Monday, September 26, 2011

Silver Investing - Buying Silver From Classified Ads

Before I discuss the mauling silver prices have been taking lately, I want to share a couple of classified ads that recently appeared in my local paper offering silver coins for sale.

Ad #1: 250 Silver Dimes, $750. How good of a deal is this? Circulated silver dimes (I'm assuming they are circulated) are considered to contain .0715 troy ounces of silver. So 250 x .0715 = 17.875 ounces of silver. Divide $750 by 17.875 for a cost per ounce of $41.958. The seller probably placed the ad when silver was going for $39-$40 an ounce (just last week). Spot silver at the time of this post is at $31.05 so the current worth of each silver dime is $2.22 (31.05 x .0715). Paying the asking price of $3.00 per coin, or a premium of $.78 per coin, is a little steep. I'd pass on this one.

Ad #2: 6 Silver Dollars, 5 Walker 1/2, 5 Silver Eagles $575. let's look at this offer a little closer. Circulated silver dollars are considered to contain .7650 troy ounces of silver, Walking Liberty half-dollars .3575 ounces of silver and Silver Eagles a full-ounce of silver. So total them all up (6 x .7650, 5 x .3575 and 6 x 1) and you have 12.3775 ounces of silver. Divide $575 by 12.3775 and you get an asking price of $46.455 per ounce. Ouch!

To take advantage of either "deal" would require great faith that 1) silver will one day surpass $50 per ounce and, 2) the buyer is willing to buy and hold despite the volatility of silver. I think it will go above that price sometime in the future but there are probably better deals to be had with silver presently in the $30-$31 range.

Now on to the shellacking the price of silver has taken lately. I've discussed this before but there is a world of difference between the silver paper traders and those dealing with physical silver. From all accounts I have read, this drop in prices has U. S. precious metals dealers scrambling to fill the huge demand their customers see as a fantastic buying opportunity. Silver buyers in Canada are of the same mind. In an article titled "Maple Leaf silver coins seeing record demand" a spokesman for the Royal Canadian Mint stated they are on track to raise sales of its silver bullion coins by around 30 percent to 25 million ounces this year. The article is here.

You would never know that physical silver demand continues to be strong by watching the downward action - a probable result of technical paper trading in the futures market. The anti- higher-silver-price crowd certainly flexed their muscles last week - silver had its biggest single-day decline in two decades. More downward pressure came after the CME again increased margins on Friday. How many does that make now?

The U.S. Mint is starting to crank out Silver Eagles again after a slow September start. The total so far for the month is 3,425,500 (year-to-date 32,376,500) with a few more days to go. Still far from January 2011's total of 6,422,000.

Be sure to visit my web sites on silver to read helpful information on common U.S. and Canadian silver coins. Again, they are Silver Investing Simplified and Silver Investing Guide.

Thanks for reading. Keep the faith.

Sunday, September 11, 2011

Silver Investing - Smart Phone Apps for Silver Coins

If you find yourself in a position to buy or sell silver coins (flea markets, private buyers/sellers, etc.) but are unsure of what they are worth at the moment, just take out your smart phone and find out. Here are a few smart phone apps that could save the day.

The first is called RRBI Silver Coins and is compatible with iPhone, iPod touch, and iPad. Requires iOS 3.0 or later. It's free and can be found at iTunes. Check it out here. The second is an Android app that essentially does the same and is also free. It can be found here. Hope you find this useful.

I just posted an entry on my Gold Investing Blog where I discussed gold and silver prices on September 11, 2001. Silver was at $4.18 and gold at $271.00. At the time of this post, spot silver is at $41.16 which is the strongest showing by far of other assets. You can see the article titled "Market Performance Since 9/11" here. It covers a number of asset classes and is interesting.

Silver eagle totals for August came in at 3,679,500. That is 3,679,500 ounces of silver used in support of that program but the U.S. Mint actually used quite a bit more in support of other programs - namely: 1) the 5-ounce 'America the Beautiful' coin series which used 175,065 ounces of silver in August and 1,902,000 ounces year-to-date; and 2) the proof U.S. Silver Eagle program which had sales of 133,460 in August and a year-to-date total of 726,921. So far in September 651,000 silver eagles have been produced with a year-to-date total of 29,602,000. Now that's a lot of silver. I hope they can keep it up.

I came across an interesting YouTube video titled "How are Silver Coins Minted?". Produced by Endeavour Silver Corp. (a mid-cap silver mining company headquartered in Vancouver B.C.), you will see the process from the melting of raw silver to the production of silver blanks (planchets) to the stamping out of silver rounds. The video runs just over six minutes and you can see it here.

My posts to this blog have been sporadic and will remain so for a little while longer. Once I get my scheduled surgery out of the way on 9/15, I hope to do better. Thanks for reading.