Buying Real Silver and Gold (Not Bitcoin)

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grayfox
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Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Wed Dec 13, 2017 11:52 am

Everyone is going crazy over bitcoin this year. In one year, it's gone from

1 BTC = $781.70 (Dec 13, 2016) to
1 BTC = $17,059.30 today (Dec 13,2017)

That's 21.8x in one year. See Bitcoin (BTC) Chart

They call bitcoin "Digital Gold" and they call Litecoin "Digital Silver". But back in 2010/2011 when bitcoin was like $1, nobody was interested in it. Back in 2010/2011, everyone was going crazy over real gold, the precious metal. The barbarous relic.

Gold had a steady increase from about $400 per troy ounce** in 2000, and, by 2011, gold was getting close $2,000 per troy ounce. See Gold Prices - 100 Year Historical Chart

But now, with Bitcoin and other cryptocurrencies getting all the attention, it seems that everyone has lost interest in real gold and silver. They just want the digital variety. Gold price fell in 2013, and then you stopped hearing about it. Right now it's $1244 per troy ounce.

People didn't get as excited over silver, but it also had a big increase from about $6 in 2000, to about $50 in 2011. See Silver Prices - 100 Year Historical Chart. Right now, the spot price of Silver is $15.74 per troy ounce.

Gold went up 5x in about 10 years. 8-)
Silver went up 10x in 10 years. 8-)
Bitcoin went up 20x in 1 year. :shock:

The current bitcoin mania makes the gold mania of the past look like nothing.

** 1 troy ounce = 31.1034768 grams or 480 grains
1 ounce = 28.3495231 grams or 437.5 grains
a troy ounce is 2.75 grams more than a regular ounce

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by technovelist » Wed Dec 13, 2017 1:31 pm

So you're saying this time it's different? :mrgreen:
In theory, theory and practice are identical. In practice, they often differ.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by kosomoto » Wed Dec 13, 2017 1:43 pm

Why buy non-productive assets when you can buy shares in the profits of the world’s most successful companies?

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grayfox
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Wed Dec 13, 2017 1:56 pm

kosomoto wrote:
Wed Dec 13, 2017 1:43 pm
Why buy non-productive assets when you can buy shares in the profits of the world’s most successful companies?
Ever seen LOTR. When they have to buy passage on the boat to Laketown, they use silver coins. You can't carry a company with you in your purse, like you can a silver dollar or a 20-dollar gold coin.
Last edited by grayfox on Wed Dec 13, 2017 1:59 pm, edited 2 times in total.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Jack FFR1846 » Wed Dec 13, 2017 1:57 pm

I learned my lesson. Bought junk silver coins when silver was around $20 per to. Been selling to private buyers on craigslist lately since they'll pay more than Apmex or the local wholesale bullion shop. I learned my lesson.
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by oldzey » Wed Dec 13, 2017 2:04 pm

Gold may be useful as a hedge against inflation, but over the past 215 years there are other financial instruments that have performed better:

Image

Source (page 6): https://www.cfasociety.org/sandiego/Lin ... 17-CFA.pdf
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by climber2020 » Wed Dec 13, 2017 2:11 pm

What's the question

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Maverick3320 » Wed Dec 13, 2017 2:19 pm

grayfox wrote:
Wed Dec 13, 2017 1:56 pm
kosomoto wrote:
Wed Dec 13, 2017 1:43 pm
Why buy non-productive assets when you can buy shares in the profits of the world’s most successful companies?
Ever seen LOTR. When they have to buy passage on the boat to Laketown, they use silver coins. You can't carry a company with you in your purse, like you can a silver dollar or a 20-dollar gold coin.
If it comes to the point where people are having to barter silver dollar or gold coins, you're going to have much bigger problems than how to pay for a boat passage somewhere.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Wakefield1 » Wed Dec 13, 2017 2:22 pm

technovelist wrote:
Wed Dec 13, 2017 1:31 pm
So you're saying this time it's different? :mrgreen:
This time is worse.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Nowizard » Wed Dec 13, 2017 2:24 pm

It seems that there are cultural and political differences among those who purchase gold/silver, particularly gold, and those who don't. These are in addition to the different reactions to whether or not metals are a good investment from a ROI point-of-view.

Tim

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Wakefield1 » Wed Dec 13, 2017 2:25 pm

I like my few bright shinys.
Actually Marie Curie gold piece is quite pretty.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by David Jay » Wed Dec 13, 2017 2:27 pm

oldzey wrote:
Wed Dec 13, 2017 2:04 pm
Gold may be useful as a hedge against inflation, but over the past 215 years there are other financial instruments that have performed better:

Image

Source (page 6): https://www.cfasociety.org/sandiego/Lin ... 17-CFA.pdf
The logarithmic scale of the chart doesn't do justice to the difference in performance.
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grayfox
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Wed Dec 13, 2017 2:36 pm

Comparing the return of stocks and bonds against gold doesn't really make sense. Apples and Oranges. I think people here are confusing buying Gold or Silver with Investing.

Investing means you take some of your profits and buy more capital assets to produce even more profits in the future. The point of Investing is growth. Grow the earnings; grow the dividend.

Gold is not a productive asset. It produces no profits. Gold serves a different role: a store of value over time. One thousand years ago, it bought a suit, and today it buys suit. (Not the exact same suit. Styles change.)

Would you call Smaug an investor, sitting on his pile of gold? No, Smaug is simply a hoarder.

Image

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by technovelist » Wed Dec 13, 2017 2:47 pm

oldzey wrote:
Wed Dec 13, 2017 2:04 pm
Gold may be useful as a hedge against inflation, but over the past 215 years there are other financial instruments that have performed better:

Image

Source (page 6): https://www.cfasociety.org/sandiego/Lin ... 17-CFA.pdf
I think it is clear from that chart that anyone who has 215 years to invest should definitely pick stocks.

Especially if they start 215 years ago!
In theory, theory and practice are identical. In practice, they often differ.

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grayfox
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Wed Dec 13, 2017 3:07 pm

climber2020 wrote:
Wed Dec 13, 2017 2:11 pm
What's the question
Having never bought silver or gold, I have plenty. But the basic idea is that with everyone mesmerized by crypto, would this be a good time to think about precious metals? Compared to a few years ago, they are cheap. See charts lined above.

The worst time to buy something is when everyone wants to buy it. Right now that's bitcoin, et al.
The best time to buy s.t. is when no one wants it. Gold and silver?

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by sergeant » Wed Dec 13, 2017 3:17 pm

It might be a good time for commodities. I would prefer an emerging market fund as a commodity play. I have owned lots of physical silver bought in the mid 80's at under $6 an ounce. I sold almost all of it a handful of years ago as it neared $50 an ounce. It felt good to be rid of it.
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by 1nv35t » Wed Dec 13, 2017 3:46 pm

kosomoto wrote:
Wed Dec 13, 2017 1:43 pm
Why buy non-productive assets when you can buy shares in the profits of the world’s most successful companies?
For bonds would you rather a T-Bill/LTT bond barbell or a 10 year bond bullet ... or a stock/gold barbell? https://tinyurl.com/ybnl88ma

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by technovelist » Wed Dec 13, 2017 4:57 pm

grayfox wrote:
Wed Dec 13, 2017 3:07 pm
climber2020 wrote:
Wed Dec 13, 2017 2:11 pm
What's the question
Having never bought silver or gold, I have plenty. But the basic idea is that with everyone mesmerized by crypto, would this be a good time to think about precious metals? Compared to a few years ago, they are cheap. See charts lined above.

The worst time to buy something is when everyone wants to buy it. Right now that's bitcoin, et al.
The best time to buy s.t. is when no one wants it. Gold and silver?
As far as prices go, gold looks pretty good to me here, being about 2 years past the bottom of a fairly severe drop. It has gone up 15% or so from that bottom, but I think it has a long way to go from here.

Silver, on the other hand, is too volatile for my liking.

If you have any questions about mechanics of buying gold (or silver, for that matter), you can PM me. I don't think most of the board would be interested in the details.
In theory, theory and practice are identical. In practice, they often differ.

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grayfox
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Thu Dec 14, 2017 9:52 am

OK, so I decided to buy some real silver and gold. I'm talking about the actual metal, not an ETF like SPDR Gold Shares (GLD).

Right now 1 troy ounce of Gold (AU) is $1,245.10 and 1 troy ounce of Silver (AG) is $15.78. It's a lot cheaper to get started with Silver, so that's what I'm going with.

I googled for "Best Place to Buy Silver Yelp". Ten local places came up. Number 1 had good reviews, mostly 5 stars. So I decided to go there and see what they had for sale. There was a good place for lunch right down the street, so I would go to the Coin Store and then get lunch.

The store was in a strip mall on a main street with a parking lot. I went inside; there were glass-top counters on either side with Coins. They looked like old collectible Coins. I told the guy that I was interested in buying silver. "Right here", he says pointing to the glass case with Silver Coins.

Basically they had two kinds of silver coins. One was actual coins--actual money--minted by various governments. The other was medallions that looked like Coins but were manufactured by private companies. The government minted coins are actual Legal Tender; the private stuff is not.

Now here is what may surprise you. The legal tender coins are all brand new-2017. Who knew that the governments of world were still minting actual silver coins? They didn't do this when I was a kid. Us kids used to collect coins, mostly stuff that we found in change. I do not recall seeing Silver Dollars except for old coins in a Coin Store. But now the governments mint brand new 1-ounce Silver coins every year.

The U.S. Mint makes 1-ounce Silver American Eagle dollars. They are one dollar face value. This is not fiat money that everyone hates. The actual silver is right there in the coin. It says right on it "Liberty" "In God We Trust" "2017" "United States of America" "1 OZ. FINE SILVER~One Dollar" THIS IS REAL MONEY!

Image

According to the guy behind the counter, the price you pay is the spot price of silver plus $3.50 premium.
I asked for the current price. $18.95 plus sales tax
Tax Credit Cards? No, cash personal check only.
What's the total price with tax? $18.95 + $1.47 = $20.42

I didn't have my checkbook with me. Who carries that around with them anymore. I looked in my wallet and had a $20 bill plus smaller bills.

So I bought my first silver coin. Yay! Paid $20.42 for a 2017 American Silver Eagle. It came inside a clear soft plastic sleeve, which he then put into a 6.5"x4.5" yellow paper envelope . He printed a paper Sales Receipt.

Also, for the bitcoin crowd that loves anonymity: This transaction was mostly anonymous. I paid cash and I didn't have to show any ID, they never asked for my name, address, phone number, anything. I'm sure there were security cameras so they know what I look like. Maybe next time I'll wear a disguise so I'm completely anonymous.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by JBTX » Thu Dec 14, 2017 10:15 am

If you want to buy a few coins in case of the zombie apocalypse knock yourself. But to have any meaningful impact on your portfolio you’d have to buy a lot and then store it somewhere safe which in my mind is a PITA.

Seems to me if civilization has collapsed then if you toss out silver or gold coins they are likely to get stolen in the post apocalyptic anarchy state.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Wakefield1 » Thu Dec 14, 2017 10:15 am

A lot of people used to buy the U.S. Mint Silver Proof Sets or Uncirculated Sets (they came in both Coin Silver and base metal as in the common bankroll coins) to give to children for their birthday presents (there was a "50 States Quarters" variation)
not really an efficient way to buy silver as they are sold at a considerable premium to the bullion value,also I believe Coin Silver is only 90%,the rest is copper or something to make the coins harder (make sure to get "Silver" uncirculated or proof,otherwise you might be getting base metal (nickle plated over copper?)
also modern pennys are not copper or bronze but only thin coloring over top of some tinny metal or plastic material

The Silver Eagle might have more silver for the money but it will be much softer.

I guess the Coin Shop sells the Silver Eagles for about the same price as buying them directly from the U.S. Mint?
Last edited by Wakefield1 on Thu Dec 14, 2017 10:34 am, edited 1 time in total.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Jack FFR1846 » Thu Dec 14, 2017 10:26 am

I don't know about your state, but in mine (Massachusetts), buying less than $1,000 in silver/gold is subject to sales tax. $1,000 and above is not. My 2 purchases have been junk silver coins at $1,000 per purchase. Although it has been a horrible investment (has lost value bigly), at least I didn't pay the 6.25% state sales tax. I've been selling to craigslist private buyers as they're paying $1 over what the dealers pay per dollar face. I'll be happy when I'm rid of this crap.
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grayfox
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Thu Dec 14, 2017 10:41 am

Here is what surprised me:

1. Who knew that the U.S. Government was still minting Silver Dollars? Not a silver medallion, but actual Legal Tender. You can pay your taxes with this. This is not fiat money, but is actually backed up with 99.9% pure Silver, that is right in the coin.

2. Who knew that you had to pay Sales Tax when buying Silver? No-one ever mentioned that as I recall. OK, I see Jack FFR says that you only pay sales tax if you buy less than $1,000. It looks like it's $1,500 in California

3. Who knew that you could get started buying with only about $20? Even these ETFs like iShares Silver Trust (SLV) it would cost about $1,500 for 100 shares.

4. Who knew you could buy Silver with almost complete anonymity.
Last edited by grayfox on Thu Dec 14, 2017 10:50 am, edited 1 time in total.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Raymond » Thu Dec 14, 2017 10:45 am

Some online calculators for silver and base metal U.S. coin values:

http://www.coinflation.com/coin_calculators.html
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Wakefield1 » Thu Dec 14, 2017 10:51 am

Wow. Beware. I just tried to look up the official U.S. Mint web page and I got what appeared to be an imposter (private dealer webpage made to look official as if the U.S. Mint site. Real one I think contains " catalog.usmint.gov/ "

most U.S. mint collectors' coins and sets are packaged inside plastic see through casings,if you might someday resell the item best not to open the casing

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Thu Dec 14, 2017 11:05 am

JBTX wrote:
Thu Dec 14, 2017 10:15 am
If you want to buy a few coins in case of the zombie apocalypse knock yourself. But to have any meaningful impact on your portfolio you’d have to buy a lot and then store it somewhere safe which in my mind is a PITA.

Seems to me if civilization has collapsed then if you toss out silver or gold coins they are likely to get stolen in the post apocalyptic anarchy state.
It doesn't have to be a zombie apocalypse. Even just high inflation. Look around the world. There are plenty of countries where you would have wanted Silver and Gold. Argentina and Venezuela come to mind.

List of countries by inflation rate

There are about 25 countries with inflation rate higher than 10%.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Ice-9 » Thu Dec 14, 2017 11:13 am

I buy occasional silver coins not really as an investment but more as a hobby that has investment-like qualities. It's fun to collect various coins from different countries.

If you can order $100 worth at a time, free shipping is available from several online stores at prices that usually beat local coin shops if you pay by check or bank transfer, including JM Bullion and APMEX.

I tell myself that if silver ever skyrockets again like it did in 2011 I'll sell a bunch, or if the gold/silver ratio ever goes low enough I'll exchange for gold, but honestly I like my coins and know it would be difficult to part with them if that time comes. Hence, I call it "a hobby with investment-like qualities." I don't feel that way about index fund shares. :P

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by harvestbook » Thu Dec 14, 2017 11:16 am

I got 20 Silver Eagles off eBay for only a couple bucks each over spot price. (I think 20 came to around $383 earlier this year with free shipping.) It's mostly an improbable emergency fund. It seems easy to sell them the same way on eBay, too, but you will stand to lose the shipping cost. The values seem to stay pretty stable there, unlike Bitcoin. (I bought $20 worth of it, too, just to see who it works, or doesn't.) Cheap entertainment. I'd hate to have huge hoards of any of this kind of stuff, when stocks and bonds are so simple and pay dividends.
Last edited by harvestbook on Thu Dec 14, 2017 11:17 am, edited 1 time in total.
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Thu Dec 14, 2017 11:16 am

Wakefield1 wrote:
Thu Dec 14, 2017 10:15 am
A lot of people used to buy the U.S. Mint Silver Proof Sets or Uncirculated Sets (they came in both Coin Silver and base metal as in the common bankroll coins) to give to children for their birthday presents (there was a "50 States Quarters" variation)
not really an efficient way to buy silver as they are sold at a considerable premium to the bullion value,also I believe Coin Silver is only 90%,the rest is copper or something to make the coins harder (make sure to get "Silver" uncirculated or proof,otherwise you might be getting base metal (nickle plated over copper?)
also modern pennys are not copper or bronze but only thin coloring over top of some tinny metal or plastic material

The Silver Eagle might have more silver for the money but it will be much softer.

I guess the Coin Shop sells the Silver Eagles for about the same price as buying them directly from the U.S. Mint?
Yes, when I was a kid, my friend's father bought Proof Sets every year. They didn't mint new Silver Dollars back then. The U.S. Government started minting the American Silver Eagle coins in 1986. It's 1 troy ounce of 99.9% pure Silver and has a nominal face value of $1.

This is a bullion coin. They also produce proof version and uncirculated for coin collectors. I'm more interested in the plain bullion coin. Although it is a beautiful work of art. I just have it on my desk because its nice to look at. For $20, that's inexpensive. I think it would make a great Christmas gift.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by itsgot8 » Thu Dec 14, 2017 11:24 am

JM Bullion provides a one time deal that allows you to buy 10 silver coins at spot price.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Thu Dec 14, 2017 11:59 am

OK, so I bought a 1 oz Silver American Eagle Coin (ASE) for a total cost of $20.42. But the Spot price of silver was something like $15.45 when I bought it. What's up with that?

The coin store has a website and it shows how much they Buy and Sell ASE coins for. It showed something like:

WE BUY WE SELL
$16.46 $18.95

It looks like they sell it at about +$3.50 over the spot price (that matches what they told me)
and will buy it back at about +$1.00 over the spot price

But with sales tax, the cost came to $20.42. So I if turned around and sold it immediately for $16.46, I would loose $3.96 or 20.92%

In order to break even, Silver spot price would have to rise to $19.42 or 25.70%.

:arrow: I lost about 20% as soon as I bought it. That's not something I would call a good investment. The spreads are too wide. With stocks, spreads are pennies. With silver coins, spreads are a couple of dollars.

So there's another surprise. No-one ever mentions that they lost 20% as soon as the bought their Silver, and Silver has to rise 25% to break even. Now If I bought more than $1,500. I would eliminate the Sales Tax with is 7.76% at that location, so I would save that. But there spread is still huge compared to stocks.
Last edited by grayfox on Thu Dec 14, 2017 12:03 pm, edited 1 time in total.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by technovelist » Thu Dec 14, 2017 12:02 pm

grayfox wrote:
Thu Dec 14, 2017 9:52 am
OK, so I decided to buy some real silver and gold. I'm talking about the actual metal, not an ETF like SPDR Gold Shares (GLD).

Right now 1 troy ounce of Gold (AU) is $1,245.10 and 1 troy ounce of Silver (AG) is $15.78. It's a lot cheaper to get started with Silver, so that's what I'm going with.

I googled for "Best Place to Buy Silver Yelp". Ten local places came up. Number 1 had good reviews, mostly 5 stars. So I decided to go there and see what they had for sale. There was a good place for lunch right down the street, so I would go to the Coin Store and then get lunch.

The store was in a strip mall on a main street with a parking lot. I went inside; there were glass-top counters on either side with Coins. They looked like old collectible Coins. I told the guy that I was interested in buying silver. "Right here", he says pointing to the glass case with Silver Coins.

Basically they had two kinds of silver coins. One was actual coins--actual money--minted by various governments. The other was medallions that looked like Coins but were manufactured by private companies. The government minted coins are actual Legal Tender; the private stuff is not.

Now here is what may surprise you. The legal tender coins are all brand new-2017. Who knew that the governments of world were still minting actual silver coins? They didn't do this when I was a kid. Us kids used to collect coins, mostly stuff that we found in change. I do not recall seeing Silver Dollars except for old coins in a Coin Store. But now the governments mint brand new 1-ounce Silver coins every year.

The U.S. Mint makes 1-ounce Silver American Eagle dollars. They are one dollar face value. This is not fiat money that everyone hates. The actual silver is right there in the coin. It says right on it "Liberty" "In God We Trust" "2017" "United States of America" "1 OZ. FINE SILVER~One Dollar" THIS IS REAL MONEY!

Image

According to the guy behind the counter, the price you pay is the spot price of silver plus $3.50 premium.
I asked for the current price. $18.95 plus sales tax
Tax Credit Cards? No, cash personal check only.
What's the total price with tax? $18.95 + $1.47 = $20.42

I didn't have my checkbook with me. Who carries that around with them anymore. I looked in my wallet and had a $20 bill plus smaller bills.

So I bought my first silver coin. Yay! Paid $20.42 for a 2017 American Silver Eagle. It came inside a clear soft plastic sleeve, which he then put into a 6.5"x4.5" yellow paper envelope . He printed a paper Sales Receipt.

Also, for the bitcoin crowd that loves anonymity: This transaction was mostly anonymous. I paid cash and I didn't have to show any ID, they never asked for my name, address, phone number, anything. I'm sure there were security cameras so they know what I look like. Maybe next time I'll wear a disguise so I'm completely anonymous.
Silver is pretty but gold is beautiful. This is my favorite coin ever: Image

It's a bit more expensive though. :D
In theory, theory and practice are identical. In practice, they often differ.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Broken Man 1999 » Thu Dec 14, 2017 12:03 pm

Ice-9 wrote:
Thu Dec 14, 2017 11:13 am
I buy occasional silver coins not really as an investment but more as a hobby that has investment-like qualities. It's fun to collect various coins from different countries.

If you can order $100 worth at a time, free shipping is available from several online stores at prices that usually beat local coin shops if you pay by check or bank transfer, including JM Bullion and APMEX.

I tell myself that if silver ever skyrockets again like it did in 2011 I'll sell a bunch, or if the gold/silver ratio ever goes low enough I'll exchange for gold, but honestly I like my coins and know it would be difficult to part with them if that time comes. Hence, I call it "a hobby with investment-like qualities." I don't feel that way about index fund shares. :P
I have purchased silver rounds from jmbullion.com, and will continue to do so. Never had an issue with them. They have weekly "specials" where you can save a bit. I get notified via email. My first purchase was one of their specials.

I have been buying proof silver American Eagles and yearly proof sets for years. I only recently started buying silver rounds. Different purpose for them than the US Mint products.

I also have been buying grandchildren a Christmas coin, an ounce of silver struck in a Christmas theme, for stocking stuffers.

Who knows if anyone will care about the coins I have collected over the years. Oh well, it hasn't affected anything of importance except for storage space. Wife nags me, I point out her baskets and collector plates.

Broken Man 1999
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by technovelist » Thu Dec 14, 2017 12:07 pm

grayfox wrote:
Thu Dec 14, 2017 11:59 am
OK, so I bought a 1 oz Silver American Eagle Coin (ASE) for a total cost of $20.42. But the Spot price of silver was something like $15.45 when I bought it. What's up with that?

The coin store has a website and it shows how much they Buy and Sell ASE coins for. It showed something like:

WE BUY WE SELL
$16.46 $18.95

It looks like they sell it at about +$3.50 over the spot price (that matches what they told me)
and will buy it back at about +$1.00 over the spot price

But with sales tax, the cost came to $20.42. So I if turned around and sold it immediately for $16.46, I would loose $3.96 or 20.92%

In order to break even, Silver spot price would have to rise to $19.42 or 25.70%.

:arrow: I lost about 20% as soon as I bought it. That's not something I would call a good investment. The spreads are too wide. With stocks, spreads are pennies. With silver coins, spreads are a couple of dollars.

So there's another surprise. No-one ever mentions that they lost 20% as soon as the bought their Silver, and Silver has to rise 25% to break even. Now If I bought more than $1,500. I would eliminate the Sales Tax with is 7.76% at that location, so I would save that.
If you really want to get into precious metals, it helps a lot to get a dealer account at a big wholesaler. For example, on 1 oz. American Silver Eagles, the dealer spread right now is about 4%, and for 1 oz. American Gold Eagles it is a little over 1%.

Of course to get an account like that you have to expect to do a lot of volume. I don't know the exact minima, but 100 oz. of gold over a reasonable period of time would probably do it.
In theory, theory and practice are identical. In practice, they often differ.

smitcat
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by smitcat » Thu Dec 14, 2017 12:43 pm

I only buy various bars of silver or palladium at price points.
I do not understand gold as it has much less of an industrial value.

That in no way means that gold is not valuable just that I never really looked into gold in detail.

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sergeant
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by sergeant » Thu Dec 14, 2017 12:54 pm

Your spread price at that shop is crazy. Develop a relationship with the shop owner, tell him you will be in once a month or whatever to buy a decent sized amount of silver and see what he will do for you. I'm guessing he will waive the tax and his spread will be less than a buck over spot. He prefers cash, and he doesn't keep records on you so you will be anonymous.
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by technovelist » Thu Dec 14, 2017 1:10 pm

smitcat wrote:
Thu Dec 14, 2017 12:43 pm
I only buy various bars of silver or palladium at price points.
I do not understand gold as it has much less of an industrial value.

That in no way means that gold is not valuable just that I never really looked into gold in detail.
"Money is gold, nothing else." -- JP Morgan (https://www.milesfranklin.com/gold-is-m ... jp-morgan/)
In theory, theory and practice are identical. In practice, they often differ.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by bhsince87 » Thu Dec 14, 2017 1:26 pm

I recommend you (and anyone who can afford it) buy some gold coins whenever it's reasonable to do so. Get 4-5 tenth oz pieces, and then ideally a few 1 oz coins. Don't worry about numismatic value.

Then hold them in your hands, study them, play with them. I do this from time to time, and it always makes me feel good!

This is the best way to understand why gold has such a "perceived" value.

IMO, when you get down to the base of the matter, it is a mystical, magical thing. Much of it has to do with beauty and adornment. It is not a matter of practical usefulness.

Gold has held this appeal to humans for millennia. Whether that appeal will continue to hold in our new technology based world is debatable.
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Tramper Al » Thu Dec 14, 2017 2:00 pm

The behavior of gold as an asset within a wider more traditional portfolio is interesting, and need have nothing at all to do with journeys in fantasy books or doomsday scenarios generally. It also wouldn't be the first asset used in portfolios that "just sits there", particularly when considered in real (rather than nominal) terms.

As a student of the permanent portfolio and other and various asset allocation strategies, I have a rather modest allocation to gold ETFs and have had for many years. The problems with the ETFs are 1) the extra accounting you have do in a taxable location, 2) the tax treatment generally, and 3) the expenses.

Holding bullion in U.S. Gold Eagles ought to give you the ability to allocate to gold without expenses, but in practice you must deal with 1) the buy-sell spread, which even in the best of cases can be substantial, and 2) issues having to do with its physical nature: shipping, insurance, storage, security, loss, etc.

Yes, I am aware of the U.S. Mint bullion program, sales tax ramifications, anonymity, and so on as mentioned above. Silver, as opposed to gold, has all of the same problems magnified - much bigger spreads, much more to ship, store, etc. These costs end up being orders of magnitude over the ERs we are accustomed to paying for low ER index funds and the like.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by smitcat » Thu Dec 14, 2017 2:13 pm

Tramper Al wrote:
Thu Dec 14, 2017 2:00 pm
The behavior of gold as an asset within a wider more traditional portfolio is interesting, and need have nothing at all to do with journeys in fantasy books or doomsday scenarios generally. It also wouldn't be the first asset used in portfolios that "just sits there", particularly when considered in real (rather than nominal) terms.

As a student of the permanent portfolio and other and various asset allocation strategies, I have a rather modest allocation to gold ETFs and have had for many years. The problems with the ETFs are 1) the extra accounting you have do in a taxable location, 2) the tax treatment generally, and 3) the expenses.

Holding bullion in U.S. Gold Eagles ought to give you the ability to allocate to gold without expenses, but in practice you must deal with 1) the buy-sell spread, which even in the best of cases can be substantial, and 2) issues having to do with its physical nature: shipping, insurance, storage, security, loss, etc.

Yes, I am aware of the U.S. Mint bullion program, sales tax ramifications, anonymity, and so on as mentioned above. Silver, as opposed to gold, has all of the same problems magnified - much bigger spreads, much more to ship, store, etc. These costs end up being orders of magnitude over the ERs we are accustomed to paying for low ER index funds and the like.

"Holding bullion in U.S. Gold Eagles ought to give you the ability to allocate to gold without expenses, but in practice you must deal with 1) the buy-sell spread, which even in the best of cases can be substantial, and 2) issues having to do with its physical nature: shipping, insurance, storage, security, loss, etc."

I have not seen the shipping or carry costs that you mention - perhaps look up the spreads on Silver Palladium gold at a few places like JMbullion.
If you already have safe deposit boxes or other secure storage a dozen 100 oz bars of silver take up very little space - palladium much less than silver.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Tramper Al » Thu Dec 14, 2017 2:25 pm

smitcat wrote:
Thu Dec 14, 2017 2:13 pm
I have not seen the shipping or carry costs that you mention - perhaps look up the spreads on Silver Palladium gold at a few places like JMbullion.
If you already have safe deposit boxes or other secure storage a dozen 100 oz bars of silver take up very little space - palladium much less than silver.
They'll vary based on your approach, sure. At one extreme you could buy locally and bury Eagles in a sack in your crawl space. So other than the spread that is basically costless - if you already have a crawl space and a sack, that is. I would suggest that if you are seeing "free" shipping/insurance and the like, that those costs (just like at Amazon) are baked into the spread. I am getting 75lbs weight for your dozen 100 oz. bars, but that does seem like a pretty generous allocation for most of us. I store some documents off site, but I don't seem to have any need for a safe deposit box. What is your experience with the buy-sell spread on silver - and wouldn't you prefer the beautiful U.S. minted bullion coins? Yes, that would be 1200 of them!

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Tramper Al » Thu Dec 14, 2017 2:26 pm

Tramper Al wrote:
Thu Dec 14, 2017 2:25 pm
smitcat wrote:
Thu Dec 14, 2017 2:13 pm
I have not seen the shipping or carry costs that you mention - perhaps look up the spreads on Silver Palladium gold at a few places like JMbullion.
If you already have safe deposit boxes or other secure storage a dozen 100 oz bars of silver take up very little space - palladium much less than silver.
They'll vary based on your approach, sure. At one extreme you could buy locally and bury Eagles in a sack in your crawl space. So other than the spread that is basically costless - if you already have a crawl space, shovel and a sack, that is. I would suggest that if you are seeing "free" shipping/insurance and the like, that those costs (just like at Amazon) are baked into the spread. I am getting 75lbs weight for your dozen 100 oz. bars, but that does seem like a pretty generous allocation for most of us. I store some documents off site, but I don't seem to have any need for a safe deposit box. What is your experience with the buy-sell spread on silver - and wouldn't you prefer the beautiful U.S. minted bullion coins? Yes, that would be 1200 of them!

Tramper Al
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Tramper Al » Thu Dec 14, 2017 2:26 pm

smitcat wrote:
Thu Dec 14, 2017 2:13 pm
I have not seen the shipping or carry costs that you mention - perhaps look up the spreads on Silver Palladium gold at a few places like JMbullion.
If you already have safe deposit boxes or other secure storage a dozen 100 oz bars of silver take up very little space - palladium much less than silver.
They'll vary based on your approach, sure. At one extreme you could buy locally and bury Eagles in a sack in your crawl space. So other than the spread that is basically costless - if you already have a crawl space, shovel and a sack, that is. I would suggest that if you are seeing "free" shipping/insurance and the like, that those costs (just like at Amazon) are baked into the spread. I am getting 75lbs weight for your dozen 100 oz. bars, but that does seem like a pretty generous allocation for most of us. I store some documents off site, but I don't seem to have any need for a safe deposit box, or a bank for that matter. What is your experience with the buy-sell spread on silver - and wouldn't you prefer the beautiful U.S. minted bullion coins? Yes, that would be 1200 of them!

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Tramper Al » Thu Dec 14, 2017 2:38 pm

Tramper Al wrote:
Thu Dec 14, 2017 2:26 pm
smitcat wrote:
Thu Dec 14, 2017 2:13 pm
I have not seen the shipping or carry costs that you mention - perhaps look up the spreads on Silver Palladium gold at a few places like JMbullion.
If you already have safe deposit boxes or other secure storage a dozen 100 oz bars of silver take up very little space - palladium much less than silver.
They'll vary based on your approach, sure. At one extreme you could buy locally and bury Eagles in a sack in your crawl space. So other than the spread that is basically costless - if you already have a crawl space, shovel and a sack, that is. I would suggest that if you are seeing "free" shipping/insurance and the like, that those costs (just like at Amazon) are baked into the spread. I am getting 75lbs weight for your dozen 100 oz. bars, but that does seem like a pretty generous allocation for most of us. I'd probably incur some insurance and security costs if I contemplated getting that package delivered to my front porch. I store some documents off site, but I don't seem to have any need for a safe deposit box, or a bank for that matter. What is your experience with the buy-sell spread on silver - and wouldn't you prefer the beautiful U.S. minted bullion coins? Yes, that would be 1200 of them!

smitcat
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by smitcat » Thu Dec 14, 2017 2:39 pm

Tramper Al wrote:
Thu Dec 14, 2017 2:25 pm
smitcat wrote:
Thu Dec 14, 2017 2:13 pm
I have not seen the shipping or carry costs that you mention - perhaps look up the spreads on Silver Palladium gold at a few places like JMbullion.
If you already have safe deposit boxes or other secure storage a dozen 100 oz bars of silver take up very little space - palladium much less than silver.
They'll vary based on your approach, sure. At one extreme you could buy locally and bury Eagles in a sack in your crawl space. So other than the spread that is basically costless - if you already have a crawl space and a sack, that is. I would suggest that if you are seeing "free" shipping/insurance and the like, that those costs (just like at Amazon) are baked into the spread. I am getting 75lbs weight for your dozen 100 oz. bars, but that does seem like a pretty generous allocation for most of us. I store some documents off site, but I don't seem to have any need for a safe deposit box. What is your experience with the buy-sell spread on silver - and wouldn't you prefer the beautiful U.S. minted bullion coins? Yes, that would be 1200 of them!
I have never bought a dozen 100 oz bars at the same time maybe up to 30 - 10 oz bars of silver though.
Over many years I have seen the buy /sell spread (same vendor / same time) vary between 4 and 8% dependent upon the metal being bought and the time of the purchase.
As far as pretty minted coins are concerned we do not view these as one of our collectables or art - we are buying metal at the bullion price with no thought to the 'markup' and potential tax issues that follow investing in rare items. That does not mean that the approach with collectable value is at all wrong just not something that we are knowledgeable about or that I can comment on.
We do have a couple of safe deposit boxes that have some room - as well as potential other storage which is not full.
Most all of the silver we have now was acquired below the $9 range as we only bought randomly on a dip.
Similar with Palladium we just bought some randomly on the dips , we also ended up with a small amount of gold (I oz bars) but I am not really sure why we have it or how to view its value longer term.

Tramper Al
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Tramper Al » Thu Dec 14, 2017 2:41 pm

smitcat wrote:
Thu Dec 14, 2017 2:39 pm
I have never bought a dozen 100 oz bars at the same time maybe up to 30 - 10 oz bars of silver though.
Over many years I have seen the buy /sell spread (same vendor / same time) vary between 4 and 8% dependent upon the metal being bought and the time of the purchase.
As far as pretty minted coins are concerned we do not view these as one of our collectables or art - we are buying metal at the bullion price with no thought to the 'markup' and potential tax issues that follow investing in rare items. That does not mean that the approach with collectable value is at all wrong just not something that we are knowledgeable about or that I can comment on.
We do have a couple of safe deposit boxes that have some room - as well as potential other storage which is not full.
Most all of the silver we have now was acquired below the $9 range as we only bought randomly on a dip.
Similar with Palladium we just bought some randomly on the dips , we also ended up with a small amount of gold (I oz bars) but I am not really sure why we have it or how to view its value longer term.
Interesting, thanks!

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by Para45 » Thu Dec 14, 2017 3:00 pm

I also collect silver coins, some newer bullion and 2 sets of silver Eagles...
but my favorites are the silver dollars that are 75-100 years old, holding them in hand, wondering of their travels/history.
Been at it so long my guess is that I did not lose any money.

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grayfox
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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Fri Dec 15, 2017 9:28 am

technovelist wrote:
Thu Dec 14, 2017 12:02 pm

Silver is pretty but gold is beautiful. This is my favorite coin ever: Image

It's a bit more expensive though. :D
Too rich for my blood. Yesterday, a 1 troy ounce American Gold Eagle was selling for $1,306 at a local coin dealer. I think the dealer said that price was the spot price of Gold + $34 premium.

Although just now I looked on their website and it shows:
Spot WE BUY WE SELL
1259.45 1264.45 1309.45

So that would indicate $5/$50 premiums over spot price for Buy/Sell

Meanwhile Silver Eagle was $19.00. The ratio of Gold Eagle/Silver Eagle = 1306/19 = 68.
So I can buy 68 Silver Eagles or one Gold Eagle.
But what's a good ratio?

In 1717, Sir Isaac Newton, master of the Royal Mint, studied this question and decided that the Gold/Silver ratio should be 15½:1.
Silver standard

:idea: It seems that right now Silver is more of a bargain than gold.
Last edited by grayfox on Fri Dec 15, 2017 9:53 am, edited 1 time in total.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by alfaspider » Fri Dec 15, 2017 9:36 am

grayfox wrote:
Wed Dec 13, 2017 2:36 pm
Gold serves a different role: a store of value over time. One thousand years ago, it bought a suit, and today it buys suit. (Not the exact same suit. Styles change.)
The suit thing has to be the silliest trope among the gold bugs. It's a meaningless metric. A "suit" could be a bespoke suit in the best cloth from the finest Saville Row tailor ($10k+ in todays dollars), or a "suit" could be a Men's Warehouse 50% off special (maybe $150).

In the last 20 years, Gold has been worth anywhere between around $300 and $2,000 in inflation-adjusted dollar terms. That makes a BIG difference in what kind of suit you would be buying with your ounce of gold.

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by nick evets » Fri Dec 15, 2017 9:51 am

Why do so few mention the (up to) 28% capital gain tax rate with precious metals?

Presumably, this is the advantage in coins, so they can be traded and sold at fairground 'coin shows,' craigslist and the like, without reporting? The ethics aside, I'm guessing there's a moderate criminal risk, and hassle in dealing exclusively in cash.

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