Author name withheld by request
http://educate-yourself.org/cn/buyingsilver04apr04.shtml
April 4, 2004

BUYING SILVER BULLION
In a recent posting, Eddy recommended that people acquire some silver, as he believes that it will skyrocket as the economy comes crashing down. I don’t know what the price of silver will do, but I have some information for people who are interested in buying silver.

A number of private companies now mint one-ounce (by "ounce" I mean troy ounce) rounds of .999 purity silver. In larger quantities and by shopping around on the Internet, you can buy these today for silver’s spot price (which today is $8.12) plus about 60 cents per ounce, with shipping and insurance included. Typically, the dealer will buy them back at the spot price, or very close to it. In a rapidly moving silver market, I would expect that you should be able to continue to get a good price for these. I am not recommending any dealers, but you may want to check out www.tulving.com or www.ajpm.com.

Some people prefer one-ounce silver Eagles, minted by the US Government, which are very similar to the privately minted rounds, above. These are very nice, but currently cost about $1.00 to $1.25 more per ounce than their privately minted counterparts. Although they have dates, most have no collector’s value.

"Junk" silver coins (circulated American dimes, quarters, and half dollars minted in 1964 or before) are sold in bags containing $1000 face value, or $100 bags at a higher unit price. These are universally recognized, virtually never counterfeited, and provide silver in small increments (a silver dime has .0715 ounces of silver). These give you some benefits of silver ownership, and in an emergency, can easily be bought and sold. You can now buy them for about their melt value, sometimes less.

But expect to sell your junk silver at a discount – maybe a big discount – to its melt value. If silver reaches $50 per ounce, do you want to sell your junk silver for $30 per ounce? In today’s market, you might sell it for a 5-7% discount from spot. In the final stages of the 1980 silver bull market, the discount was close to 40%, mostly because the price per ounce the coin dealers received wasn’t fixed until after the smelting process, and this took several weeks.

Common date, circulated Morgan and Peace silver dollars (.77 ounces each), currently sell for about 50-90% above their melt value. Collectors have little interest in them, and in a roaring bull market, these will probably be melted down for their silver content, just as many were in 1980. These would then, ounce for ounce, be worth no more than your junk silver coins.

The 40% silver "clad" Kennedy half dollars were minted from 1965 to 1970. These cost about the same per ounce of silver as the 90% coins, but their extra weight and bulk makes them less desirable, and harder to sell.

Avoid 100-ounce silver bars like the plague. It is relatively easy to take a genuine 100-ounce silver bar, bore out most of the silver through holes in the sides, fill the holes with lead, and seal the edges with silver. Neatly done, this is almost impossible to detect without sawing the bar in half. No matter how genuine your bar is, you may find it difficult to sell, especially as the price of silver rises and counterfeiting becomes more common. And the 10-ounce bars usually cost as much per ounce as the more popular silver rounds, but force you to buy and sell in increments of 10 ounces.

Don’t confuse buying rare or uncirculated silver coins with investing in silver. Rare coins are primarily collectibles, like baseball cards. Many people have lost their life savings learning this the hard way, and many precious metal dealers will try to steer you away from bullion and toward collectible coins, for which they have large markups. You should avoid such coins, unless you are a hobbyist, with money to throw away. In a real depression or emergency, few people will have money to spend on rare coins.

Be leery of companies that offer to store your silver or gold for you. While this may be very convenient, many companies that were in this business years ago fleeced their customers. And if the government ever "calls in" silver as they did gold in 1933, expect them to go to these companies, first.

In most cases, you should take physical delivery of the silver, but make sure you have a secure place to store your silver. Don't tell your friends and neighbors what you bought. 100 one-ounce rounds weigh about 7 lbs, and some metal detectors are good to depths of 20 feet or more. If nobody suspects you are hiding anything, metal detectors should not be a problem, anyway.

Remember that virtually ALL personal property can be confiscated by federal or state government agencies, for any reason or no reason. Don’t make it easy for them.