Guest Post: The 2010 Silver Buying Guide

Tyler Durden's picture

From Jeff Clark of Casey's Gold And Resource Guide

Guest Post: The 2010 Silver Buying Guide

Silver has been sizzling and causing lots of buzz in the industry. Investors are excited.

Part of the hubbub is due to its current run. Since its February 8 low,
silver has roared ahead 22.4% (through June 21) and has doubled from
its November 2008 low.

This excitement has spilled over into greater investment demand –
especially so for coins. The U.S. Mint sold more Silver Eagles in the
first quarter of this year – just over nine million – than any prior
quarter in its history. The Royal Canadian Mint produced 9.7 million
silver maple leafs in 2009, also a record.

Take a look at the jump in U.S. Mint coin sales since 2007.

Silver bullion ETFs are growing, too, experiencing a five-fold increase in metal holdings since 2006.

There’s plenty we could talk about with silver, but our goal is to make
money. So let’s focus on answering just two questions: Is today’s price
expensive or cheap? And, what are the best silver coins, ETFs, and
stocks to own? 

We have all the answers straight ahead, including lots of actionable info, so let’s jump right in...

Why Should I Buy Silver?

There are several reasons to own silver in addition to gold.

First, it’s cheaper! Known as the poor man’s gold, those with limited
budgets will find it easier to purchase. You might hesitate plunking
down $1,200 for an ounce of gold, but you can pick up 32 ounces of
silver for half that amount.

Second, silver has wide industrial use and this component can help or
hinder its price. As its consumption increases across a growing number
of industries, this should help place a floor under demand. And because
of its unique properties, new uses continue to be discovered.

Third, silver is money and has served this role more than any other
material on earth, save gold. Due to its historical role, silver will
always have monetary value and offer similar protection as gold to the
ongoing global currency devaluations, and will definitely benefit from
the inflation hurricane we see as inevitable.

Silver is more practical as a currency used for everyday purchases.
When the time comes, you can sell the requisite number of silver coins
to cover a specific need, as opposed to being forced to liquidate a
high-dollar-value gold holding. Silver is perfect when smaller amounts
of cash are required.

Fourth and last, silver could possibly outperform gold before this bull
market is over. The market capitalization of silver (and silver stocks)
is much smaller, making its price more susceptible to demand spikes
than gold.

In the latter part of the 1970s precious metals bull market, gold
gained over 700% – but silver soared over 1,400%. If you’ve got a bit
of Gordon Gekko in you, we recommend investing a portion of your
dollars in silver.

Caution - Hot!

Like all things, silver has its drawbacks, two in particular.

First, the price is volatile. Over the past 12 months, silver has seen
gains of 53.8% and 22.9% and drops of 21.9% and 19.6%, all within a
period of months or even weeks.

If you’re going to own silver, you must be prepared for big price
gyrations. The best way to do that: buy it and forget about it. And...

?Make price volatility your friend. Big price swings present the opportunity to snag silver at a big discount. We give some guidance on prices below.

Second is the storage issue. As your pile grows, the advantage to
storing gold will become self-evident. At $1,200 gold and $18.50
silver, $10,000 will get you eight gold eagles that will fit nicely in
the credit card slots of your wallet; however, it will buy 540 silver
eagles, weigh nearly 34 pounds, and fill a small bank safe deposit box.

?How to store physical silver. There are several ways to solve the storage dilemma, even if you plan to buy like the Hunt brothers.

  1. Spread your holdings around.
    Not only is it wise to avoid keeping all your physical silver in one
    place, diversifying your storage arrangements allows you to buy more.
    Hide some at home in several locations (no cookie jars, though), and
    obviously tell only one trusted person. Store some in a bank safe
    deposit box and use more than one bank as your holdings grow.
  2. Buy bars.
    Silver bars take up less space than a pile of coins of the same weight.
    We wouldn’t start out with nor have all our holdings in bars, because
    you want the advantage coins offer. But the larger your holdings, the
    easier it will be to store some of it in bar form.
  3. Use pool accounts and unallocated storage.
    With a pool or unallocated account, you’re essentially getting free
    storage no matter how big your stash. That’s hard to beat. You’ll pay
    fabrication and delivery charges if/when you convert your holdings and
    take delivery, but in the meantime, you save on storage costs. Great
    value for the large holder.
  4. Private storage.
    Store your silver with a private vaulting company. The advantage is
    that it’s outside the banking system; the disadvantage is that it’s
    usually expensive, though it can be cost effective for large holdings.
    Do your own due diligence if you go this route because we can’t vouch
    for any facility, but you could start by checking out Keep in mind that using a vaulting facility
    beyond a reasonable driving distance will mean added shipping/insurance
    costs and restrict quick access.

Is Now a Good Time to Buy?

With the gains we’ve seen in silver, would we buy right now?

Let’s first look at the big picture. The following chart shows how far
silver is below its inflation-adjusted peak reached in 1980.

Another clue some investors watch is the gold/silver ratio (gold price divided by silver price) shown below

Since our current bull market in precious metals began in 2001, the
ratio, while fluctuating wildly, has never gone below 45. And yet look
where it went during the precious metals peak in 1980: it bottomed at
17. Even though gold was soaring at the time, silver outran it.

The ratio might show relative strength between gold and silver, but
it’s not a good buying indicator. A falling ratio could mean silver is
rising faster than gold, like it is currently, or it could mean silver
is falling slower. As a result, we’d use the ratio to determine
silver’s upside potential but not necessarily when to place an order.

These big-picture signals tell us silver is undervalued and, at the
moment, a better bargain than gold. And given the currency crisis we’re
convinced is in the cards, we wouldn’t want to be caught without any.
If you have a long-term mindset, silver is a buy today.

Would we wait for a better price?

If you do not own any, and plan on holding what you buy until a mania
develops, then we wouldn’t wait. The risk of buying silver at current
prices is lower than owning none at all.

If you do own some but want to add to your holdings, we’d probably wait
for a drop in price, in part because silver could more easily fall when
the economy is found to be more fragile than what many believe. And
with industrial uses comprising approximately half of silver’s demand,
it would be more susceptible to sell-offs than gold if our research is
correct about global economies. 

Further, summer usually brings pullbacks in prices, and this can be
especially true for silver stocks. This is the tendency, though we
can’t be sure if this summer will follow past trends. Still, our best
guess is to anticipate another leg down this year. If you already own
silver, we’d look for a correction to add to your holdings.

In our opinion, owning no silver in this bull market would be a
mistake. And your first (and biggest) investment in silver should be in
a physical form.

How much physical silver should you have? There’s no right answer and
one size will not fit all. But we do recommend holding more gold than
silver. Our suggestion for your precious metal holdings is roughly 80%
gold and 20% silver.

Like gold, silver comes in different forms. We’d start with the more
popular one-ounce coins and then branch out into other types as your
holdings grow.

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mikhail kalashnikov's picture

maybe we should use my buying guide, free of charge to ZH members


remember, in one tomahawk, there are 1400 OZ of silver...never to be seen again.

Hephasteus's picture

I seriously doubt there is 43 kilograms of silver in a tomahawk. That just doesn't make ANY sense.

mikhail kalashnikov's picture

there are 1400 oz in one. silver connections, wiring and solder. remember that a tomahawk is about the size of a school bus.

Hephasteus's picture

1440 kilograms. 450 of that is warhead. For 42 kilograms of silver to be in it there would have to be about 52kg of solder. Which would build basically an electronics package about 6 or 8 feet wide and up to the 8 ft cieling and a couple feet deep. A huge set of server racks.

Now unless you want to say 1400 grams which is 45 ounces. I'm going to say nu uh. Cause my guess is that it's got about 600 kg of engine and couple hundred kg of housing. Leaving not much left over for goodies. And weapons systems always uses best material within reason for a specific task. Unless there was something that needed silvers heat conducting properties .... still going to say no.

Be careful what you pick up at kitcom. Some people don't remember what they read very well.

mikhail kalashnikov's picture

however you break it down, it is still silver that will never be recovered, and about 3/4 of a million down the drain. or into a cave or mud hut or whatever. the point is that silver is used in manufacturing, never to be reclaimed. that means it is worth something.  if i was off on my numbers, i am sorry.

Hephasteus's picture

Oh no worries. It's still a bunch of silver.

Real Estate Geek's picture

remember that a tomahawk is about the size of a school bus.

No, it's much smaller.  Tomahawk cruise missles were developed so that the Navy could fire them out of submarines.  In fact, I believe that they're fired through the torpedo tubes.  As such, they're much smaller than a school bus.

(FWIW, Wikipedia says its diameter is 0.52 meters, and its weight is 3,200 lbs.)

Perhaps you're thinking of a Trident II ICBM?  Those are pretty big, and can carry up to 12 hydrogen bomb warheads.

Hephasteus's picture

I think he's thinking of the tomohawk submarine which uses a buttload of silver in silver nitride batteries. But unless they sink the batteries can be recycled.

RichardENixon's picture

Damn, I've never even seen an axe that big.

RockyRacoon's picture

We think alike... scary thought there. 

I wonder if that weight included the feathers and beads?

goldfreak's picture

i like your guide MK, been using it for years

mikhail kalashnikov's picture

my buying guide is available in handy PDF format, too.

unwashedmass's picture

a little fuel for the silver buying fire.....from Harvey Organ's blog....


In silver we have had 2 big delivery months of March and May. If you include the options exercised the precious months and add them to the delivery months,

the total of silver standing is represented by 22 million oz and 24 million oz respectively.

There has been 18 million oz of SLV leave London but it did not enter the comex which is the rule. I cannot see the comex settling with paper SLV but I may be wrong.

I have not seen any appreciable silver enter the dealer inventories for these past 3 months.

In gold, the amount that is standing and will eventually stand is an astounding 2.33 million oz. (we included the 204,000 oz of options exercised in May).

We are now past the half way mark and still no activity into the gold dealer inventory.

As for the movement btw HSBC and Scotia, I guess Scotia is the supplier of the metal and has none so it must get it somewhere.

There has been massive withdrawals of silver from the customer inventory as these owners are afraid of comingling and thus do not want to take a chance on keeping their metal at these registered comex vaults.

Adrian and I both smell smoke and where there is smoke, there is fire.

unwashedmass's picture


given the CTFC, the "regulatory" body charged with "regulating" the Comex steadily averts its eyes from whatever the large shorts do in an effort to control the matter HOW outrageously corrupt.........

given the apparent smoke billowing out the sides of the Comex now as the peasantry is demanding that contracts be honored and metals delivered....

it would not be at all unusual to see Comex gold and silver -- regardless of market fundamentals, actual demand, prices in the real world, inventories, and ... reality -- take a 20% haircut in the next couple of days in an effort to short circuit the pending explosion of gold and silver prices.

The buying opportunity this will present is self explanatory.

The corruption, well.......whatever, we lost free fair and transparent markets here a long time ago.....

And whatever happens, rest assured, that the CTFC will continue to parrot the mantra, "there is NO manipulation" of gold and silver; there is no manipulation of gold and silver....

and then, two months or even two weeks from now, after all this dust settles with gold over 2k and silver in the 20s, the Comex and the CTFC will wonder why no one wants to trade with them any more.....

and why this entire market has moved out and overseas......


Gully Foyle's picture

Buy Silver after the Bullets and Bandaids, or so I have read.

DoChenRollingBearing's picture

Holding both silver and gold is right.  Depending on your wealth, goals, etc., it would make sense to hold more than 80% in gold.  But, if you want to speculate (or bottom fish for long term holding) then owning more silver is just fine too.


Shameful's picture

True, but other factors come into play.  Things people might not normally think of in investments like weight.  I like silver, a lot, however I'm likely not to be buying much more.  I don't like the idea of hauling a big pack of silver around with me if I have to relocate a little faster then I would like.  That and I might look a little funny trying to fly with a bag of silver as carry on "No Mr. TSA, this is my good luck silver.  I can't fly without it!"  :)

Gold on the other hand, well I can put my limited wealth in a pocket and not have to much fuss. 

DoChenRollingBearing's picture

+ $1230

Or would that be:

+ $18.40

If it comes to the point where the TSA becomes involved, yessir, I would convert my Ag to Au before I got to the airport, LOL...

TheGoodDoctor's picture

At some point the wheel will come off in this game. Then it will be interesting to watch. Like someone trying to grasp sand. The tighter they grip it, the more it all falls away.

StychoKiller's picture

Also, gold and silver cannot trip ferrous metal detectors.

Anton LaVey's picture

Are you absolutely sure of that "stychokiller"?

Anton LaVey's picture

I can put all of my "wealth insurance" (Silver and Gold) in the smallest backpack I have at home, with room to spare. And I could carry it around with no problem.

Most of my Gold could fit in my pocket, but I guess it would be a bit uncomfortable...

unwashedmass's picture


and there's the other "half" of the story...about JPM and why silver is so incredibly "volatile"....

JPM runs the Comex, and sets the prices....and tell the "regulators" what to regulate.....

and, purportedly, JPM is -- in order to keep silver prices "in line" -- short almost a third of the WORLD"S ANNUAL PRODUCTION.

Yes....a spike in price could be a body blow to JPM...and of course, to the peasant taxpayers who would ultimately pay the bill for this ...."loss".....

and yes, this is risk beyond insanity, but ...its with peasant money, so who cares?

and they run the it becomes difficult to actually deliver on futures contracts (like now)....JPM might just turn to the regulators and tell them to change the rules to force the uppity little investors to take paper instead of actual metal for their paper.

and that's the whole story. JPM seems to be sitting atop a volcano....but ...who cares? No one....CTFC seems to be in porn reading contest with SEC....

Chupacabra's picture

Unlimited naked shorting.  Gotta love it.  Where do I sign up?

unwashedmass's picture


unlimited naked shorting with privatized profits, completely socialized losses.....

JohnG's picture

Sorta makes one feel sick.

unwashedmass's picture

kennie boy works in futures and options, the americas ... at JPM.....

he's probably a really good person to ask when they plan to close out their gloriously humungous silver short and let silver trade freely....

what else could we ask kennie boy? ah, might be interesting to know exactly how they control the CTFC so thoroughly, given that most of the CTFC is GS - alum......

ah well, we should all write and let kennie boy know that we're waiting and it would be nice if he tipped us -- along with all his relatives -- as to when they are going to close the galactic-sized short so we can ....and yes, i know we're peasants and should not get a dime of this,,,,,but we are peasants who know what is going on, so we are "special" like JPM is "special" ..... rules don't apply to us.....

so we can benefit from the doubling or tripling of the silver price that results from letting silver trade freely for the first time in almost a decade.....

unwashedmass's picture

kennie boy works in futures and options, the americas ... at JPM.....

he's probably a really good person to ask when they plan to close out their gloriously humungous silver short and let silver trade freely....

what else could we ask kennie boy? ah, might be interesting to know exactly how they control the CTFC so thoroughly, given that most of the CTFC is GS - alum......

ah well, we should all write and let kennie boy know that we're waiting and it would be nice if he tipped us -- along with all his relatives -- as to when they are going to close the galactic-sized short so we can ....and yes, i know we're peasants and should not get a dime of this,,,,,but we are peasants who know what is going on, so we are "special" like JPM is "special" ..... rules don't apply to us.....

so we can benefit from the doubling or tripling of the silver price that results from letting silver trade freely for the first time in almost a decade.....

hamurobby's picture

30,000 out of the money slv options I carry, like a load of sulfur on my back, down the mountain, waiting for the day a frog becomes a prince....:-)


cyclemadman's picture

When the Federal Reserve Notes turn into toilet paper it won't take people long to remember/learn what real money is again. Don't forget your bags of junk silver.

Rebel's picture

If one is purchasing silver with the idea that it will literally become money, as in, used in barter, junk silver is the best way to go. Large poured bars would be accepted by few people, and would likely need to be assayed. Silver quarters and dimes would be universally recognized, and would quickly be recognized and accepted as money.

ColonelCooper's picture

+100.  In dimes and Walking Liberty Halves.  When I first started buying silver, it was mainly junk coin.  I agree 100% with the recognizability factor.  Some old farmer that I want to buy a half a beef from would probably tell me to shove my handful of 5 oz. Apmex bars up my ass, but would immediately liken to a roll of Morgans.

Plus, the premium on junk dimes and halves was next to nothing until recently.  Now, the premiums aren't hardly worth it compared to Eagles and Maples. (IMHO)

I still buy mostly Eagles and Maples, but also have started buying 5 oz. Bars.  The premium is lower, and if one is using it for a major purchase or sale, you're probably going to have to have an assayer anyway.

I am probably a bit heavy on silver.  I have been buying and holding probably 60% gold, 40% silver.  My main reasoning is that since it is pretty much insurance, I plan to SPEND my PM's, not sell them.  I would rather try to buy a bag of seed oats with a Peace Dollar than try to convince the guy down the road that my 2 peso coin is real.... Then bite off a quarter of it and try to give it to him.

We'll see if I end up a winner or a loser in my thinking.



lucyvp's picture


I buy old silver coins at estate sales, flea markets etc.   I often pass up silverware, candle sticks, commererative silver coins etc, because you can't be sure of the purity and unless you bring a little scale you don't know the weight.

Is is .999, sterling, coin silver, 50%.  If I see a morgan, I know the weight and the purity.


hamurobby's picture

.900 for American coins, im surprised Mr. Raccoon has not jumped on that. I like coins for their immediate recognisably and small denomination :-)

RockyRacoon's picture

You conjured up the Coon?  Here I be.

There are some things that are just too minor to comment upon.   .999 vs .900 is a small mistake and its source is probably the .999 gold parallel.  I'm sure the difference will be important some day -- but this ain't it.  I tend to be a bit heavy on the silver side as many have indicated, but that is because I plan to spend it when the time comes.

Happy hunting! 

Hephasteus's picture

Switch to buffalo and eagles and other numastic coins. I won't touch a morgan because it's named after an asshole.

JLee2027's picture

LOL. What?  Who?  Seriously who?  I've been collecting Morgans since the 1970's and never heard that.

TheGoodDoctor's picture

He either doesn't like the guy who created the Morgan or he is anti JP Morgan. LOL.'s picture

What's the beef with George T. Morgan?

Hephasteus's picture

He was born with a bad last name. LOL

RockyRacoon's picture

Are you trying to back out of being misinformed?

George T. Morgan

Besides, "numastic" coins have a collector premium and don't fit the bill.  Numismatic coins are always priced above their value as a hedge against anarchy.  In a sane world, where civility reigns and inflation is "tame", numismatic coins can return a hefty investment premium however.

lucyvp's picture

many morgans and peace dollars can be purchased for near spot price of the metal.

usually found at private sales, antique malls etc.  dealers don't often go in and reprice their stuff every day or week for that matter.

I don't buy coins that have numastic value.

I do consider if I buy through a dealer, i'm going to pay over spot for bullion coins, and maybe shipping and insurance too.

Hephasteus's picture

Nope. He came on after the FED was enacted in 1913. I don't like the guy still. LOL

Blues Traveler's picture

in the words of Tom Petty, the waiting is the hardest part

papaswamp's picture


Sudden Debt's picture

Tyler, in a deflationairy market Gold and Silver will crash. And like in your other post about housing, we'll get just that.

I wouldn't buy it, all overpriced.

Either gold and silver are overvalued or everything else Is undervalued

spyware-free's picture

Long term, monetary inflation will take over deflation. PM's may be overvalued short term but let's talk after the debt crisis finally hits our shores. So, you are correct that PM's will experience a pullback short term due to deflationary pressures but that just equates to a buying opportunity.

Rebel's picture

This is really a hard one to predict. When the debt crisis hits our shores, there well could be deflationary pressure, lowering PM prices, but at the same time, there could be a flight to quality, which could put upward pressures on prices.

PhattyBuoy's picture

The Euro was under pressure recently ... and the Euro flight was to Gold. Gold appreciated to an all time high against a devaluing Euro.

In a fiatsco (paper) race to the bottom, Gold wins.