Silver?

Ive been meaning to ask this for a while, but held off because i thought i would find the answer.
Never did though, so i'll ask it.

What is the deal with silver?
Why does everyone like to find it?
Can you sell it for more? - what do you do with it?

*phew*

Thanks in advanced

 

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Well, yes on 90% silver. But 40% silver halves are worth about 60 cents to perhaps just under a $1.00 each depending on how you are able to sell.

Willie

 

But also keep in mind that silver is very volitile in price. As I write this, the spot price is up to $7.21. Many people believe it will be worth much more in the near future due to the deficit of production compared to annual consumption.

 

I'm a happy camper that silver is getting a bump today! I try to buy all the time, regardless of what the price is doing. Can't ever have enough coins! EBay prices for silver don't seem to change unless there's a major movement in the POS. Even though silver is up today, junk silver will still be selling for 5X face or less on eBay. Might even find that nice uncirculated roll for close to spot too! Time to go hunting....

 

Cloudsweeper makes a great point. I personally am inclined to agree with precious metal experts, many of whom that claim silver could hit 30 to 50 dollars an ounce again. So, I'm holding onto all of my "junk silver" for the moment, and even buying more at the current melt value. Maybe the experts are wrong and silver will tank. If so, then what the heck I'll still have a nice collection of silver coins and that's good enough for me!

 

The nice thing about buying 40% silver coins is that from an investment standpoint, it is the equivalent of buying silver with a put option attached. If you pay $.75 for a halve, the upside is theoretically unlimited, but the downside is only $.25 because it can always be spent even if silver goes to zero. In my mind, that makes 40% silver superior to 90% silver coins. Same upside, less downside risk.

 

I agree that 40% halves are a great investment. Not only will you stand to lose less money if silver drops to zero, but also, they can still be pulled from circulation at face value. If you follow this course, then you can't lose any money! The downside to the 40% Kennedy's is that they are very bulky to accumulate. Just ask my girlfriend

 

My stepfather got me into coins. He always treasured his silver over everything else. In fact, I don't think he ever collected nickels or pennies. That is probably how I got started with it.

I search Kennedy halves for fun. I got started quite by accident one day. I went to the bank to buy one roll, hoping to find a bicentennial half to show my boss. Inside was a 1967, and the rest is history.

Finding silver in rolls is almost like finding lost treasure. No, you won't get rich off of a few nice 40% silver Kennedy halves, but the excitement of searching and discovering a 64 Kennedy or a Franlkin or a Walker has its rewards too. And consider that there are thousands of collectors out there who would snatch them up if they could, and millions of non-collectors who'd keep them if they only knew what they were holding in their hands.

Will silver go to $30 or $40 an ounce one day? Who knows. Maybe if the Hunt brothers are still around! I'll hang onto what I've got, continue putting a little away at a time, and see what happens.

 

I don’t think silver will reach $30+ for a long long time. Its price is driven by industry. I wouldn’t be surprised if some of the industries (pharmaceutical, chemical) that use silver start switching to other compounds. Platinum and copper are the same way. Remember when platinum took a dive in the late 80’s?

 

Here is a link to an article explaining how the silver market has been manipulated for the past 15+ years and why the market is bound to rise.
http://www.finetuning.com/articles/2459-silver-leasing-what-a-lie.html

 

Speaking of silver...I bought a "coffee" type table at an estate sale a couple of years back and in the table I found a set of sterling silver. Twelve place settings with all the extras. What is the silver content of this type of silver?

 

I thing it’s a little over hyped.

sterling silver is usually 92% silver I think.

 

By definition and international agreement “sterling” silver is 92.5% pure silver and 7.5% some other material – usually copper. The 92.5% is why the better jewelry is stamped with the numbers 925 or .925.

 

I would, respectfully, like to disagree with you Cobra. Industry is using silver at a much faster rate than its being mined. With above ground stocks of silver at all time lows, the price of silver has to rise. It is a simple matter of supply and demand. Not to mention all the silver that has been leased to corporations by central banks around the world. This in itself isn't a problem. Except that these companies have already consumed the silver and when the central banks ask for their silver back, these companies are going to have to scramble to buy up whatever silver they can find in order to fulfill their contracts. This too will force the price of silver up.

 

Thanks for all your replies.

But i question: if silver does go up to 30$ eventually, then wont the market be flooded with all the coin collecters and investers selling their silver - thus reducing the price?

anyways, again, thanks for the replies.

 

During the "Mad Silver Melt of 1979-80" people were standing in line to sell family heirlooms, tea sets and anything made of silver for the scrap prices which were typically $20 to $30 per ounce in those days. A huge number of junk silver coins were also melted down. So the theory is that what you described already happened, and that there isn't much silver left to come on the market at prices less than $20. This isn't to say a lot of people won't get rid of their 40% silver, G4 Morgan dollars, and even silver eagle coins if prices shoot up a lot. It's just that there isn't as much silver around now as their was then because hundreds of millions of ounces are gone forever. The flood might be more of a trickle. But you are essentially correct. Higher prices will bring additional supplies of silver out of hiding. Maybe just not enough to collapse the price.

 

Cloud, and others, make some great points. But keep in mind the silver melted down was formed into 1,000 ounce bars, so that silver itself was not destroyed with the big melt, only converted. In the big melt, perhaps the better case could be made for numismatic coins being reduced in unknown numbers making the ones that remain more valuable. Believe the overall supply has been reduced more by photography, cell phone, computer, etc., and other, industrial uses. The cost to recover the small amount of silver in a cell phone, for example, would likely be much more than the recovery value. Don't believe any other metal is as conductive as silver, so that usage is not likely to be replaced easily.

The fundamentals of supply and demand in silver have been favorable for many years. Some say the market is being manipulated. My own theory is that it has not been manipulated as much as the exchanges have let the big brokers/banks play the commercial speculators like a drum, by letting the brokers/banks short huge amounts without having the physical to back up the short selling, and then roll over contracts or settle in cash. When the shorts cover the price spikes up, the big brokers/banks short heavily again, and the process is repeated. Allowed market action by the current rules, or manipulation? This whole silver price thing remains a mystery. Some think it could not continue if a large buyer would simply demand physical delivery. Much has been spoken and written about it that can be searched on the net.

Another way of looking at it is every ounce of silver found in circulation reduces your cost of purchased silver some amount, however small.

One more point is it is thought that at higher and higher silver prices, there will be more and more counterfeiting of bars, as has been detected in the past. Much less likely with coins.

Willie (The Ghost of)

 

One thing to consider is that silver, unlike most gold, is actually "consumed." After it is melted into 1000 ounce bars, the bars are purchased by firms such as Kodak [for film] and defense contractors. So the bars are the "package" purchased by the users. There are far fewer bars around today than 30 years ago.

Another interesting point is that extracting silver from cell phones and other electronic devices is about equivalent to mining in efficiency. The concentration of silver, copper and gold in a pile of old cell phones and computers is approximately the same as many open pit mines. And when you start talking coins, the concentrations of metals are so great that the tiny cost to separate the silver from the copper in a large-scale smelting operation yeilds profit margins far in excess of any mine.

So hang onto those 90% and 40% silver coins and don't let anyone tell you they are worth far less than melt value. It just isn't true.

 

Agreed, and certainly on the last paragraph.

Perhaps we can move this discussion further with a comment, a hypothetical, and some tougher questions, at least in my mind.

(1) The comment is I always believe one should have an exit strategy in mind for any investment. The price of silver could move up rapidly, and be discounted heavily by purchasers who fear buying in a topping formation.
A person may need to spend some funds a some point in retirement. An individual may not feel their heirs would deal properly with this form of investment. There could be any number of reasons.

(2) If someone wanted to, or had to, sell 40% Kennedys now, how would they maximize their net price. My guess would be via ebay, but, since I have never sold anything on ebay, or any gold or silver for that matter, let me ask someone to let us know say what would be the net price for a relatively new account with a 100% rating on ebay to sell at a gross auction price of $1,000 worth.

(3) A tougher question for me to answer right now is not whether to worry about selling 40% or 90% silver under spot, but should one pay many multiples over spot to get into numismatic coins. They are magnificant and a great hobby, learning experience, etc., etc., sincerely. But will guys like you and I be some of those buying these coins for pennies of the current prices in a recession. I hear too many collectors saying I love my coins and would never sell under any conditions. Some imply that if prices continue to go up, what a great investment. If prices go down, no big deal because it is a hobby. Is that realistic? No offense intended to anyone, but I think it is a valid question to at least consider for any asset.

(4) I am sure there are many great, helpful, honest, etc., "small" coin dealers out there. But what I'm picking up on several of these forums is it is a very, very tough business, and it is difficult to be all of those good things and make any money. Upon inquiry about buying from them when prices are falling, often I hear personally from dealers that "I can't lower my price because I have more than that in the coin." And upon inquiry about selling to them when prices are rising [I think that is a valid question early on, for future reference, even if you are holding for the longer term], "Oh, I can't pay you that price because I can't replace my inventory for that price." As I have said before, you can always walk away, and should be disciplined enough to do so. It seems much easier to buy from, than sell to, a "small" dealer.

Willie