Choices in Silver

     This week we will look at how to buy silver with a focus on the physical products available. Just as in gold there are funds that are based on silver. Buying in the stock market offers speed and accuracy but lacks the actual possession. Here are some of the options for buying physical silver.

      The United States makes one ounce American Silver Eagles and Canada produces the Silver Maple Leafs. Other countries make silver products as well, but in America these are the two most popular government issued silver. Government products are popular as their weights and tolerances are very exact and backed by the country producing them.

      There are a number of refineries that produce bullion products in silver today in popular sizes such as 1, 10, and 100 ounce bars. These sizes are sought after because of the ease in calculating the value of these items. Roughly 1000 ounce bars are also produced for the Comex market, but can be found in the open market as well. It should be noted that 100 grams and kilos are popular in other countries that use the metric system, and refineries have produced a host of different sizes.

Older refineries have produced odd weight silver. Rather than producing an exact size piece they would pour bars at a rough size then weigh and stamp them with the exact weight. An example would be a 101.56 ounce bar rather than a 100 ounce piece. With the sophistication of refineries today these bars are not nearly as popular.

Older U.S. Silver coins are also popular for silver enthusiasts. Silver coins produced in this country before 1965 were made with 90% silver and many are sold for just their silver content. A common misconception is that a $1,000 bag of old coins has that many ounces, when in reality it only weighs about 795 ounces and contains roughly 715 ounces of silver. These are popular because they are actually still money and easily recognized.

      As far as value is concerned the government produced pieces carry the largest premiums. Old silver coins command a steady premium as the pieces were made by an exacting government as well. The widest variant in premiums can be found in refined bars. One ounce pieces are produced by a host of regulated refineries and come in numerous designs, but as you go up in size who made the bar becomes more important. The two most popular refineries are JM (Johnson&Mathey) and Englehard. When it comes to larger bars other brands can be discounted much more heavily.

      In the late 70's and early 80's a host of 'homemade' bars flooded into the market. Many of these were produced without regulation and may not bring as much when being sold today. Oddly enough with the rise in silver prices we are seeing this trend again. People are manufacturing their own bars without regulation or registration. Be careful of the silver you buy. If it comes from an unknown source it may have to be re-refined again and thus the selling price for that silver would be much less. It is our recommendation that you stick with buying one of the many good known brands of silver.

Currencies and Gold

 

Lately gold is not headlining news stories as it was last year. Instead we are hearing about the Euro and all of its issues in Greece and Spain. With the negative news many of our customers are asking why gold has not been going up like it was before and has even been seeing some corrections. One would think that with the Euro troubles that the value of gold would be headed up and not down.

I will attempt to explain the basics of why this is not happening, but let me first say that I do not profess to forecast what the value of what gold's price will do. I simply try to logically guess the next direction of golds value.

In terms of the Euro crisis and gold we must first start with the most basic principle that affects gold pricing for us, we price gold in dollars. When the Euro falls in value the dollar appears stronger in the world economy. Our dollar buys more Euros and therefore its value appears to be going up. Even if our dollar is falling in value if the Euro is falling faster our dollar appears to be better value.

As the world turns, all currencies are affected in this type of manner. Dynamics of currency trading are complicated and have many facets, but when we see things like gold, oil, and even stocks falling as the Euro falls we can attribute it to the fact that the world is valuing the dollar higher compared to the Euro. I am ignoring other currencies in this scenario, but the principle remains the same. If the world values dollars higher then the number of dollars it takes to buy things like commodities, oil, or even stocks goes down.

A basic principle with gold is that a person is usually not buying it to make a gain, but rather to maintain buying power. Of course there are always factors that can produce gains or losses outside of normal trading ranges. But gold seems to be the most steady of the commodities. I liken it to a tree. The larger the base of the trunk the less likely it will be swaying in the wind. The taller and thinner trees blow to and fro while the thicker based trees sway, but they do not swing wildly in the market winds. When we look at the long term charts of gold it has been on a steady increase which amounts to a good strong base in value. A ten year chart on gold shows that since 2005 when gold hit $500 it has been on a slow steady increase. It blipped up to $1900 last year, but still fits nicely into the $1550-1650 range today.

Based on what can be seen it appears that gold will continue its upward direction in the near term future. Ultimately the value of currencies appear to remain in decline and hence we could continue to see rises in commodities such as gold. Ultimately, I do not think that our nation will recover with hyper inflation or sky high gold prices, but a wilder thought is that just as Europe may not be able to recover with the Euro we may not be able to recover with the dollar either.

Time to start that coin collection!!

As of late we have been watching the metals prices fluctuate fairly strictly within a range. Silver has been basically between $28 and $33 for some time now, albeit with seemingly random breakouts occurring on both the up and the down sides.

This channel that metals have been living in is reflective of two primary factors. The first is uncertainty in economies as a whole. With the edginess of the Euro, political discontent in Russia and a slightly slowing Chinese economy people are not sure which direction to go. So they'll “flee to safety” one week and return to the markets in force the next. The second is, at the very least, the perception that the markets are manipulated. Evidence for manipulation in the silver markets is abundant. A manipulated market would be expected to operate tightly within a channel and this is largely what we see.

With the strong possibility of an economic recovery looming (Europe's troubles notwithstanding) a shift from a bullion or flight to safety mindset may be in order. Historically the people who have done very well with hard assets are collectors. This is particularly true in rare coins where the person who studies and buys rare coins sees his or her wealth grow exponentially as compared to gold and silver bullion hoarders. Rare coins have been far from depressed in recent years, but in relations to their basal metal value they have been quiet. It is, as they say, a very good time to buy.

Start investigating the world of numismatics. You will enjoy the hobby immensely and if you educate yourself it is relatively easy to expand your personal portfolio.

Go to our website www.brokencc.com  to see the finest selection of rare coins on the web. Whether you're looking to buy or not, this is a great way to get a feel for values and see some incredible rarities. If you're new to collecting give us a call 1-888-836-5527 and we'll be happy to guide you.

Silver Certificates

     Silver certificates were a standard currency in our country for nearly 100 years. From their inception in 1878 till their final printing in 1963 (series of 1957), silver certificates were designed to be backed by the value of actual silver. With silver on the rise in the 1960's the actual value of a silver dollar was becoming more than the face value of a one dollar note forcing the U.S. to quit printing them. Redemption for the silver certificates continued until June 24, 1968. After that time the certificate maintained its value as a Federal Reserve note, but was no longer redeemable for a silver dollar.

      With silver at the $30 dollar mark this week a stark contrast between the value of silver and the value of the dollar can be seen. The true value of a silver certificate is its face value, but most are worth a slight premium to collectors. A vast majority of silver certificates still known to exist trade from $1.25 to $2.00 each. Of course there are varieties and issues that are worth much more, but most fall into this category.

      At the same time a silver dollar has shot up to at least $23 based on its silver content, which is about 77% of an ounce. Of course some have even more value to a collector based on rarity or conditional factors. Most silver dollars trade for between $23-$30 for the common dates and grades. There are always a host of reasons that silver dollars can be worth much more than $30, but most do not make the higher category due to availability and demand.

      Looking at the value difference between the silver certificate and the silver coin can be eye opening. If a person had $1000 in 1968 and kept them in silver certificates the value today would most likely be around $1500. But, if that same person had redeemed their certificates for coins the value in today's dollars would be around $23,000.

      In 1968 many collectors kept their silver certificates in hopes of the collector value going up, but after 40 years it has been shown that the wiser choice was to keep the actual silver over the certificates themselves. If you have older silver certificates you can always have them checked to see if they are better varieties or issues, but the value of each will be dependent on that fact itself. Trading your old paper money in for metals will not net you as much now as it would have a generation ago, but it may just be a wise move for the generation you pass it down to.