Some basic PM questions

Discussion in 'Financial Cents' started by monkeyman, Feb 10, 2006.


  1. monkeyman

    monkeyman Monkey+++ Moderator Emeritus Founding Member

    Ok, I know a lot of folks have gotten into stocking up on PMs for barter and investment and so on. From what I understand most of this is in the form of coins cast from PMs like silver or occasionaly gold, and that the price is based on the value of the metal but priced above the selling price for that amount of the PM they are made from. If Im wrong on these basics please let me know but assumeing Im right the questions are as follows.
    If being used as barter, especialy in a SHTF situation (economic or general) would the trade value be expected to be based on the face value or weight or would it be something else?
    If its based on weight would say pure silver that was not in coin form also be of the same value per weith measurement?
    Since its cheper to buy silver thats not in the form of coins but rather bars or some other form, how viable would it be to say buy it in other cheaper forms then put it in uniform 'denominations' suitable for trade by weight, in other words small enouph to be practical?
    Would say getting a bullet mold say for .50 cal bals and casting the pure silver into balls this way be practical and how useful would this be in your opinions?

    I had just been reading one of the other PM threads and it made me start wondering about this so figured I would toss it out there for some of you folks who had more knowledge on the subject.
     
  2. TnAndy

    TnAndy Senior Member Founding Member

    Silver is sold pretty much on the basis of the silver......doesn't matter TOO much if it's in coin form or solid, like rounds or bars, though traditionally, coin IS cheaper ( more in a minute ).

    For example, a dealer I use is Tulving. From their site today:

    Spot price listed 9.69

    One ounce .999 rounds are 10.35 ( in 20 round tubes )

    90% US coin is 9.76/oz ( in $1,000 face bag )

    40% Kennedy halve 9.75/oz ( by 1,000 bag )

    10 oz bars are 10.35/oz ( 100 bar minimum )

    100 oz bars are 10.11/oz ( 10 bar minimum )

    Silver 1oz US Eagles are 11.30/oz .....AND you have to buy 500 to be allowed to pay that for that overpriced form !

    Source: http://www.tulving.com/goldbull.html

    So, US coin, either 90% or 40% is the cheaper way to go, and pretty much always has been. You can see from Tulving's prices, that coin sells slightly above spot, whereas pure sells anywhere from 50 cents ( on the 100oz bars) to 1.70 ( on the US Eagles ) over spot.
    That's quite a hit to take if you ask me.

    The discount on coin is due to the melt factor. Should you sell silver that is going to a refinery, .999 silver ( rounds, bars,etc ) is easier for them to deal with to melt into 1000oz bars which is what the industry buys for industrial use. Any other form, coin, sterling ( which is 92.5% silver content ) must be melted, then the 'other' metals must be extracted to leave pure silver, thus the price of them is less due to more work involved on the smelter level.....thus they sell at more of a discount to spot.

    Here's the downside to coin......and you'll hear this from folks that sold in the last runup of silver in the 80's. Smelters will take silver in pure form, and pay more for it, over coin. Simply less work, and in the case of the 80's run up, they KNEW it was going to be a short lived spike, and they paid less.....sometimes WAY less for coin, because they didn't want to get caught literally 'holding the bags' by having paid close to a high spot when the prices went back down........so 40-50 FRN spot saw them only paying maybe 25-30 FRN for the silver content of coin bags....pure they could simply melt and get out the door, so they paid closer to spot......I doubt ANYBODY ever got 50 bucks for their silver, quite truthfully.
    However, that said, I also think the coming rise of silver this time will NOT be a short spike......last time, there was a lot of silver around......the US Govt was still sitting on a few billion ounces even then.....the Hunt Bros were simply trying to corner part of the market and run up the price.....thus, it couldn't be sustained. Things are different today.


    BUT anyway, the coin factor, IMHO, works GREAT for someone buying for a SHTF situation.

    WHY ? Because US coin is a known factor......they have a given amount of silver based on the date convienently stamped there by the US mint....so you KNOW a dollar's worth of reasonably decent looking(not worn to the point you can't see anything or drilled out with holes for a necklace, etc ) pre 64 coins contains .7235 ounces of silver.

    Should you cast a 50cal ball of silver, what is it ? Did you use 90% coin to make it ? Did you use .999 silver ? Did you use 1/2 silver and half scrap wheel weights or shiny lead/tin/antimony solder you had laying around ?

    Heck if I know......and after the SHTF, I doubt any of us are gonna have a portable assay system.

    So even something stamped with a "sterling" hallmark would likely be more acceptable ( at least to me ) than a melted glob of unknow content. I could weigh the sterling fork or spoon, calculate 92.5% of it to be silver and have some reasonable basis for a trade.

    THAT is one of the properties of money......that is bear some standard denomination so we DON'T have to haggle over what it is......which is one reason money is superior to barter....."how big are them apples ?........how old are they ?......you hiding any bruised ones on the bottom of the basket ? ....they rotten inside ?".......see my point ?

    SO, for the above reasons, MY silver is primarily in 90% coin form ( with the rest in one ounce rounds ). I have no bars at all.

    My thinking is this: either the S is Gonna HTF ........or it ain't........kinda like rain.

    If it does, I've got real money to deal with ( along with barter items......I'm not against barter, as I can also see the need for trade to trade items......a guy needs beans and toliet paper WAY lot more than a pocket full of silver if there is no place to BUY beans or toliet paper )

    AND if the S doesn't HTF, then silver is going to be one of the best investments you could ever make.

    The world is going to continue to rock along using more silver than is being mined like it has for the last 12-20 years ( depending on whose figures you choose ), and at SOME point, the COMEX warehouse is gonna come up empty......at which point the price in relationship to the FRN is gonna go to the moon.

    Silver is a critical industrial metal they HAVE TO HAVE. If you build smart bombs and use several ounces per bomb on a 100,000 buck priced bomb, you AIN'T gonna quit building them because 100 FRN silver adds .000005% to the cost of it.

    If you build cell phones, and use a silver based battery or solder contacts in it that right now cost you a few pennies, you ain't gonna quit making them because silver jumps to 200 FRNS......you'll simply add 50 cents or a buck to the price of your phone and drive on.

    And so on.... They are GONNA pay it. AND I GOT IT TO SELL TO "EM.....ahahahahaaaaa......at my price.
     
  3. ghrit

    ghrit Old, mean, and nasty Administrator Founding Member

    Quite likely not. But if there is a reloader in camp, the start is there with a powder scale and some sort of accurate measure that the medic might have. Like as not, you won't be able to tell what the alloying material is with out a metallurgical ID kit, but you can surely tell if it's close to pure. "Eureka."
     
  4. Bear

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

    Nice replies guys....

    Monkeyman .... Congratulations.... pretty good that you're asking ..... get some.... even if its just a few 90% coins at a time.... you won't regret putting a little away at a time....

    I've got a buddy up in the Dakotas and one in Washington State that picks it up as sort of a forced savings plan..... a little here... a little there..... doesn't go overboard.... stays well within their means.... a comfortable pace that allows them to still support and enjoy themselves and their family.... learn what you need to learn.... ask lots of questions..... we're here to help..... then do what's right for you.... but do it.... don't just talk about it.... too many just talk about things.... lot of good that's going to do them.... "I should've.... I could've... " some of the sorriest words to come out of a persons mouth!

    Everyone else... Party On !!!! [beer] b::
     
  5. TnAndy

    TnAndy Senior Member Founding Member


    Nope.....scale won't tell you much

    Silver weighs 10.49 grams/cubic centimeter

    Lead weighs 11.34 grams/cubic centimeter.....real close.

    Tin( common component of solders like 50-50 or 60-40 ) about 7.2 grams/cubic centimeter

    You melt about 30% lead with 20% 50-50 solder, and 50% silver, and you have a cubic centimeter that will weigh right at one of pure silver...but is only 1/2 silver....and that is assuming we've got any way to accurately measure an exact cubic centimeter.

    So, you see the problem of home made coinage.....and why known coins would be better.

    Even using THEM will take some serious re-educating of most folks, since the average Joe couldn't tell you the difference in a 90% coin and a clad pc of crap.
     
  6. melbo

    melbo Hunter Gatherer Administrator Founding Member

    That's why I like 90% myself.
    But, I also 'diversify a bit too. I have Canadian Maple Leafs which are 'pure' or .9999 kinda like 24Kt. I also have some American Eagles as well.

    From a purity standpoint, the MLs are better. But I can just hear some Tennesseean come SHTF telling me that he don't like my 'funny money'...

    But in the beginning, you can find 90% (pre-65 US coins) at flea markets, gun shows, coin shiops, etc. Right now we are looking at around 7X face value. So a .50 piece will go for about $3.50.

    Some of us hold silver that we bought at $5 an oz and are waiting for it to go to $100 an oz to sell and buy an island somewhere.

    Others have a half and half strategy.Save half and sell half if it goes "to The moon"

    Others yet will just hold onto it as real money. If silver goes to $100 an oz... Do you really want to take a peak at what those 'dollars' are really worth?

    By a few coins. They have a really cool feel to them. the 'clink' has a ring to it that is pretty cool too. Reminds me of being at my grandmothers house playing cards. actually takes me back there.
     
  7. melbo

    melbo Hunter Gatherer Administrator Founding Member

    Bear and I were thinking of offering some small amounts of 90% here for sale just to get them in some folks' hands. Maybe we will start this sometime.
     
  8. ghrit

    ghrit Old, mean, and nasty Administrator Founding Member

    That turns out to be easy with a pretty common lab or pharmacy tool (graduated cylinder.) Somewhat similar in a way to a kitchen measuring cup, but a lot more precise.

    However, you are right about being able to gin up an alloy that approximates the density of silver. Again, you are right about having some difficulty determining that the metal is fake without some moderately sophisticated assay tools. All that said, it would take some pretty sophisticated metalsmiths to counterfeit (to make up the fake alloy) as well.

    There are some field test kits that would be of inestimable help in shaking the wheat from the chaff. We might be lucky and have a fellow monkey that has one of those in his bugout kit, but I'm not taking bets.

    All that said, there might be some paranoids that have made up some bars of pseudo silver in advance of SHTF for just such an eventuality. That bet I'd take. And, were he found out, he neck would be worth about half a wooden nickle in my camp.
     
  9. monkeyman

    monkeyman Monkey+++ Moderator Emeritus Founding Member

    Ok I was kind of thinking that the 'spot price' was what like just bars or blobs of silver actualy sold at ad that the other forms were above that. Also was thinking other than getting bars and casting the balls from, things like going to yard sales and so on and findint the stuff where folks dont realize what they have and are say selling grandmas tea set thats solid pure silver or maybe the silverware or whatever where you can get it well below the value of the PM but if you were to try bartering with it based on the PM value it would be at the least like trying to break a $100 bill if not more so casting it into balls. I know I have several platers and such that my mom was going to just throw away that are sterling so I brought them home and have them around some place. I guess I can see though where it may be harder to get some folks to accept them though.
     
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