The case to be made for gold vs silver

Discussion in 'Bullion Investing' started by Jason.A, Jul 16, 2017.

  1. Jason.A

    Jason.A Active Member

    I don't want to beat a dead horse or flood the forum, but after lots of thinking and reading many replies to other topics I and others have started, I decided to put it all in one single topic. There is no judgement in this post. This is my reason for choosing gold over silver. I am curious what other people choose and why they choose it. I am also curious if you observe flaws in my rationale.

    Today's spot
    Gold: $1232
    Silver: $16
    The following prices compared below are based on buying current year 2017 gold and silver Eagles from JmBullion.

    1. Storing gold is easier than storing silver. Let's take a modest $25,000 of gold. That's a little over 20 ounces of gold, weighing about 1.37 pounds. That can be stored in 20 total coins. On the other hand, storing $25,000 of silver is 1,562 ounces, or over 107 POUNDS. That's also 1,562 one ounce coins!

    2. Premiums on gold are much lower than premiums on silver. In order to recoup your premium in the future, the price of each commodity must rise by at least that much for you to get your money back. Let's say you are deciding between gold and silver American Eagles.
    You will pay approximately:
    American Silver Eagle $19.50 per coin You are paying 21% over spot
    1 ounce Gold Eagle $1300.00 per coin You are paying 5% over spot

    On your $25,000, you will have paid around $1,250 premiums on the gold vs over $5,000 of premium into the silver!

    3. Gold does not tarnish, tone, or milk spot. Ultimately, bullion is just bullion to most. However, a less than average piece of bullion that is heavily scratched, has changed color, or developed other "damage" will be less desirable. Gold is not susceptible to these environmental changes. Buying gold instead of silver greatly increases the risk of not losing one's premium due to damage.
    Last edited: Jul 16, 2017
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  3. Santinidollar

    Santinidollar Supporter! Supporter

    I see your points. Just curious: what source are you quoting your buy prices from?
  4. ddddd

    ddddd Member

    1. True; for storage, gold takes up much less space than the same dollar value of silver.

    2. Yes gold premiums are lower percentage wise than silver premiums when buying. However, one must also consider that you can get some premium back when selling silver. One cannot just assume that both will be sold for spot. Silver Eagles can be sold for $1-$2 over spot fairly regularly. Actually Gold Eagles can also be sold for over spot.

    Side note: your buy premiums are a little high. Right now I can find a Gold Eagle for a little over $30 over spot:

    silver eagles are closer to $19 per coin if buying a roll (but can sometimes be even lower, closer to $2-$2.75 over spot):

    3. Gold actually can tone or tarnish. Most gold coins, including Eagles, have some copper in them. This can lead to discoloration. Sometimes that can actually be a good thing! Ask @jwitten to show you some examples!

    Toning is easier to find on Silver Eagles. That also isn't always a bad thing. People collect toning and if your silver develops attractive colors, it can suddenly be an upgrade from bullion to a higher premium collector item.

    I will add that milk spotting on silver is a big issue. However, it is mostly an issue for collector coins (or better bullion/semi-numi pieces). A spotted silver Eagle will usually still bring at least melt upon sale.
    Seattlite86 and jwitten like this.
  5. Jason.A

    Jason.A Active Member

    Fair points. Thanks, guys.
    To clarify: the prices are for current year 2017 gold and silver Eagles from JM Bullion. One gold Eagle is $1300. One Silver Eagle $19.56.

    Yes, impure gold (such as Eagles) could change appearance. However, 9999 gold options, such as Maples, do exist that will not have these problems. However, 9999 gold may scratch more easily. However, my assumption based on experience is that a slightly scratched 9999 bullion coin will still recoup more of its premium than a tarnished piece of silver bullion.
    moneycostingmemoney likes this.
  6. Clawcoins

    Clawcoins Well-Known Member

    Let's think on the buyers side.

    1 - does the buyer have a lot of disposable income available, say over $5,000 at a time
    2 - or does the buyer have little disposable income available, say under $150 at a time?
    3 - or somewhere in between, or less, or more.

    The amount of disposable income available will also make one's decision a bit more.
    I someone only has $50 ... then they are more likely to buy silver.

    When you get to the $150 range then you get options of one really dinky sized gold coin or maybe 8 LARGE sized 1oz SILVER COINS.

    As you move up in more available cash then the options of 1oz gold coins vs a bunch of silver comes into play. And at that point I'd rather have the 1oz Gold.

    but then with more money a MONSTER BOX of ASEs is pretty impressive. :)

    It may infer some economics of the buyer, but it is mostly a buyer preference an buyers perspective of silver v gold rounds, gov't bullion, bars, etc.
    Seattlite86 and ddddd like this.
  7. Jason.A

    Jason.A Active Member

    That's an excellent consideration.

    However, we must think about the following:

    Even for that person who may have only $150 or so of disposable income in a month for precious metals, buying gold over silver still makes the best sense.

    With $150, we'd be talking about one 1/10th gold Eagle per month or about 7 or so Silver Eagles. My three points in the opening post still completely apply or mostly apply.

    1. Storage considerations in this scenario are similar. For $150.00 of precious metal purchases would be one 1/10 gold coin to every 7 silver coins. For $25,000 worth, it would be just under 200 gold 1/10oz coins vs 1562 silver 1 oz coins. Total weights are still about the same (200 oz of gold vs 1562 oz of silver).

    2. For premiums, we'd still be talking about 9-10% or so premium on the 1/10th oz of American Eagle gold pieces each month compared to over 20% for the same dollar value of silver Eagles. In this scenario, silver buyers are still way overpaying on premiums compared to gold buyers.

    3. Same issues on spotting, tarnishing, etc. exist for this scenario. Silver gets damaged. Gold does not.
    Seattlite86 likes this.
  8. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    Like Santinidollar, I can see your point, but I think it is important for the discussion to ask what exactly are you saving it for ?? If you are 'wanted' somehow, spy, murderer, trigamist, forger, etc. go gold for value/amount for Lawyers, guns , and money. If you are afraid of an economical meltdown worse than any before, then a mixture of gold for the big needs, and bags of silver dimes or quarters for the small stuff.If you just want to look at it and like Gollum say precious, oh my precious, then silver will do fine. :)
    Tater, Stevearino, Alegandron and 3 others like this.
  9. Clawcoins

    Clawcoins Well-Known Member

    My last purchase of ASEs I payed 8.9% premium.
    spot was $18.42 and ASEs were $20.60

    So ... I don't know where you get your numbers.

    It all comes down to watching the premium that you pay versus spot.
    Many buyers think that just because SPOT comes DOWN, that the buying price comes down. That has not been the case as I've been watching it for a while now. You have to pay attention to when the *REAL* deals are out there.

    So you're paying more a premium on Gold, than I am on Silver.
    ddddd likes this.
  10. ddddd

    ddddd Member

    I believe @Jason.A mentioned that the premiums came from JM Bullion.

    You are correct about watching premiums and minimizing the price paid. Many times the ebay deals section will have the best prices and one can pay with a credit card (for an additional 1%-2% savings via rewards....make sure you pay that balance off on time or else it negates the savings!).
    Jason.A likes this.
  11. Jason.A

    Jason.A Active Member

    I mentioned twice that these are prices of 2017 gold and silver Eagles. Prices are from JM Bullion.

    Even if you paid an 8.9% premium on ASE as you mentioned below, that is still way higher than a 5% premium on a 1 oz gold Eagle.

    Last edited: Jul 16, 2017
  12. Jason.A

    Jason.A Active Member

    Thank you for reading the posts before replying. These are, indeed, from JMBullion.

    That is also excellent advice to watch premiums are buy when there are special deals or when you can use a credit card without penalty.

    However, I would point out that you can also apply your great advice to gold and use it to further reduce your premiums on it. So, at the end of the day, gold still comes out the winner. Unless, of course, we discover that deals are offered on silver more often than on gold. That would be interesting to explore.

  13. ddddd

    ddddd Member

    In terms of the ebay specials page, I have seen more good deals on gold. I have seen a Gold Maple (as low as $15-$20 over spot), Gold Eagle ( $25-$40 over spot), and other 1 oz options (Krugerrands, Philharmonics, and Britannias have all been on the deals page for $20-$35 over spot).

    Silver has had good specials lately too (5 oz bar for about $0.20 per oz over spot), but I have not seen as many deals as for gold.
  14. Clawcoins

    Clawcoins Well-Known Member

    Weren't you stating about 1/10th of an oz of gold vs silver ??
    a 1oz of Gold is a tad bit more $$ than 1oz of Silver.

    FYI, it's not *if* ... but I did pay 8.9% .. which is one of my higher %s of buys and I buy small quantities. With silver, you can get more discount as you buy more.

    you've probably seen the sales of up to 6 ASEs for little over spot from time to time from a few vendors out there as they then try to get you hooked into buying something else with higher premiums.

    But it all comes down to what the buyer wants to buy.
    I have silver and gold as *I* like them both. So "whatever ..." when it comes to stuff like this or are we trying to convince people that silver isn't worth the metal it is stamped out on?

    And with storage considerations ... I don't know why people don't consider buying a 2nd safe considering the dollar value they are storing .. or another SDB.
    But then many people buy cheap safes and not something that is insurable.
    ddddd likes this.
  15. sakata

    sakata Devil's Advocate

    You are comparing apples to oranges. There is a premium on any coin which occurs dues to mintage costs. Obviously the lower value incurs a higher percentage premium. So your comparison has to be between comparables.

    If you are going to take 1 oz of gold as the standard then you must take a comparable dollar value in silver. As I type you can see the following on APMEX

    100 oz silver bar: $1703.00, spot $16.04, premium 6.17% (5.5% on 5 or more)
    1 oz gold bar: (1262.49, spot $1231.60, premium 2.5%.

    So spending about $5000 gives premiums of 2.5% for gold and as low as 5.5% for silver. Okay, gold is lower, but not anything as much so as you claim. And silver does generally sell for a higher premium on the open market (not by selling to a dealer) so the difference is negligible.

    This means that the only major advantage to comparable amounts of the two is the storage issue, and there I cannot argue. But if storage is not an issue then that also drops by the wayside. Admittedly, at lower amounts the numbers are different. But people who are limited to being able to spend smaller amounts don't get the benefit of volume. Isn't that the same in the real world?
    Alegandron likes this.
  16. Jason.A

    Jason.A Active Member

    Wait. Besides that I have actually compared two things that are as equal to each other as perfectly as possible to illustrate gold vs silver differences (2017 gold Eagles compared to 2017 silver Eagles), you comparing Eagles to generic 100 oz bars is not even Apples to oranges, it's apples to hydrogen peroxide. I mean, at least Apples and oranges are both fruit. You've just compared two completely different ways of buying precious metals that are also in two different weight values. It's not even the same ballpark.

    Seattlite86 likes this.
  17. sakata

    sakata Devil's Advocate

    No I didn't. I compare generic gold bars to generic silver bars. That is usually the cheapest way to acquire each. If you choose to pay a premium for ASEs or AGEs then that is your choice. But the title of the thread is "The case to be made for gold vs silver", so don't now try to change it to "The case to be made for AGEs vs ASEs". That is a totally different thread.
  18. Jason.A

    Jason.A Active Member

    I established the parameters in the opening post: gold vs silver Eagles. You've attempted to change it to generic. However, generic is less safe, less desired, less valuable, and, quite frankly, butt ugly.
    Seattlite86 likes this.
  19. Bman33

    Bman33 Well-Known Member

    The only thing I can add to in this thread is worrying about silver tarnishing, especially Silver Eagles. I may want my Silver eagle collection to tone a little but not my Silver Eagle Stash. I have been buying, selling, and tracking silver for a year and a half and that has been my only worry. I don't know what long term storage will do to my Silver Eagles. I have some American Gold Buffalos that I love due to space and really not having to worry about storage and tarnish.
  20. PeacePeople

    PeacePeople Wall St and stocks, where it's at

    My belief is that if you're looking for something for wealth preservation, then it would probably be gold. If you're looking for something that you can flip in a relatively short time frame, 6 months to a few years, and have a chance at a premium gain, then silver is the choice.

    Basically, you choose the one you want to dabble in based on what your objectives are. I don't think either is a bad choice, but you need to do some real homework and pay attention if you want to play the flippers game. You should also prepare to make some mistakes, but if you do it right you can make some very real gains.
    SLACKACTION likes this.
  21. Seattlite86

    Seattlite86 Well-Known Member

    Have you ever taken a comparative politics class by chance? If so, you'd know that what the OP did was the textbook definition of comparing two like items. As a matter of fact, apples and oranges are rather comparable too. Also, the OP set more specific parameters on his OP.
    Stevearino, imrich and Jason.A like this.
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