Cavorting At A Local Coin Show

Well maybe not cavorting in the true sense of the word but I had a great time at a small, local coin show recently. And small it was with less than 10 dealers present. But most had impressive inventories to display (it wasn't just a bunch of Morgan dollars, Mercury dimes and Silver American Eagles). It just goes to show that even small coin shows can have value for coin collectors and investors.

I took time to examine some old silver coins, most notably a Capped Bust 1827 silver half dollar in About Uncirculated condition. It is a great coin for serious collectors but for the asking price of this coin, I could purchase just shy of 15 Silver Eagles or Silver Maple Leafs which is more to my liking (confirming my casual investor status). This 1827 coin will have to be someone else's treasure to have and hold.

I am less of a fan of silver rounds and tend to favor government-issued silver bullion coins. But I do make exceptions for silver rounds at a good price BUT they must have good eye appeal. As luck would have it, I found some nice rounds at a good price (in the low $20's with the spot price at just over $20.00) at this show...

This first silver round is modeled after the U.S. Indian Head Quarter Eagle and Half Eagle minted from 1908 through 1929 (none were struck from 1917-1924).  These gold coins set a U.S. precedent in that the figures (a.k.a. devices)  and lettering were sunk below the coins' surface (incused) as opposed to other U.S. coins in which the "devices" were and are raised from the surface of the coin.  The silver round's obverse closely matches the gold coins' obverse but the reverse of the silver coin differs from the gold coins as it identifies a private mint plus the weight and silver fineness of .999.

I was not familiar with the issuer of this round, the Golden State Mint, so I visited their web site at GS Mint. They have a number of interesting silver and gold rounds and bars (of various sizes) with a $500 minimum purchase. To their credit, they have survived the many lean years, having been founded in 1974. Next I did a quick Internet search for "Golden State Mint Reviews" and "Golden State Mint Complaints" with nothing alarming showing up. They look like a good company to do business with but please be aware: 1) I have absolutely no affiliation with this company and receive no compensation for any purchases by anyone; and 2) I am not recommending that you do business with Golden State Mint without doing your own due diligence. You are responsible for your own decisions regarding the purchase of precious metals.

Another silver round I picked up at the show is also modeled after a U.S. gold coin - the 24-karat (.9999 fineness) American Buffalo which began production in 2006 (and this gold coin was modeled after the historic buffalo nickel minted from 1913-1938). The silver round's obverse closely matches the gold buffalo's obverse (just missing a date) but the reverse of the silver coin differs from the gold coin as it specifies the weight (one troy ounce) and silver fineness (.999) among other lettering differences. The Silver Buffalo was also purchased at a good price in the low $20's.

To my way of thinking, silver rounds that are modeled after well-recognized

and popular designs (24k Gold Buffalos, Morgan dollars, gold Krugerrands, $20 Saint Gaudens, etc.) stand a better chance of being favored over lesser known (and less attractive) designs when it comes time to sell. In addition to the purchased silver rounds, I was able to pick up some nice Barber and Standing Liberty quarters, a 2014 Australian Saltwater Crocodile 1 ounce silver coin and my first Maria Theresa thaler (a historic but not so rare Austrian coin containing .7520 troy ounces of silver) but that is the subject of a future post.

Changing gears, are you familiar with the IRS reporting requirements when buying and selling precious metals? The good people at JM Bullion have put together a helpful Infographic if you are unfamiliar with these requirements or need a refresher. You can find it at JMInfographic Its purpose is educational and shouldn't be considered financial advice. Of course you are responsible for any capital gains tax on profits from sales even if your transaction(s) don't require dealer reporting.  

At the time of this post, spot silver is at $19.45, Silver Eagles month-to-date are at 1,510,000 and the year-to-date total is 27,613,500.

One last note, I have published my ebook "The Last Canadian 80 Percent Silver Coins - A Buying and Selling Guide " on Smashwords so it is now available on Apple iBooks, Barnes & Noble, Kobo, Oyster as well as Kindle and a few more. You can see the Smashwords listing at  Canadian Silver Coins . My other ebooks, "The Last 90 Percent Silver United States Coins - A Buying and Selling Guide" and "A Guide to Buying and Selling Peace & Morgan Silver Dollars" are still available on Amazon only.

Thanks for reading, keep the faith. 

A Lesson In Silver Investing

In a recent episode of Pawn Stars, a client brought in an impressive amount of silver to sell. This segment of the show provided some insights into why investing in silver can be a smart move.

If you are not familiar with Pawn Stars, it is one of the top cable TV reality shows currently being aired. The scenes take place at a small pawn shop located in Las Vegas between downtown and the start of the Las Vegas Strip (I have driven past the shop on a few occasions but never stopped - there was always too long a line of people waiting to get in). As with all pawn shops, the public is free to walk in to pawn or sell their valuables with some leaving highly satisfied and others having their hopes of quick riches dashed. 

On this particular day, this young man brought in a cart containing 3,372 ounces of silver. He had taken his father's advice to invest in silver about 12 years ago when it was cheap to buy. In studying the scenes, it appears this silver "pile" consisted of 1) one bag of circulated 90 percent silver dimes (715 ounces of silver), 2) one bag of circulated 90 percent silver quarters (715 ounces of silver), 3) ten 100 ounce silver bars (1000 ounces of silver), and one 1000 ounce silver bar (942 ounces of silver) for a total of 3372 ounces of silver.

Just a few comments on the above list. 1000 ounce silver bars are rarely (if ever) exactly 1000 ounces. They are somewhat roughly cast so the refiners stamp the actual weight of each bar along with a unique serial number, purity and the hallmark of the refiner. Because of their weight (just under 70 lbs), investors usually don't take delivery of their 1000 silver bars but pay a reliable financial organization to store the bars for them for a fee. And if they are wise, they only invest in 1000 ounce bars that are allocated or assigned to them by serial number. One last note, if the hallmark or identity of the refiner is well recognized, the silver bars are accepted as good with no testing necessary. If not, the buyer may and should require testing. The hallmark I saw on the 100 ounce bars was Engelhard which is rock solid. The hallmark on the 1000 ounce bar was not clearly shown and evidently required testing by drilling into the bar and testing the shavings with nitric acid. It was good (more info on silver bars can be found at Silver Bullion Bars).

Over what period of time this silver was accumulated was not discussed. But if the majority was purchased about 12 years ago, the seller may have paid about $5 per ounce (a good average for all 12 months of 2000). Let's do the math working with that figure...

$5 times 3,372 ounces of silver = $16,860 initial investment.
Spot price of silver at time of sale was in the low $30's.
Buyer offered close to the spot price, total of $110,901.00.
Final offer was $111,000 which the seller accepted.
$111,000 minus initial investment of 16,860 = $94,140 profit.

This is a nice profit of course but the IRS probably watches this show too and the seller has taxes that must be paid. I believe the $94,140 is treated as a Long Term Capital Gain and taxed as such. And if the seller didn't keep his 12 year old receipts, $111,000 may be the taxable gain (this is my take on it and is not to be considered legal or financial advice).

The burning question is did the seller sell too soon? The current spot price of silver is $26.90. If the price stays under $30 and in a narrow trading range for the next few years, he will look like a genius. On the flip side, if silver goes to $50 per ounce or higher in the next year or two (as many experts predict), he will have lost a bundle. My questions to him would be why now and why didn't he keep some back.

Whenever silver experiences a significant price drop (it is almost half of what it was in April 2011), physical silver becomes a hot commodity. You will have to decide if this price low in silver represents a final buying opportunity before the price takes off to unimaginable heights. As for me, I would not be selling at this time but looking to invest in more. That would include low premium silver bullion and leaving the higher priced, higher grades to others.

By the way, if you are interested in viewing the Pawn Star episode discussed above, you can find it here.

Thanks for reading.