Buying silver, where to start

Discussion in 'Financial Cents' started by rush81, Feb 3, 2010.


  1. rush81

    rush81 Monkey+

    I'm quite interested in where to start buying silver from. Do I want to buy coins, discs or these little bb things i'm seeing online?

    I'm sorry if this is redundant, but I've done some backreading and don't really see a good place to start. APMEX?
     
  2. melbo

    melbo Hunter Gatherer Administrator Founding Member

    Welcome,

    This is my suggestion although there are many opinions out there.

    Best place is to look for a local 'coin dealer' in your area. Not a cash for gold type place but an established dealer in coins and gold and silver.

    Second best for me has been an online broker like APMEX. I've done quite a bit of business with them over the years and have always been dealt with professionally and honestly.

    All oz (ounce) listings below are Troy ounces. These are not the same as the 16 oz that equal a pound. Never buy anything listed in pounds like on some ebay lots.

    Coins would be old US coins that were in circulation until 1965. Also known as 90% Silver and "Junk Silver". Junk refers to the fact that it does not have numismatic or collector value. 1 silver dollar contains around .715 oz of silver (rounded for simplicity) 90% Silver coins include $1, $.50, $.25 and $.10 pre-1965.

    Discs more commonly called rounds. These are full 1oz units that are almost always listed as .999 pure (Sterling silver is .925 pure). Rounds come in a few different forms. US Silver Eagles are put out by the US mint and are stamped $1, Canadian Maple Leafs are denominated at $5 and this can be confusing because they both contain 1 troy oz of silver. The last sort of Rounds are privately minted and can say anything from Englehard to Santa Claus. You may pay a little more for certain 'brands' but an oz is an oz is an oz to me.

    BBs? don't know and would stay away from them as they are not recognizable as silver and the burden of proof as to the metal content would be on you should you decide to sell them.

    I'd start off with some 90% Silver coins and add some 1 oz rounds after that.

    Silver spot right at this moment is $16.36 an oz. That price is tracked and based off of paper metal trades, (much like a stock market) and will fluctuate wildly from week to week. It is however the baseline for a dealer to set a price to sell to you. 90% Silver trades the closest to that "spot" or "melt" price, (you'll hear both terms but they mean the same).

    So, right now, the "spot" price for $1 of 90% Silver coins is $11.69 (16.36 x .715 = 11.69) That would make $10 of 90% = $116.90 and so on.

    You won't find any for sale at that price as there is extra added to the spot price when trading Physical over Paper. You can find 90% for .50 to $1 over spot most of the time. There are also different premiums on the Rounds as well. US Eagles carry a premium that is close to $4 over spot.

    The thing about that 'Premium' is that you can also expect to get that back when you sell.

    Chew on this for awhile and get back if you want any specific advice. How much do you want to spend?
     
  3. rush81

    rush81 Monkey+

    Thank you very much for that in depth introduction. I'm not looking to make a large investment right now, more as I'm looking to buy $25/$50 a week and build up a collection that way. To be honest I'm mosty looking to build this collection as a barter/trade option in case of some sort of local/national economic crisis. TEOTWAWKI
     
  4. melbo

    melbo Hunter Gatherer Administrator Founding Member

    I would find a local coin dealer and start buying 90% dimes. I haven't been in a shop to price small lots of dimes lately as the better deals are in $1000 bags ($12,000+ right now), but I bet you can get mercury dimes for $1.25 to $1.50 a piece. Perfect for your perceived need.

    You can build a relationship with a dealer and stop by every week with your $25 to $50 and walk out with a small bag of dimes.

    Let me know if you have any other questions or want some price checks to see if someone is trying to rip you off. I know I threw a lot at you in the post above.
     
    fedorthedog likes this.
  5. rush81

    rush81 Monkey+

    Thank you for that tip. It would make a lot of cents to buy dimes as they are a good amount for any type of trade. Thanks again.


    -justin
     
  6. melbo

    melbo Hunter Gatherer Administrator Founding Member

    ;) yep. more cents per dime every year...
     
  7. kckndrgn

    kckndrgn Moderator Moderator Founding Member

    Do a search on here, I asked pretty much the same question and got some GREAT responses.

    Check out the top right corner of the forum for the current SPOT prices. Make sure you know that what your paying is in the ball park. I've found a few places locally that have told me SPOT was $2 - $5 higher than what it was.
     
  8. rush81

    rush81 Monkey+

    1.So I'm looking at "junk" coins I believe? Are these "junk coins"?

    http://www.apmex.com/Category/17/90_Silver_Generic_Bags.aspx

    2.And it looks like for $1128 I'd get $100 face value of change which is roughly 71.5 ounces of silver. Right now silver is trading at 15.15 an ounce so that means that the silver is worth approximately $1083. Am I reading this correct so far?

    3.Also what is the advantage/disadvantage of buying these "junk" coins rather than say the silver dollars which are selling for 18.69 but the weight of the silver is not listed?

    4.And also when it comes to the Junk Silver it appears that these are all coins that are pre-1965, correct? Should I start looking for these in everyday change?



    thank you for your help

    -justin
     
  9. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    Justin,

    1. The coins are 90% Silver, and are only called "junk" because their only value is the silver itself...and it's a loose term used for odd bulk coins with no collector value.

    2. I think your math is close enough. Apmex or any dealer always charge over spot, it's the way the business is done. Nobody is going to sell precious metals at bare market value, there is no profit in this.

    3. The bulk coins are an advantage compared to the silver dollars you mentioned because they are not being marked up for collectors. It's all a state of mind, really. When the economy collapses, silver will all be worth pretty much the same depending on its purity and troy weight. A "rare" series of silver dollars (vs. .999 silver bar) mean nothing in barter to most people (chance may have it you find a collector, then so be it), and Ebay won't be in business during the next great depression...at least not in America.

    4. Not all coins minted back before the 60's were silver, but I always keep a lookout for silver coins. I managed to collect quite a few buffalo nickels and dimes this way, even a couple of quarters.

    Try looking into 1 oz. troy silver to round off your silver reserves if you are serious about it. I have even located means to start investing in 1 gram bars of .9999 gold with assayers certificates. Coins are great to invest, they cost little to start a collection, but not too many people may be willing to trade for them. Of course...nothing is certain. With a barter system and free market, the buyer (you) are 100% at the mercy of the person you trade with -and their perceptions.
     
    Heads Up likes this.
  10. melbo

    melbo Hunter Gatherer Administrator Founding Member

    What Brokor said.

    You have to be careful with the term 'silver dollar' as a pre 65 silver dollar that was once meant for circulation is a different weight than the $1 Silver American Eagle. The Eagle is 1 oz .999 silver and the 'junk' $1 'silver dollar' is around .715 oz, (Not sure the exact amount but that's close enough).

    I'd start with pre-65 if I were at your stage of the game as you can acumulate more silver for less premium with pre-65 US coins.

    You'll see that the discounts in 'premiums' at APMEX are with the larger bags ($1,000 face value) and the percentage goes up as you shop for lessor amounts ($500 and $100). They used to also sell amll lots at #x per $1 face.
     
  11. TnAndy

    TnAndy Senior Member Founding Member

    Welcome to the confusing world of silver.... :D

    Melbo is correct on the "new" silver dollar ( The Silver Eagle....sometime abbreviated as the SAE....Silver American Eagle ) is a full one ounce of silver.

    The older silver dollars ( Morgan and Peace dollars ) were minted up until 1935, and contained .7725 ounces of silver from the mint. Most folks accept them as .75 ounces of silver with circulation wear. Those dollars also usually sell for a bit more than "Junk Silver", just because of age if nothing else, but they do contain a bit more silver than pre-65 dimes/quarters/halves, which came from the mint with .725 ounces of silver, and are generally accepted to have .715 ounces ( per dollar face ) of silver due to wear.

    JUST TO ADD some more confusion, they minted Eisenhower silver dollars for a while in the late 60's and into the 70's ( Google them ) and I think some of them were 40% silver content, and some were simply clad coins......but you don't see them for sale much.....I would avoid them for silver content.....just because of the confusion of metal content.

    Junk Silver is a good way to start collecting. As to finding any in circulation, good luck ! Last one I found was about 10 years ago, a 1959 quarter. About the only ones you will find are where some kid pilfered dad's coin collection for soda money, or some crack head stole some and spent them for face value. There basically are none in circulation.
     
  12. rush81

    rush81 Monkey+

    wow, this is all so overwhelming but I appreciate everyone's help in watering this down for me. so it looks like for my interests i'm looking for pre-65 silver. this would be a good investment as well as work for currency in case of TEOTWAWKI? I'm going to check out a coin shop today to see what they have as APMEX's smallest bag of "junk" silver is almost $1200 and I just don't have that kind of cash for an investment right now.
     
  13. melbo

    melbo Hunter Gatherer Administrator Founding Member

  14. UGRev

    UGRev Get on with it!

  15. rush81

    rush81 Monkey+

    ok, this is what i got at the coin shop today. this is $200 worth of silver. how'd i do?
    100_0043.JPG
     
    Heads Up and Marck like this.
  16. melbo

    melbo Hunter Gatherer Administrator Founding Member

    All in all, you are 11oz heavier in silver than you were this morning and I'd say that is an outstanding position to be in.

    Nice thing about the Maple Leafs is that they say $5 on them and are .9999 fine and I'm never one to complain over a dollar or two premium when making a purchase like that; especially when the (paper) price just dropped and many dealers pulled their stock. Silver is worth more FRNS than 18 right now IMO.

    Good job in seeking advice and then pulling the trigger on a deal. You just entered a small category of the mass population with that purchase. It took me a few years to begin to think in oz over dollars.
     
  17. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Just noticed this thread... You did good on your first "exchange"... paper for physical is always a good thing... :0)
    Remember... there's a big difference between the preservation of wealth and "investments"... remembering that will save you alot of anxiety when the market goes up and down...
    I remember fretting over silver at $5 and gold at $350 not so long ago... kinda laugh about it now...
    Melbo is a good reference and source of information... can't go wrong asking questions before you decide what is right for you and your situation....
    Careful... its addicting... :0)
     
    Heads Up likes this.
  18. melbo

    melbo Hunter Gatherer Administrator Founding Member

    :lol: I still remember my first silver purchase. I had something Bear wanted and he offered to pay me in 90% Silver. I can still remember opening that package with my wife while sitting in a Denny's for lunch.

    I'll never forget that clink, clink sound that is unique to 90% Silver.

    Bear and I then went on to exchange in Silver as barter between ourselves, partner on a couple good silver buys (Silver at $6?? i think) and there may have been a few surprise gifts of Au/Ag back and forth as well. Holding your wealth in your hand is good for your soul!

    Glad to see you post here Bear as i think you were the first to bring PMs to the monkey. I feel like the graduated grasshopper if you are suggesting my advice to other neophytes!
     
  19. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    I actually remember that phone call... while you and your lovely wife were at lunch...
    I remember you telling me how different the sound and sight of it was... boy that was a while ago... good times... good times...

    Silver is still a good price today.... someday soon... folks will be remembering those days when it was $16... just like we remember when it was $6 (and fretting over whether to buy it or wait till it went back to $4 :0)

    I still have those Hawaiian Mint pieces... very very cool....

    Graduated Summa Cum Laude PHD - Real wealth... way beyond me... folks would do very well to listen to you my friend...

    Good times past and many more good times to come!
     
    Heads Up likes this.
  20. SLugomist

    SLugomist Monkey++

    Morgan silver dollars aren't pure, they're like .75 of an oz. if old and worn generally about 0.71 oz.

    Silver prices peaked at about $21-22/oz last year, so ~16/oz is ok. There is alot more silver on the planet than gold but silver is also used in alot of "destructive" technologies, i.e. once used it's gone.

    Also nickles, dimes and quarters 1964 and older are part silver. You could take a paper bill to the bank and trade for rolled nickles, dimes or quarters and fish. It's time consuming but you can come up with some Junk Silver that way, for cost. If you find none, then re-roll and exchange at the bank.

    pre-1983 pennies are copper or contain a majority of copper
     
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