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Investing in Silver

Where should I Start – Basic Fundamentals

What are the first things you should do?

The old proverb states, “The journey of 1000 miles begins with the first step”.

First, understand the Silver language.  It is not difficult to do, but like anything else, it takes a little time and research.  Knowing terms like American eagles, bullion bars and rounds, silver dollars, junk silver, 90% circulated and uncirculated coins and ETF are just a few.   In other words, before you make a purchase, understand what you are buying.

Secondly, what do you want to do and how will you go about doing it?  You will need to develop a personal buying and storage program.  Simply put, how much should you purchase and where will you keep it safely.

Third, find local Coin shops or Coin shows in your area.  You will find these venues a wealth of information.  Almost all dealers will assist you, providing they have the time at the moment.  Things can get pretty hectic at any given instant and they are making a living doing this, so be patient.  You will develop a relationship with many different people, all of whom have walked in your shoes.

Understanding Silver Bullion Terms

The silver market can offer a variety of different products.  After reviewing this material and attending coin shows or visiting your local shop, you will be able to decide what you will want to concentrate on.  It could be just one or a combination of different options.  Diversification is key.

Silver Bars

Bars are a popular way to invest in silver. The most common sizes are 100-oz and 10-oz sizes, which are usually called investment grade bars because you can buy a greater volume of silver for your money as compared to bullion coins or rounds.  Bulk investors may also purchase 1000-oz bars.  Other sizes, which were usually produced in the early 1970’s, are 50-oz, 20-oz, 5-oz and 1-oz.  The 1 oz size was used as “Art Bars”.  This sector is highly collectable and many of the pieces are very difficult to find as most were destroyed during the “Great Silver Meltdown” in the early 80’s.  Additionally, the smaller sized bars are now gaining in popularity because they are relatively standard size, making storage easier and liquidation quick.

In general, most bars are 99.9% pure and carry unique identification numbers, markings of the manufacturer and indications of the weight and purity.  Silver bars are produced by Engelhard, Johnson Matthey, Silver Towne, Sunshine Mining, A-Mark, APMEX, Northwest Territorial, Paradise, Credit Suisse, Wall Street Mint and many others.  These companies have been in business for a long  time.  Bars can be purchased from bullion dealers and premiums are traditionally lower than other methods. Bars with recognized hallmarks are accepted by most bullion dealers for resale making them easy to convert to cash.

Silver Rounds

Another method for investing in silver is with silver rounds.  Silver rounds are the most liquid and premiums are usually lower making them one of the least expensive ways to purchase silver.  Most are minted privately in the shape of a coin and are one ounce of pure silver.  These silver rounds will have various designs and can sometimes be minted with custom designs and shapes for special occasions.  The value of silver rounds is mostly that of the silver content.

One of the most popular silver rounds minted is the Engelhard “Prospector”.  They were minted from 1982 thru 1987 and featured stunning artwork showing a prospector panning for gold on the obverse and one of two different logos on the reverse – the big “E” or the “Eagle”.  In 1985 they experimented with fractional bullion rounds and minted 1/2, 1/4, and 1/10 troy ounce sizes.  These were very limited and some collectors consider them as the “holy grail” of silver rounds.  The Prospectors were discontinued when the US Mint started the production of American Silver Eagles in 1986.

Circulated and Uncirculated U.S. Silver Coins – pre 1965

U.S. Silver Coins (dimes, quarters and half-dollars) issued prior to 1965 were minted of 90% silver and 10% copper.  This investment option is called junk silver and is an appealing means of investing since you are getting old United States coins.  Originally, the mint issued 90% coins in a bag of $1000 face value of a particular denomination.  That would equate to 10,000 dimes, 4000 quarters or 2000 half-dollars.  Being uncirculated, this bag contained 723.4 ounces of silver.

Today, a $1000 bag is evaluated at 715 ounces of silver due to the wear of the circulated coins.  Often mixed bags of different coins are sold in different face value amounts.  Each coin also remains legal tender for the face value and may be a collectable coin in terms of rarity or numismatic value, but it is highly improbable.

Dimes were issued in the Barber type from 1892-1916, the Mercury type from 1916 to 1945 and the Roosevelt type from 1946- 1964.

Quarters were issued in the Barber or Liberty Head type from 1892 to 1916, the Standing Liberty type from 1916 to 1930 and the Washington type from 1932 to 1964.

Half –Dollars were issued in the Barber or Liberty Head type from 1892 to 1915, the Walking Liberty type from 1916 to 1947, the Franklin type from 1948-1963 and the Kennedy type in 1964.

Silver Dollars

U.S. Silver Dollars are one the most collected coins available today.  These silver dollars generally fall into one of two groups – the Morgan and the Peace. The Morgan Silver dollar was named after George T. Morgan who designed them and was minted from 1878 to 1904 and in 1921. The Peace Silver Dollar was named to commemorate the end of World War 1 and was minted from 1921 to 1935.  All Silver dollars were minted of 90% silver and 10% copper.  Each coin contains .7734 ounces of silver.

Unlike most junk silver consisting of dimes, quarters and half-dollars, which their value is derived from mainly their silver content, silver dollars, do have a premium value because of their rarity or numismatic value.  Earlier Morgan dollars usually carry higher premiums over the Peace series in comparable grades.

American Silver Eagles

American Silver Eagles are the official silver bullion coin of the United States and are struck by the U.S. Mint and issued by the U.S. government. Each coin contains one troy ounce of 99.9% silver.  The price for Silver Eagles usually consists of the cost of silver plus a premium to cover the cost to manufacture and distribute them and any dealer costs.

These coins are guaranteed for silver content and sold through a network of authorized dealers.  Since 1986, these authorized dealers purchase these coins in lots of 500 in “Monster” boxes for distribution.  Each monster box contains 25 tubes each with 20 coins.

The U.S. Mint also sells special sets containing individual coins to the public.  One excellent way of collecting American Silver Eagles is to purchase a special coin binder and purchase one for each year of issue.  This will protect them and allows for easy viewing and sharing with others.  Mintages for each issue are available from the U.S. Mint and have varied throughout the years.

The Silver ETF – “Electronically Traded Fund”

This method is traded like a stock and can be purchased from a broker. Generally it is part of an investment portfolio giving exposure to the silver metal market. Each individual portion or share in the ETF account will represent a certain amount of silver held in the trust.  There is generally a fee associated with this type of investment.  The price of the ETF should follow and track the underlying market price of silver.

Before deciding on Purchasing – Buyers Beware

As stated earlier, if you don’t have a lot of knowledge about silver and investing, take your time and examine the different topics in this website.

You must be careful in buying silver from sellers, especially now that the metals market is in its current up and down mode.  Check the spot price for the precious metals on a daily basis on the internet.  There are many to choose from such as Monex or Kitco.  Additionally, there are many other fine reference sites.

The first thing you must do is to buy from reputable and experienced precious metals dealers.   There will be an extra charge over the spot price which may vary from dealer to dealer.  Remember, the spot price is a reference point and will be less than what a seller will be asking for his item which he has physical possession of.  As stated earlier, there are usually premiums for each type of bullion or coin which can vary as the silver market makes it moves.  At times, this makes buying one type over the over a better choice.  Shop around and this will give you a good idea of how much you should pay.

On the internet, look for individuals showing an appreciation for customer service.  There are many very good sellers on EBay currently, but there may be some out there that are just trying to make a quick profit on some silver that was tucked away for a while.  Look for those with good feedback ratings.  Always, before bidding on an item, look up the seller’s feedback rating and check some of the replies they have received, not only from the buyers, but also from the people they buy from.  Before you bid on it, take the time and do your homework.  You will be glad that you did.  EBay is a great place to see what other people are buying and selling silver for.  But remember; do not take too much time because the opportunity could pass you by.

As stated earlier, there are different types of silver to add to your collection.  There are rare pieces that a have history to them and you will have to sometimes pay a very large premium in order to get it.  As a silver enthusiast you will become both a collector and investor and it is difficult to draw the line in between.  Remain steady and consistent in your personnel quest.  However, be aware that looking for coins or bullion can be a difficult job that takes not only patience, but a never ending pursuit for new items and answers.

Your friends that you will find will become your biggest supporters as you travel around looking for treasures.

Good Luck and Keep Stacking Silver!!!


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