Buying silver

[carlson1]

Silver's down a buck to $15.46 - so I bought more.

[ Image ]

You are killing my budget.

[carlson1]

I noticed it went up thanks to you I saved about $30.00. I bought some for my kids for Christmas. The site you post (Provident Metals) has been the best I have found.

Andy I guess I owe you a brokers fee.

[carlson1]

A real good price, but only until Monday.
http://www.providentmetals.com/" onclick="window.open(this.href);return false;
(10oz of bars for only .49 over spot)

I bought a set for my grandchildren for Christmas. I am hoping Mom's and Dad's will save it for them. They are going to enjoy their toys, but maybe when they get older they will enjoy having the silver.

[The Annoyed Man]

I just received my five 1oz "Stagecoach Bars" today, and their aggregate value has gone up $2.80 since 11/23, the day I bought them. That was a 3.4% increase in just 20 days. Of course, nobody pays the spot price on the day they buy, because the seller has to account for their smelting cost. The spot price on the day I bought them was $16.46/Troy oz., but the bars actually cost me $19.06/1oz bar. So my 5 bars, which had $82.30 worth of silver in them, cost me $95.30 (plus $10.00 shipping). So my P&L on that date was -$23.00.

Now, 20 days has gone by, the spot price has gone up from $16.46/oz to $17.02/oz and my investment has gained 3.4% (not counting shipping) in value........and my P&L has become -$20.20......an improvement, but still not breaking even. The spot price is going to have to climb considerably for me to break even. In fact the spot price has to exceed $21/oz for this particular purchase alone to make a profit for me.

Now, I have found that there is a lesson in this for anyone aspiring to buying silver. This should not necessarily be a discouragement, but you need to answer for yourself "WHY" before getting into this, because the answer will help you to determine a strategy that makes sense within the context of your personal finances:

1. Buying as an investment: Understand that shipping cost will be amortized over the number of ingots and/or coins that you buy, and take that into account. Northwest Territorial Mint, where I bought my Stagecoach Bars, charged me $10 shipping for 5 bars, making the actual cost per bar $21.06, not the $19.06 price on that day. However, they charge the same $10 to ship 10 bars - double the number (and weight) - and my cost per bar on that day would have been $20.06..... a dollar less. This would have affected my P&L favorably. So the lesson is, buy more than you think you want, IF you can afford it without making your kids eat rice and beans. Assuming prices continue to go up, you'll recoup your initial investment more quickly that way. Even so, understand that, purely as an investment, buying silver bars and coins (or any other precious metal, for that matter) is a long game, not a short one, and that you're going to have to invest a lot of money over the long haul to see a significant enough return on your investment to make it worthwhile. For this reason, silver as an investment is a secondary reason for my buying it.
2. Buying as a hedge: Hedge against what? The vicissitudes of the stock market? See #1. For me, it is a hedge against the possible collapse of the national currency. I can't afford gold, so silver will have to do for now. This is the reason I bought the stagecoach bars:
   
   They sell coins like this too. They are scored so that they can be broken into smaller "denominations", as a sort of currency against the day that the federal government can no longer keep the currency afloat. I cannot afford to buy large quantities of these at any one time, but I can buy a few here and there, and gradually build up my ingot inventory. At some point, when I have accumulated enough of them, I will begin converting some of them into larger ingots, and some into gold. But I will always have silver available as "ready money", as part of my preps, along with junk silver coins.

But if I were trying to make a short term profit, I would buy stocks and municipal bonds. The only reason that silver went up in the last 2 weeks is because we had a stock market adjustment the other day, and stocks went down. But overall, this is a good time to be in stocks, which means that it is not as good of a time to be in precious metals for short term profits.

On the day we discovered my late father in law's silver coin collection on January 12, 2013, he had $26.15 in silver coin face value, worth $423.30 in silver. On 6/30/13, the silver value was down to $287.27, and on 7/18/13, it was down to $282.89. On 11/23/14, it was down to $240.74. The spot silver prices were $22.38/troy oz on 1/12/13, $15.19/troy oz on 6/30/13, and $14.96/troy oz on 7/18.13.

Today, the junk silver is up to $248.93 in silver value, a jump of $8.19, but still only 58.8% of its value not quite 2 years ago. The spot price was $16.46 on 11/23/14, and $17.02 today. Why? Because the stock market has steadily improved since January 2013, and because we had a minor downward adjustment a few days ago and again today, causing a corresponding blip upwards in silver prices. But unless the stock market continues to plummet, this is merely a blip, and right now, the dow is still above 17,000..........NOT a good omen for silver as an investment. The spot price has to climb another $3/oz for the bars I just bought to become profitable. At least the junk silver was an inheritance and didn't cost anything, other than the loss of a good man. That is why I don't consider silver as much as an investment strategy as I do a hedge against an uncertain future.

I find that investing in precious metals for profit is kind of like joining a multi-level marketing organization. Those that get in on the ground floor will tend to do better than those who get in later after the market is more saturated with product. People who bought silver or gold 30-40-50 years ago have made out exceedingly well, even taking into account the fall in prices over the last two years. I remember when gold was set at $35/oz. Today it is $1,222.85/oz, after having reached as high as $1,800 two years ago. Even if you lost that $578/oz between 2012 and today, you're still up $1,187/oz over your original $35.....a profit of 3,391%. Very few things have performed that well and held their value. But the price for gold (and silver, etc., etc., etc.) has to go down a LOT before it becomes a significant investment strategy for the small-time investor.

Your mileage may vary.

[carlson1]

[StewNTexas]

So far, Provident works well for me. As to shapes and sizes, I tend to stay with 1 oz. rounds, in a pattern that closely resembles US coinage.

If a problem arises, and we pray it does not, if you were traveling it would be much easier to barter with smaller and more familiar denominations. I can only guess the problem in trying to trade or barter with multi-ounce bars. That is another reason I stay away from unusual or strange patterns. I am not sure a merchant would understand or trust a 'zombie' coin, much less a bar.

[Wes]

I buy for my a problem arises planning and figure worst case scenario I may eventually have a little savings nest. I've considered the bars and stagecoach stuff but US coins just seem like a better option for value returned and easy recognition. I have 90% BU dimes, quarters and half dollars, then the silver Eagle and America the beautiful pure stuff. Gives me a range of sizes and values if it's used for trading and a variety of collectables for savings. I will say, the provident 10oz bar sounds tempting though.

[sookandy]

I've been following this since it got posted. Never really knew where to buy or how. I did know I wanted some. So far I've made three orders. All arrived in 2-3 days. It gets stashed in the safe and forgotten. Either one day it will come in really handy or get handed down.

I figure if silver is silver it doesn't really matter what the image is. But there were some neat ones, I just didn't feel like paying a premium for them.

Great post though Andy

[rotor]

The Hunt brothers didn't seem to know when to buy either. Buy for the fun, not for profit. Like the guy on tv says, "I like to hold it in my hand" or however he paraphrases it.