it right before going in; as silver and gold are a commodity and can fluctuate. If you are still a bit nervous, ask for a print out of current prices. The good shops will accommodate you, because they want your business. The shady ones will pan out real quick; they want to turn a quick buck on the desperate folks. They don’t typically stick to current market prices, or accommodate you in a printout of current prices. Spend your hard earned federal reserve notes at the place that wants your business. 

The next web site falls in the category of ‘read up, student’. It is Zero Hedge. The comments section can be quite coarse and rough in language, but the owner (Tyler Durden, an obvious nom de plume) will publish stories and guest posts with a bent to telling the truth. They speak heavily of the markets. Go, read, and educate yourself. 

The third recommendation I make is for you to find the web site of your local coin shop – The ones who do a lot of business will also have an up-to-date price list. This comes handy to see what they are charging over spot, if they have a lag to the current market, and what their inventory is; saving you gas money before you drive over there. My local coin shop even lists the past several years worth of their auctions on their more rare/collectable stuff; helping me further by building my case history on my next purchases. If your local shop has such a resource, use it and arm yourself with knowledge. In my experience, fair business means letting your customer know what the current prices are, by providing a safe place to buy and sell, and by running an honest shop. The coin community will quickly oust unjust or dishonest businesses (and FYI, the ‘We Buy Gold” places do not sell, they only buy, and only at reduced prices). If you have a friend who collects coins, ask them what stores they go to, I guarantee they will have an opinion on the shops in your area. 

My next web site recommendation is to point you to a forum for numismatists (in simple terms, numismatists are folks who collect coins.) If you get into the collectible aspect of things (called numismatics), you will want to know more about grades, dates, mint marks, fakes, if one cleans a coin versus not cleaning it, coins in holders (called ‘slabbed’) or coins loose (called ‘raw’). Once you sign up to participate in the web site, don’t be afraid to ask questions; I recommend the CoinCommunity site due to the culture of courtesy and sharing there. I further recommend it as the site has a whole passel of folks who are the real deal. Not only will you see some beautiful coins, but exonumia (items other than coins; the medals, tokens, and scrip) and also ephemera (the boxes, holders, news ads and other various ‘throw away’ stuffs the coins came with way back when). Some of these folks just have to be of the museum curator ilk.

The final recommendation I will make is for you to buy yourself a Red Book. This spiral bound yearly publication talks about history, rarity, collectibility, and mintages of coins. Start with a section you are interested in (say Morgan dollars) and read it. Mark the interesting bits. Refer back to it. If you are truly abstemious in spending any money on printed materials (my father comes to mind here), or simply want to start this on the cheap, Whitman has a web site with an electronic edition.

I am in no way associated with any of these companies, and stand in no way of profiting from these recommendations. I instead pen this article in hopes of reaching the reader who is much like the very kind/very confused approximately 80 year old lady I met last week at my local coin store. Her husband had cashed out a sizable chunk of their retirement to take delivery on a ‘monster box’ (a 500-count case of 1 oz silver coins, a.k.a. American Silver Eagles, .999 pure silver rounds) and some fractional gold coins (called fractional because they come in various denominations; $50/$25/$10/$5, effectively a tenth oz, fifth oz, half oz and 1 oz coin; a.k.a. Gold American Eagles, .916 pure gold rounds). She was supportive of her husband, but had a bunch of questions, and was too timid to ask the sales guy. I struck up a conversation with her and talked about what I was looking at that day (so happened to be looking at commemorative slabbed coins; I saw an amazing MS65 Lafayette dollar!). Her interest was piqued, she was polite, and though I may sound like an apologist here, the people behind the counter were way too busy to do anything but fill orders (the line was something like four people deep when I was there). My only regret, looking back, is I never got to tell her how impressed I was was that she and her husband were trying to hedge themselves against the craziness in the investment markets. 

Okay, lets shift gears here a bit. If you, as a potential silver stacker, have stuck with me this far, perhaps I am almost convincing you to try some of these suggestions. Read on then, and lets talk a bit more about some helps.

Before you rush off to the coin store, begin to keep a close eye on silver spot price against what your local coin shops are asking per/oz. As of about 13:00 central time, when I began this article, there is a lot of stuff going for ‘over spot’ depending on what you are trying to buy. When I started stacking coin (at Mr Rawles’ suggestion), prices were a bit lower than now, and the ‘over spot’ margin was significantly smaller. The huge surge in demand of physical (instead of paper; like all the other physical commodity markets from pork bellies to sweet light crude oil), has combined with the present lower prices, and the resulting action is that dealers have raised their prices. 

As of today, according to my local coin shop’s web site, ASEs (American Silver Eagles) are about $5.80/oz over spot, “About Good” condition Morgan or Peace dollars (.773 pure silver) are $4.22/coin over spot, and ‘junk silver’ is going for $4.34 over spot/for $1.00 worth of ‘face value’. The smallest ‘over spot’ margins (on coins minted by the United States mint) I have found are the 5 oz America The Beautiful bullion coins. Bullion, for simplicity of explanation, is for precious metal content, and is not typically collected for numismatic factor. There are however some limited strike, proof strike, or limited release bullion coins. I state this as it can be confusing to see a bullion America The Beautiful coin and a slabbed America The Beautiful coin. The slabbed one will cost more because it is graded, and collectible. Yes, we numismatists can be a wee bit zany. s

I am not even going to start into Canadian, Mexican, Australian, Chinese, or other mintage coins, be they bullion (.91 and higher) or even numismatic. This article today is just for US Mint products to help the starting investor, as they are recognizable by everyone in the event of a Schumer/Oscillation Device occurrence. Ideally you can position yourself to not have to explain to your neighbor why your Peso from 1943 is 90% silver. As my late grandmother use to say,”K.I.S.S. stands for ‘Keep It Simple, Son'”.

I also tend to shy away from the odd weight/off-brand/hand poured stuff due to the influence of Chinese fakes out in the market. Fears over fakes is an entire other conversation (there is at present some noise out across the wire that regular ‘junk silver’ is the next target; Morgan and Peace dollars have been faked for years), but to arm yourself against them keep three ‘M’s’ in mind.  Measurements: the weight, thickness, diameter of coins (there are accepted dimensions), Magnetism: a silver coin when held at an angle will let a small strong rare earth magnet slide slowly across it’s face, and Melody: when you flip a silver coin on a hard surface , it should ‘sing’ or ring. 

The only other thing I can suggest with regards to fakes is to buy from a reputable dealer. Craigslist may have some mighty tempting ads, but you are truly on your own, and if you are just starting out, Caveat Emptor, buyer beware! Learn what to look for before you spend a passel on comparatively worthless plated copper fakes.

In closing, let me reassure the folks who feel like they are ‘too late’ to start. Fear not! I started in 2010 (as I mentioned, at the recommendation of Mr. Rawles), and have taken many small steps since then. While it is true that many people started pulling silver coins out of circulation back in 1965 (45 years before I started, mind you), I am still moving forward with my plan. Stock up on beans, bullets, and Band-Aids, and then (only after all the other bills are paid) pick up any bullion in small denominations. For the folks who feel it is too late, don’t let hindsight poison your faith. Take the small steps and God will bless you. 

I hope these thoughts help. In parting, I quote Mother Theresa; “We can do no great things, only small things with great love.” God Bless, – Jay in Missouri

Bookmark the permalink.

Advertisements:


Leave a Reply

Your email address will not be published.
Anonymous comments are allowed, but will be moderated.
Note: Please read our discussion guidlelines before commenting.