Thoughts on silver

[PhantomPhixer]

"Buy Gold" has been all over the airwaves ever since the recession started, and we've all watched the value skyrocket. Something that caught my ear just yesterday was related to the devaluation of the Dollar: in 1973 it was said, the price of gold was $35 / oz. Wow, if there was ever better proof of why we should still be on a gold standard, then I don't know what it is.

But I digress. It made me think "how would I actually buy something with gold?" Because at $1,500 / oz, it would only take a tiny flake to pay for something like a tank of gas. But what about a loaf of bread? In a total economic collapse, banana-republic style, gold seems like it will be impractical as a currency. Silver, on the other hand, appears to be more readily available. I looked up some silver coin values; in the case of a "Morgan Dollar" (I'm no coin expert), there was something like $32 worth of silver. Trouble is, the numismatic value of the coin (to a collector) is still much higher.

What I don't know is if it is possible to buy bars or ingots of silver at a 'melt value' price. I'm interested in any thoughts people have on the subject. Silver coins are attractive, but I'd be holding on to them for a long time waiting for the melt value to increase.

[PhantomPhixer]

Meant to say $22 instead of $32 for the silver value of a Morgan. Not sure how to edit.

[zykur]

Most times people are buying gold and silver coins, for ease of transport. In the event of a total collapse of the dollar and or society the price of a loaf of bread could cost $1,500. In that case is gold or silver even a currency that would be valuable? I think it would turn into a true barter system where you're trading something of value to the seller.
I haven't checked the prices lately but it's only worth the risk if you can buy low.

[mamabearCali]

Silver sounds like the way to go, Now gotta have $$ to convert to precious metals.

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[Radiac]

Look into pre 1965 90% silver dimes, quarters, halves also. These can be bought at a lower premium and are not collector grade.

[ShotgunBlast]

Just a nitpick: the price of gold has gone up, not the value (which you probably meant). The value of gold has stayed the same all these years, ie: 1oz of gold could purchase a great suit whether you purchase the suit in 1913 or 2013 even though 1oz of gold cost $19 compared to today's cost of $1575. As you mentioned, it's the devaluation of the US dollar (decreased purchasing power) that has caused the price of gold to skyrocket.

As far as actually purchasing something with precious metals, things can get interesting real quick. I personally won't consider using PMs as a barter item (or at least accepting PMs for goods that I have) just because of the risk of fraud. If you don't want to go all in on 1oz of gold, some retailers are offering them in 1/10oz increments or even 1g increments. http://www.goldgrambars.com/

As far as silver, yes you can get .999 pure silver in a variety of bar or coin configurations from 1/4oz up to multiple ounces. Your local pawn shop probably has them and tend to sell for silver spot price. I've purchased from Scottsdale Silver (based in Arizona). They have both a direct storefront on their website as well as an ebay store.

Some people also deal with "junk silver" by collecting pre-1965 dimes and quarters. Once again I don't mess with that because it's technicially illegal to melt down American currency and I don't want to explain to someone that the silver quarter I'm giving them is actually worth more than $0.25. Speaking of junk silver and price vs value, 3 pre-1965 dimes could buy you a gallon of gasoline in 1965. Because of silver's value those same 3 dimes could also buy a gallon of gasoline in 2013.

Hope this helps. Like you said, the US needs to get back on some kind of standard, but that will never happen because we've become used to printing money to finance deficit spending. There will be a horrible correction I fear in my lifetime which is why I convert out of US dollars and into food, bullets, PMs, or anything else as quickly as I can.

[gunderwood]

"Buy Gold" has been all over the airwaves ever since the recession started, and we've all watched the value skyrocket. Something that caught my ear just yesterday was related to the devaluation of the Dollar: in 1973 it was said, the price of gold was $35 / oz. Wow, if there was ever better proof of why we should still be on a gold standard, then I don't know what it is.

Internally the US went off the gold standard during the Great Depression when the government confiscated it. However, from then until 73' the Bretton Woods system was in place. Basically we "gave" our gold away at an artificially low price so that other countries would use dollars (this is how we became the worlds reserve currency). Depends on the year, but the real world market price of gold would have been about double that. This is also how Germany acquired so much gold post-WWII. Basically, we gave them practically free "loans," they rebuilt their industry, made goods that they sold to other and us for dollars, and then exchanged those dollars for a lot of gold at an artificially low price. In a nutshell, the German miracle.

But I digress. It made me think "how would I actually buy something with gold?" Because at $1,500 / oz, it would only take a tiny flake to pay for something like a tank of gas. But what about a loaf of bread? In a total economic collapse, banana-republic style, gold seems like it will be impractical as a currency. Silver, on the other hand, appears to be more readily available. I looked up some silver coin values; in the case of a "Morgan Dollar" (I'm no coin expert), there was something like $32 worth of silver. Trouble is, the numismatic value of the coin (to a collector) is still much higher.

When commodities were circulated as money, gold, silver and copper were the common metals. Silver and copper were more common to circulate for everyday necessities. However, once you get past that they become tedious to transact with for larger items. As for divisibility, coins were often cut up making it a none-issue. More modern examples would be the collapse of Argentina (ya, which one...). Gold typically didn't circulate because there were still trusted currencies (e.g. dollar and euro), but banks traded gold extensively with those who had a need for wealth conversion. For example, if you had an ounce of gold (really a troy oz), take it into the bank and exchange it for other commodities (e.g. silver or copper) or currencies (e.g. dollars or euros) can then you can exchange it for bread, water, etc. Practically that is how it worked.

What I don't know is if it is possible to buy bars or ingots of silver at a 'melt value' price. I'm interested in any thoughts people have on the subject. Silver coins are attractive, but I'd be holding on to them for a long time waiting for the melt value to increase.

Here are my thoughts.

If you want to go dollars -> gold/silver -> dollars as an investment, then physical possession just doesn't make sense. The overhead is just too high. There are easier ways to invest via paper/electronic methods. However, if you want to go dollars -> gold/silver -> other physical things, then physical possession makes a lot of sense. IMHO, it makes very little sense to pay the premium of physical and the storage fees just to find out that the government has taken possession of the vault during a crisis or at the very least it's going to be hard to get your share any time soon.

If you go the physical route you have to quite thinking of it as valued in dollars (since you're not interested in going back to dollars). You have 1oz of gold regardless of what the spot price is and the one thing you know for sure is that if you ever need it to buy stuff with, it will be worth much more than whatever today’s or tomorrow's spot price. 1oz of gold is 1oz regardless if the spot is $10/oz or $1,000,000/oz. If you can't view it that way, you'll likely loose money because you won't be able to tolerate the volatility in the commodity markets.

As for physical mediums, I prefer the following:

1. Gold American Eagles or Krugerrands because they are recognized world wide, state their weight on the coin, and most importantly are a gold alloy. When gold circulated as money, it wasn't done as pure because pure gold is too soft. Eagles use the old British 22kt standard (aka Crown Standard) which is mostly silver and a bit of copper (FYI, a 1ozt eagle actually weights more than that, it's 1ozt of gold and about an extra 9% silver/1% copper). Krugerrands are basically 1ozt gold and an additional 10% copper (gives them an orange tint). Both of these coins could physically circulate if required. Don't consider 24ct gold coins to be as useful given the investment scenario. There are also lots of old coins from other countries that are good as well (e.g. British Sovereigns, Swiss Francs, etc.) Typically, the old circulated coins have the smallest premium.

2. Silver can circulate pure or at ~90% (often called sterling silver). The old US coins were 90% silver and saw a lot of circulation. These are sold as "junk silver," not because they aren't worth a lot, but rather because they have no collector value. Since silver is harder than gold, pure bullion such as the Silver American Eagles, Canadian Maple Leafs (purest coin available), Austrian Philharmonics, etc. is a good option. Typically, junk silver has the smallest premiums. I'd suggest a mixture of junk and bullion.

[gunderwood]

Just a nitpick: the price of gold has gone up, not the value (which you probably meant). The value of gold has stayed the same all these years, ie: 1oz of gold could purchase a great suit whether you purchase the suit in 1913 or 2013 even though 1oz of gold cost $19 compared to today's cost of $1575. As you mentioned, it's the devaluation of the US dollar (decreased purchasing power) that has caused the price of gold to skyrocket.

Exactly.

Hope this helps. Like you said, the US needs to get back on some kind of standard, but that will never happen because we've become used to printing money to finance deficit spending. There will be a horrible correction I fear in my lifetime which is why I convert out of US dollars and into food, bullets, PMs, or anything else as quickly as I can.

This is the primary reason to consider investing in physical assets such as gold, silver, etc. The dollar collapsing is a serious enough threat that the Chinese have been encouraging their people to buy gold/silver for a while now. Thus, dollars -> gold/silver -> stuff and how many ounces troy, not the relative value via the spot price today. If it goes to $100/oz for gold I'll just buy more.

[Snakester]

I think everyone should have some Gold and/or Silver in their portfolio. I mainly buy PM's as a hedge against inflation. The only Gold Coin I buy is the 20 Franc Rooster...the size of a nickel and 1/5 oz. Gold. The only Silver I buy is "junk" $1,000 Face Value...715 oz. Silver Content...Best deal going , No added Premium and I get Free Shipping.

I'm not a Coin Collector , I have used PM's to purchase Gun's and Ammo and have also taken as payment and have bartered deals as well. CASH use to be KING, but not anymore. PM's are just another thing that has to be hoarded like water/food/ammo/medicine and even TP. All will be perfect for barter when out economy Fails.

[HighExpert]

I am curious about how much silver in actually in sterling silver flatware. My wife has a silver set for 16 that she is talking about selling and, if it is solid silver, she is not being offered anywhere near scrap value for it. Anybody have an idea?

[mamabearCali]

Of course brass is always good to have around too!

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[PhantomPhixer]

Great thoughts in here. Several of you are summing up nicely what I suspected, that the 'true' value of a precious metal hasn't really changed all that much. i.e. the example of three silver dimes buying a gallon of gas then vs. now, or the cost of a nice suit remaining equal to an ounce (or whatever) of gold.

Next question then, which is a little more complicated. Is there a reliable way to gauge the value of a commodity in a panic situation like we face now? Ammo is overpriced, gold is probably overpriced, silver maybe less so since everyone is focused on gold. Obviously the time to trade currency for these things is BEFORE the panic....which I didn't do. Looked at another way, if the inflated prices were only the result of a DEflated dollar, then it wouldn't really make a difference when to buy.

My goal with this is to convert currency => commodities => future goods. I'm not looking at this as an investment strategy, more like a survival strategy. Also, as a potential way to starve the beast. The more I can participate in a barter and PM economy now, the less support they get from me.

[gunderwood]

I am curious about how much silver in actually in sterling silver flatware. My wife has a silver set for 16 that she is talking about selling and, if it is solid silver, she is not being offered anywhere near scrap value for it. Anybody have an idea?

It should be stamped "925" or something similar (92.5% is the most common accepted sterling silver purity). Silver has a distinct sound when struck (hence the christmas silver bells), it should make a nice ringing sound. That should tell you if they are plated or solid.

Have any pictures?

[Monkey]

I'm not a big fan of gold. Too volatile. Besides, if SHTF, I'd rather trade with ammo, food, or alcohol - stuff I can use and that others could immediately use as well.

Perhaps I'm too naive or I'm missing something...

[ShotgunBlast]

Next question then, which is a little more complicated. Is there a reliable way to gauge the value of a commodity in a panic situation like we face now? Ammo is overpriced, gold is probably overpriced, silver maybe less so since everyone is focused on gold. Obviously the time to trade currency for these things is BEFORE the panic....which I didn't do. Looked at another way, if the inflated prices were only the result of a DEflated dollar, then it wouldn't really make a difference when to buy.

You value a commodity in a panic situation the same way you value it during any other conditions - what are you willing to trade to get what you want? Granted in some type of grid down situation there won't be a national spot value for bullets or anything like that. People will set the value based on the individual transaction. The guy who has thousands of rounds of ammo already stashed away may think ammo is overpriced now because of the law of diminishing returns, but the new gun owner whose spider sense is tingling may feel it's worth paying what we perceive to be an inflated price because they have no ammo at all. You may think gold has hit its peak price, but there are two factors that may indicate that now is a great time to buy: 1. our currency is still off the gold standard and if history continues the price will continue to go up 2. our federal reserve is dumping $40 billion a month of new made up currency into the system through QE with no end date in sight, causing our currency to continue to decline in purchasing power. You look at the 5-year or 10-year spot chart and you'll see that overall, gold prices go in one direction - up. If I were buying gold I'd ride out this current dip to see how low it goes and then pull the trigger as soon as it starts turning around. http://www.blanchardonline.com/market_c ... ocus=5year

My goal with this is to convert currency => commodities => future goods. I'm not looking at this as an investment strategy, more like a survival strategy. Also, as a potential way to starve the beast. The more I can participate in a barter and PM economy now, the less support they get from me.

Everyone's situation is different. Gold is a great way to retain your wealth between the collapse of one civilization to the rebuilding of another one. If you have fewer years left and no family to pass your wealth on to, you'd probably skip the gold and just trade your currency for goods. PMs in general are never an investment strategy but rather a hedge for inflation or way to transfer wealth from one inidividual to another. Their speculative nature and lack of dividends disqualify them from being an investment.

[ShotgunBlast]

I'm not a big fan of gold. Too volatile. Besides, if SHTF, I'd rather trade with ammo, food, or alcohol - stuff I can use and that others could immediately use as well.

Perhaps I'm too naive or I'm missing something...

Everyone's situation is different, but you and I are in the same boat.

In a rule of law situation gold serves no purpose for me because of its speculative nature and lack of dividends does not make it an investment.

Without rule of law you can try to cut that gold coin into pieces to barter, but you'd also have to educate those in the value of gold. I estimate you'll be on the losing end of many trades because no one knows what gold is worth. You trade with a can of soup or some TP and everyone already knows the value in that.

To spend $1500 on one ounce of gold, I can use that money elsewhere and get a bigger bang for my buck.

[Vince]

I'm not a big fan of gold. Too volatile. Besides, if SHTF, I'd rather trade with ammo, food, or alcohol - stuff I can use and that others could immediately use as well.

Perhaps I'm too naive or I'm missing something...

Not at all, I agree 100% in a "if SHTF mode" I would barter with ammo,food and booze before gold and or silver. BUT if it's not going that direction than yes, mineral value is by far better than paper.

[gunderwood]

I'm not a big fan of gold. Too volatile. Besides, if SHTF, I'd rather trade with ammo, food, or alcohol - stuff I can use and that others could immediately use as well.

Perhaps I'm too naive or I'm missing something...

Everyone's situation is different, but you and I are in the same boat.

In a rule of law situation gold serves no purpose for me because of its speculative nature and lack of dividends does not make it an investment.

Without rule of law you can try to cut that gold coin into pieces to barter, but you'd also have to educate those in the value of gold. I estimate you'll be on the losing end of many trades because no one knows what gold is worth. You trade with a can of soup or some TP and everyone already knows the value in that.

To spend $1500 on one ounce of gold, I can use that money elsewhere and get a bigger bang for my buck.

During initial collapse, yes food, water, ammo and other physical goods do well. If you don't have some of those, I would agree that $1500 is best spent on those things. However, the wealth storage utility of gold is hard to beat. Additionally, as things settle down and civilization rebuilds, money becomes a necessity. For all of recorded human history money seems to keep reverting to gold and silver.

[lonestarag]

Whatever you do, don't buy it now! The reason those commercials are on TV is because someone wants to off-load the inflated metals they bought at basement prices before that bubble pops. Hoard some cash and wait for a dip in the market, then pounce on it.

[Reverenddel]

Keep in mind, American Eagle Silver Boullion, or Canadian Maple Leaf are the two best silver coins with a decent price, and a fairly low chance of counterfeiting (Still illegal to C/F them because their CURRENCY).

But silver has OTHER properties as well!

It's antiseptic, and healing properties work VERY well! Miners in the 1900's would take a silver dollar, throw it in a bucket of water, leave it out in the sun for awhile, and it would kill the pathogens...

They didn't really understand WHY, but they did it!

Hence Collodial Silver (which will turn you BLUE)!