Blog posts of '2014' 'July'

As we look at recent financial history, it’s not hard to see that world economic and monetary systems are in great peril. We seem to be teetering on the edge, awaiting the next credit crisis. According to the FDIC, 258 US banks have been closed since the beginning of 2009.

Precious metals are one way to diversify away from credit/debt instruments like money and mortgages, stocks and bonds, etc. I also think that a food plan, water and a water filter, guns and ammunition should also be a priority, perhaps even before you buy precious metals.

Should our economic and monetary system come crashing down, you need something that for thousands of years has been accepted in trade for goods and services. Monetary systems which were tied to gold and silver standards have tended to be much more stable as it pertains to prices. As more money and credit is created, it decreases the purchasing power of the dollar and the price of gold and silver appears to go up. The price of gold or silver has had an effect of mirroring the decrease in value of the currency unit by rising in price, such as we have seen over the past ten years.

"Paper money eventually returns to its intrinsic value -- zero."
Voltaire (1694 - 1778)

The answer to my title is - Yes, everyone should own some silver.

If you think the purchasing power of the dollar will continue to decrease - and I see no reason to think otherwise - you should get some silver.

I think it is very possible and in fact likely that the US Dollar could see a full blown collapse. Something similar to the German Reich Mark or the more recent example of the Zimbabwean dollar.

I am old enough to remember bread for sale at the grocery stores at 4 loaves for a dollar. I remember 25 cent gas. A quarter from grandma was like being handed a five dollar bill today. Silver played a big role in US monetary history up until 1964, when it was removed from our coins.

The value of silver in a pre-1965 quarter is about $3.70. That would probably buy a gallon of gas or a loaf of bread many places in the US today. The price of gas in silver coinage has never fallen below $.20 or risen above $.30, even with oil ranging from $90 to $147 a barrel.

Silver is more practical in a barter environment than gold. Common size bars can be found in 10 ounce and 100 ounce sizes. These bars are a low cost way to purchase large amounts of silver and can be very efficient way to store a large value of silver in a smaller space.

The disadvantage to 10 and 100 ounce bars is divisibility. With silver around $20 an ounce, a 10 ounce bar is worth $200 and a 100 ounce bar is worth $2000. How does someone "make change" for this in an average grocery store transaction?

One ounce coins minted by the US Mint and other foreign mints provide excellent credibility and recognition. Silver American Eagles are by far the most popular coins with my clients. The problem with Silver American Eagles is they are also the highest premium silver coins I routinely sell. In a crisis, I think an ounce of silver will be an ounce of silver.

So what is the best product for my "End of the Dollar as We Know It"? I like 1964 and prior 90% US Silver Coinage. Good old dimes, quarters and half dollars minted in 1964 and before. It was a perfect system - ten dimes, 4 quarters or two half dollars contain exactly the same weight of silver. Produced by one of the best mints in the world, they are familiar to every American. A quick look at the date assures you that the coin contains an exact amount of silver. It’s also very divisible - at $20 silver price, a dime contains $1.40 worth of silver. A quarter buys a gallon of gas, 30 cents buys a dozen eggs, and a chicken is less than a dollar.

And here is the best part - it is one of the lowest premium ways to buy silver. It’s also easy to get. If you plan to accumulate slowly, spend a $100 here and there as you save up. Set aside some money from each paycheck and each month, and visit your local dealer.

So even if you are strapped for money and not able to invest in precious metals, silver allows you to have some sort of insurance from the greatest economic dangers I think we face - a dollar collapse.

Pay off debt; get food, get water and a decent water filter, guns and ammunition - and silver.

Original content by Tim Frey, President of Roberts & Roberts

US Coinage containing 90% silver minted before 1965 is commonly known as “junk” silver. Any dimes, quarters, or half dollars made 1964 and prior fall into the category of 90% silver coinage, with anything made 1965 and and after being worth only the face value with the exception of half dollars. Half dollars made from 1965-1970 have only 40% silver. These coins are far from what one might think of as junk, and have great utility as alternative currency. There are pros and cons to buying 90% silver coinage, and it all depends on your personal reasons for investing in silver.

Pros:

• Most inexpensive way to buy silver. Because the coinage is only 90% silver, the calculations used are based on that percentage whereas a one ounce silver coin is more expensive due to a higher amount of silver and higher premiums charged by the mint to create the coins.

• Smaller denominations. 90% silver coinage is excellent for those who are expecting a financial collapse of the dollar and are looking to use silver as a currency. With smaller denominations of quarters and dimes, these coins are great for barter because it is easier to make change or buy products more directly. For example in a post-federal reserve note world, if you wanted to buy some eggs from a local farmer, it would make more sense to use dimes instead of trying to break a one ounce coin into a bunch of tiny pieces.

• Recognition. Because these coins were created by the US Mint, they are instantly recognizable as currency and therefore people are more trusting and willing to accept them in transactions. The date of the coin will validate the coin is silver (1964 and prior).

Cons:

• Appearance. These coins are called junk silver because they are not deemed collectible pieces. If you are looking for a nice gift for someone, giving them a bunch of beat up quarters may not be the best idea. There are some that have not been widely circulated and look nicer, especially if they are proofs, but for the most part these coins look like regular coins we use today because that’s what they used to be.

• Storage. 90% silver coinage takes up more space than for instance a silver bar for the same amount of ounces. It is easier to store a 100 oz bar rather than 100 ounces of quarters.

• Purity. 90% silver coinage has only 90% silver in it, so for those who like purer forms of silver, a Silver American Eagle or Canadian Maple Leaf would be a better choice.