So, what do you know about buying precious metals? And, no, I do not mean buying precious-metal-related mutual funds, or precious-metal-related accounts; I mean actual, honest-to-God, hold-in-your-hand metals.
I have been plowing through the information provided by the Northwest Territorial Mint and vaguely eyeing their Stagecoach Silver, simply because they are a known quantity to me and I know them through their military challenge coin minting, but I am completely new to the concept, and am still very much in the “information-gathering” stage.
So, what are good sources of information? Who are reputable dealers? What are things to keep in mind? What are “normal” premiums? Buy in bulk, or go with “monthly accumulation programs”? What materials, and in what forms?
Rest assured I am doing my own homework, but this is one topic area that is absofragginglutely flooded with shysters, creative misinformation, “get rich quick” scams, and so forth, so if anyone has been down this road before, I would certainly appreciate suggestions.
That depends on what your goal is. For instance, from what I’ve read, pre-1965 US silver coins are more likely to be accepted as valuable if things go to Fort Polk in a handbasket, when compared to silver not minted by a government. OTOH, if you’re interested in silver as an investment, the thread I linked to above points out that the US Mint offers “bullion” silver coins at a very low premium. Those should also carry the benefit of being accepted as having the advertised silver content, while not having any price premium due to numismatic value.
If you see yourself spending little bits of silver here and there in some future scenario, I suppose bags of “junk” silver would be the most liquid coin out there, as well as the most recognizable and with the smallest “spread” when purchasing them. However at this point I think you would get more bang for your buck if you invested in lead. Admittedly ammo is a bit bulker.
There are counterfeit Morgan dollars and silver bars out there. Someone from China is plating tungsten ingots and slugs.
If your plan is to hoard wealth in a hopefully inflation-proof package until you can again go to the mall and buy a Panda Express value meal, then bullion is what you want, and I’d diversify as much as possible into other metals and do my damnedest to avoid a paper trail when buying and holding the stuff.
I’d stay away from the Franklin mint “medallion” market as much as possible. They seldom have collectible value and they are composed of an unknown quantity of metal from the point of your trading partner. Ditto with foreign silver coins with possibly the exception of Canadian junk silver.
Turnabout is fair play: If you decided to stockpile or wanted to prepare to reload ammo for your neighbors as a barter item, what types would you pick? Besides 12gauge, 22LR and 9mm what else? Would there be a significant number of people with a zinc 25ACP and only half a box of ammo? Are there really a lot of .303 guns still out there? Or only up in Canada? Should you try to stock a bit of everything like three boxes of 16 gauge and some ,221 fireball, or will people have enough sense to hoard their empties?
If you are stocpiling for when the excriment strikes the air circulation device, lead is the precious metal of choice, usually packaged in brass, packed with nitrocellulose with just a touch of mercury fulminate or something at the end for good measure. If the zombies have slain your well-stocked neighbors, it’s easier to negotiate your inheritance with a couple full magazines than with a purse full of coin.
If you’re looking for an online dealer, I’ve used Bullion Direct with good success. I’ve used them largely because of their “Nucleo Exchange”. I’ve always been a big eBay/Craigslist fan, so this aspect appealed to me, plus it consistently has the lowest markups of anywhere since you’re buying from private sellers. But I wouldn’t use them until you at least get a little bit comfortable with the market, since their forums and research are a little bit lacking in comparison with some of the other online dealers. But once you learn a little, they’re great.
Montana Rarities has been good to me every time. Call/email for best pricing through a check or money order. Mark only works with stock on hand so there’s no lead time. I’ve also purchased from NWTM with fine results. They’re much more formal and have 6-8 week lead times depending on what you’re ordering.
My concept of normal fees is based on these two sources alone. I haven’t felt the need to search out a better deal.
I’ve stuck to US junk silver in dimes and quarters. I lean toward easy trades later. I don’t want to have to know about proof marks, sketchy contents, assessments, etc. A silver quarter is a silver quarter. Storage size doesn’t really figure in. At the value densities these things are running today, you’re more apt to forget where you put it. Value density and recognition is also why I’ve stuck to silver instead of gold ($ density) or the other metals (recognition).
As for a purchasing strategy, can’t really suggest there. That’s much more personal than the other stuff. I tend to buy when my savings account gets past the run-the-household-for-six-months level and I want to future proof some value.
Sadly, Tennessee has sales tax on retail coins, including bullion. For a while, I have accepted this and only dealt with local coin shops since there is no risk and immediate delivery. Go for junk silver or Americal Eagles, since the risk of confiscation is minimal. No numismatic coins…
Good luck
@ AuricTech: So this is where I get a little confused on things – why is it that country-minted coins seem to command a higher premium than private mints? I mean, granted, it can be used as legal tender based on its face value, but that seems kind of dumb to do… And the link you provided did mention that they carry with them the guarantee of the US Mint… but, these days, how hard is it, really, to make up a mold of a Mint Silver Dollar, and have at it with whatever materials you desire? It is, of course, illegal, but when has that stopped anyone?
@ Standard Mischief: Space is one of my primary concerns (in that ammunition takes a lot of it), as well as the fixed nature of precious metals – I am not likely to engage in a hobby that will consume it at a prodigious rate. And, after all, it is a hell of a lot easier to pocket a significant value in precious metals than it is in ammunition…
In regards to the specific of ammo, though, offhand I would stock the crap out of .22 (due to its hard-to-reload-if-at-all nature), followed by .38/.357 (given that it is common in both handguns and rifles), then 12 gauge (’cause who does not have a shotty?), then probably on to 9mm, and .45. However, I would definitely keep a decent stock of things like .308 handy, as well as possibly x54R – it never goes bad, and lots of people use both. Diversity is the spice of life and all that…
@ Evyl Robot Michael: Oh, trust me, any precious metals I procure will not be in the place of my ammunition purchases/stocks, but in addition to… And not only is it going to be a hedge against the zombopocalypse, but also just a generic investment – the value of effectively all precious metals have been skyrocketing of late, and if I had started purchasing actual metals when I opened my precious metals mutual fund, I would be a lot happier with myself at the moment…
@ shawya: Thanks for the recommendation! I will start poking around there as well.
@ aczarnowski: Just from briefly looking around, I definitely prefer his monthly purchase plan to NWTM’s, just on the basis that he actually sends you the materials every month, rather than holding on to it until you reach some set minimum purchase level…
And this is where I continue to get confused… Stamping a coin with a certain value, when the coin itself is intrinsically worth more than that, means it will be worth… what in a commercial transaction? I mean, assume the worst case scenario (collapse of the US dollar, etc. etc.) – if you go to some farm and want to buy a chicken, where is the value of the coin going to end up?
For that matter, how do you know which coins are 90%, 40%, 35% or whatever other percentages of silver there are out there? Seems they were originally meant to have equivalent amounts of silver to their face value ($1 – 1 ounce, $0.50 – .5 ounce, etc.), but that may have fallen by the wayside?
@ Polumetis: Tennessee taxes precious metals purchases? *sigh* At their face value (if they have one) or their intrinsic?
I really do like this state, but sometimes it makes me wonder…
And this is the place where I further exhibit my ignorance – what is the difference between “numismatic” coins and American Eagles?
All pre-1965 US silver coins contain 90% silver. From 1965 on, US dimes and quarters in circulation have been made of copper and nickel. At least the US government did us the courtesy of telling us they were debasing the coinage….
As for government-minted coins being more likely to be accepted without further assaying, it’s a matter of familiarity. After all, most folks will trust that the US Mint is telling the truth about the silver content of a bullion coin, because they’ve heard of the mint. Some people might not trust the Northwest Territorial Mint, simply because they haven’t heard of that mint.
@ Linoge:
To avoid all the issues you bring up about how much was in each coin I stick to pre-65 US silver. So I know it’s all 90%. And anybody I would conceivably trade it with later will have a good foundation for also knowing it’s 90%. A Swiss something-or-other or a NWTM silver round not so much.
It’s a hard habit to break, especially with coins of any nature, but I find it easier to not think of metals as “money.” I imagine whiskey, but try bread or something. Something you could conceivably make yourself and understand how much goes into it. Now buy a roll of dimes. There’s 50 of them and you paid $164 or so for it today. Bread is $3.50. You now know that a loaf of bread is about 1 pre-65 US dime. If you get a roll of dimes every month, you’re packing away 50 loaves of bread every month (ok, ok, it’s not a perfect comparison with transaction costs, market lags, blah, blah but it helps me).
As I’ve purchased I’ve tried to keep a running conversion chart of common goods. Kind of my own little inflation calculation. As I expected/hoped, silver is staying pretty much even. Unlike my savings account making 2%, i.e. going backwards 8% against what I believe is 10% or so inflation, the silver is holding. Metals aren’t an investment, they’re a way of not going backwards. Which given silver’s rise recently should scare the crap out of anybody paying attention.
One other comment, if you haven’t bought anything yet this is all very ephemeral. When I finally got mostly through all my questions and got my first order of dimes from Montana Rarities it all came home. When you look down at the little package of coins in your hand something clicks. Which is another reason I like silver coins. There’s just something human and real about them.
It may not be of great importance given your purpose, but it should be noted that if you later sell it as an investment, precious metals are taxed as collectibles, not capital gains. I know of one individual who was surprised by this, and had to pay several thousands more in taxes this year as a result.
I have used Westminster Mint a half dozen times. Timely shipments, good quality (they mint their own coins as well as selling others). They are out of MN and sell for a fair price. I especially like their 1/2 oz silver buffalo coins they mint themselves. I figure 1/2 oz coins are a good size for trade, not too big to require splitting or cutting, and easy to carry. I have assayed them and they are pure silver (I have Bio and Chem degrees, I can do a metals assay w/o too much trouble). They also offer 3% off if you pay by check or ACH instead of credit card.
I agree with aczarnowski, holding them in your hand just makes you feel better, a little calmer about the world.
just my 2 cents, which oddly enough is worth less every day.
>For that matter, how do you know which coins are 90%, 40%, 35% or whatever other percentages of silver there are out there?
http://www.coinflation.com/silver_coin_values.html
@ Knotthead:
I obviously can’t leave this thread alone. Knotthead makes a good point. I failed early in my collecting to keep track of things. Keep a spreadsheet of what you buy, when and for how much so you can easily figure out any obligations later.
@ aczarnowski: Do keep coming back – this thread has proven to be quite useful to Better Half and I, especially given the amount of mis/disinformation out there…
And, yeah, I guess it makes sense that officially minted coins will carry with them a little more trust than the private entities’… I still think it cannot be that hard to fabricate your own, but I say that from a position of complete and utter ignorance.
We are definitely having a hard time looking at “official” coins as anything but their face values, but that comes from literally a lifetime’s worth of dealing with what is effectively valueless money. As I am researching these things, though, it is all starting to get a little easier to grasp…
After a fashion, I guess it is kind of like concealed carry, in reverse – you think it is such a huge deal, what with people finding out, and it getting in the way, and this-that-and-the-other, but then you do it, and you realize it really is not…
@ Knotthead: All precious metals in any forms? Well that is kind of… silly. Leave it to the feds, I guess. I take it collectibles are taxed more significantly?
@ OHIO SHAWN: Pretty much all of the major dealers give discounts for “cash” transactions (for varying definitions of the concept “cash”) over credit cards… it is not a major concern for me, but it is interesting. I will look into them as well
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@ Standard Mischief: Iiiinteresting. Thanks for that – I just found out some coins my grandfather left me are not just coins…
If you are in the 15% bracket, long term gains (held longer than one year) on collectibles are taxed at 15%, otherwise they are taxed at 28%. Those held less than one year are taxed at your regular tax rate. Long term capital gains, in contrast, are taxed at 15%.
Collectibles include precious metals as well as collectible coins and beany babies.
Zouch!
I wonder if your average yard-selling family is aware of that… Which, once again, illustrates the complete idiocy of our tax code, and how damned-near-impossible it is to file your taxes 100% accurately.
> how do you know which coins are 90%, 40%, 35%
> or whatever other percentages of silver there are out there?
I’m not sure about silver, but with bullion (not junk silver) I wonder if it works as gold does? With gold, regardless of whether you buy a one-ounce American Eagle (91.67% gold) or a one-ounce Chinese Panda (99.9% gold), either way you get a Troy ounce of gold. The Eagle has a greater /total/ weight that includes the alloyed Silver and Copper.
The best advice I’ve seen re buying coins is stay away from anything “commemorative” (which the more shady shops like to push), and try to minimize the premium over spot.
Best of luck!
Unfortunately, when it comes to coinage, the percentage by weight/volume of silver in them varies whether we are talking about dollars, halves, quarters, dimes, and nickles; what years they were minted in; and what countries minted them. That is where the percentages come from. But as aczarnowski said, if you stick to pre-1965 American coins, you generally know what you have in your hand.
Yup, I am definitely shopping around for the best buy… Currently eyeing up Montana Rarities’ monthly acquisition program, but I am, as always, open to further suggestions
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