Guest Post: What Form Of Silver Should You Hold?

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man blog,

Along with gold, silver has been considered money for thousands of years. In ancient Rome, for example, the silver Denarius coin was first minted in the third century BC. It contained about 4.5 grams of silver and would have a metal value worth roughly $5 in today’s money.

We talk a lot in this column about the importance of owning precious metals… and often for the sake of convenience, I lump gold and silver together in the same category. But while the two share similar characteristics as excellent inflation hedges and stores of value, silver has unique fundamentals worth considering.

For starters, while the entire gold market is small, the silver market is even smaller. It’s tiny. As such, silver is highly volatile and even more susceptible to wild price swings than gold.

This means that, in a boom, silver is going to rise more rapidly than gold. In a bust, silver is going to drop more rapidly. We saw this a few year ago after the Lehman collapse, silver dropped to $8, then subsequently reached a peak of $40. Gold’s roller coaster ride was nowhere near as severe.

This gives silver an interesting edge as a speculation. And one way to play this is to buy specific types of silver whose premiums soar during financial panics.

Last week, you heard from my friend Jake Lawless; he’s something of an expert when it comes to gaming the system, and I asked him to weigh in on this topic of ‘silver premium arbitrage.’ From Jake:

It’s true that not all silver is created equal. Every type of refined silver is going to sell for the spot price (melt value) plus an additional markup. This markup is called the premium… and premiums vary dramatically from one form of silver to another.


As I wrote last week, my preferred form of physical silver is pre-1965 US dimes, quarters, and half dollars… known in the industry as “junk”. Junk silver as an investment. It has a nice ring to it.


In a financial panic, people who procrastinated about buying real money (precious metals) all try to rectify the situation with predictable results. Suddenly, they want gold and silver, and junk silver is quite popular.


First, it’s easy to buy. Everyone in the US knows what a dime or quarter looks like, and all you really have to do is make sure that the date is before 1965.


It’s also easy to buy in small amounts. At $30 an ounce, a silver quarter costs $5.36 and a dime $2.13. More people can afford that than the hernia-causing 1,000 ounce bar at $30,000+. This affordability factor is a huge reason why demand surges for junk silver during panics.


When demand surges, the premiums go up. During the last panic in 2008, premiums on junk went from 29 cents to $4 almost overnight.


At the time, I went to my coin dealer and sold some physical silver for cash. The spot price was $25, so I received $25 + the $4 premium, or $29 per ounce.


Then I called my commodities broker and bought a 1000 ounce futures contract priced at spot, or $25. In this way, I pocketed the $4 premium, but I still had exposure to silver.


As expected, the world didn’t come to an end, and the panic subsided. Silver premiums returned to normal, and I soon took delivery of an ugly 1000 ounce bar. My coin dealer then swapped me for 1000 ounces of junk silver again.


So essentially, I swapped junk silver for cash, cash for a futures contract, the futures contract for a 1,000 ounce bar, and the bar for junk silver. It didn’t matter if the price of silver went up or down in the meantime… I ended up right back where I started, except that I put the huge premium in my pocket.


That’s the basic strategy, and you can do the same. Again, I use junk silver because I have not seen this kind of premium spike in any other form.


If you can, I recommend having at least $500 face value in these coins stored somewhere safe yet easy to access. At Thursday’s close, my dealer was selling junk at 35 cents over spot (or $34.45) with free shipping. A bag of $500 face contains 357.5 ounces and costs $12,315.88.

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FreeMktFisherMN's picture

Prefer minted coins. Canadian wildlife series, ASEs, philharmonics (Austrian school!), libertads, and pandas (purchased from reputable dealer like Provident). I wish I hadn't bought the 10 oz. Silvertowne bar I have, but it's a trusted company and has assay #, so not concerned in this case. Always am looking for pre '65 quarters but have yet to find one!

strannick's picture

You should get an unallocated SLV certificate, that way its convienient.

Then again probably best to get a 1 ounce Maple or Eagle

Clueless Economist's picture

Rolls of 1960-1964 Junk Silver quarters.  Better than just plain all dates worn junk silver quarters. 

Place a roll of worn silver against a roll of XF-AU 1960's quarters and you will see the difference in weight and volume.

Oh and take physical possesion!!!

crusty curmudgeon's picture

It doesn't matter how worn they are...they are all sold with the assumption that there is 715 oz in $1,000 face.  This already accounts for wear ... if all coins were uncirculated, there would be well over 770 some odd ounces.

I always recommend well-known coins (e.g., silver eagles, junk silver, morgans).  You don't want to have to prove that your silver bar/ingot/odd coin is actually silver nor do you want to have to prove how much silver it is (you don't want to have to bring a scale with you to conduct a transaction).  Always a good idea to buy from a trusted don't want to find your silver is really silver coated tungsten.  Though I don't take issue with people who get a good deal buying junk dimes on ebay...I'd be surprised if someone bothers to fake those at silver under $50/oz.

akak's picture


if all coins were uncirculated, there would be well over 770 some odd ounces.

Actually, if they (dimes, quarter-dollars and half-dollars) were all uncirculated, they would have exactly 723.4 oz. of pure silver per $1000 face value.

The corresponding figure for US silver dollars would be 773.4 ounces of silver.

crusty curmudgeon's picture

Right, thanks for the correction.  I was thinking of Morgans. 

The point, though, is that while I understand the appeal of technically getting more silver, unless you're going to melt them down, I'd rather have older coins with potentially more numismatic value than more recent coins with technically more silver in them.  You will not be able to sell junk silver as though it has more than 715 oz silver no matter how pristine the coins are.  And in the case of half dollars, you very likely will get a larger premium for heavily worn walking liberty halves than you would for pristine kennedy halves.

SanOvaBeach's picture

When yea gonna move out of the bedroom you grew-up in?

jumbo maverick's picture

My man what the fuck was that? When guys like that ramble on about things they know that is how I learn things. Make all the fun you want to I guess but I would wager that many of us here took note of what was said.

Just a few short years ago I didn't know why you would want to weigh any silver coins I bought. Nor did I know why one would want to own a device to measure the circumfrance and thickness of a coin. And don't even get me started on how to do a test for specific gravity of a certain element.

But never mind all that if you want to make it out like that guy is some kind of nerd I guess you can. When guys like you, the vast majority of the population, don't understand the precious metals market then it makes it better for guys like me to navigate my way through that market.

I'll keep stacking and I'll keep loading mags. You keep making fun of what you can't understand. If you change your mind people here at fight club will help you. Just start paying attention.

Clueless Economist's picture

Correct, akak - there are 723.3918 troy oz of silver in 1,000 face.

If all are perfectly UNC the weight would be 803.7686 troy oz of weight.

The coins are of course 90% silver.

It is correct that is assumed there is 715 oz of silver per $1,000  because of wear.  But I buy XF-AU and there is 723 oz of silver per $1,000 

UnpatrioticHoarder's picture

I'd be surprised if someone bothers to fake those at silver under $50/oz

For that reason alone the gold/silver ratio will close toward its historical norm: Demand for gold will be tempered by rising fear of counterfeits due to its extreme profitability. Therefore demand will switch to silver as it is less profitable to fake. OTOH just get an ultrasonic thickness gauge and you'll be OK.

vast-dom's picture

hold on to your ballsack and your gun, tight.


think different : silver apples :

SanOvaBeach's picture

perth mint no longer sells unallocated silver certs.  where can i get one?

Ponzified Plebe's picture

I wish I had been more educated when I started stacking. It seems that all of my Perth Mint coins carry far larger premiums than any of my other coinage. Besides, they sure look purdy too - Aussie Kookaburra's should be part of everyone's stack.

Pinch's picture

1000 oz bars for me. I don't deal in junk silver or small denominations. I invest millions.

SanOvaBeach's picture

u must have a kool car and a long, fat cock too!  of course, the fuck'in big ego w/ it!  Blow me, asshole...........

prodigious_idea's picture

Is your tag from the movie Rounders?  Malkovich was terrific as KGB.

SanOvaBeach's picture

A teacher suggested it when I was filling=out comments for the HS yearbook.  San Ova Beach = Son of a Bitch.............

xtop23's picture

A LOT easier to offload smaller units of Ag ( 10oz or less ).

If Ag should hit 150 an/oz or more , selling that Comex ( assuming the Comex is even around at a time when Ag goes for that kind of price ) deliverable bar is going to be a real bitch.

Not going to be a lot of people with that kind of scratch.

Good luck.

Personally , I like eagles , harmonics , and junk but that's just me.

JoeSexPack's picture

Austrian Phil's good, no Queen or Masonic symbols like eagles & maples.


Also like US pre-65 dimes & quarters.


100 oz bars for the rest, J&M or Englehard.

Whalley World's picture

Funny you bring that up.  A bright young friend of mine was listening to me rattle on about the need for her to buy silver and showed her my silver maples.

when she did not bite and get some, i asked why she decided not to buy.  She said that she did not want to own anything with the face of the queen on it!


HoofHearted's picture

I had lots of fun with Canadian friends of mine. Acting like the jackass I am, I asked, "Why the hell do you Canadians have a picture of an old hag on all of your money? Who is that bitch anyhow?" They were not impressed by my questions.

akak's picture


Canadians should grow some balls and throw that bitch off their money, like, 100 years ago!

Bad enough to have a powerless, figurehead monarch on your coinage, but to have the powerless, figurehead monarch of ANOTHER nation on it?  Damn, if I were Canadian I would be embarrassed as Hell!

(Maybe almost as embarrassed as I am by the USA having the likenesses of dead politicians --- and pretty much the most pernicious, statist politicians at that --- on our coins and bills).

Canuckistan Al's picture

Akak: Don't worry that day is coming eventually, its most the old folks with historical roots to the monarchy that keep this charade going.

I dont think most of usc give a flying F about the old windbag or her inbred family. Some think this is quaint, I like you, and some others find it offensive.

akak's picture

What do you want to bet that when the Canadian government does finally dump the bitch from your coins, they will just replace her with the portraits of various dead prime ministers --- to eventually be followed by the current prime minister, a la a more honest monarchy/oligarchy?

Diogenes's picture

If you're not ashamed of Obama I'm sure not ashamed of Queen Elizabeth.

akak's picture

Do you, can you, REALLY believe that no American here is NOT ashamed of Obama (or of the majority who apparently, supposedly elected him)?

imaginalis's picture

Which Pres will be on the $50000 note we use to buy a loaf of bread soon?

Fred C Dobbs's picture

I am not sure she is powerless.

Jim in MN's picture

HRH the Prince of Wales begs, yes begs, to agree with you.

HamFistedIdiot's picture

The British "royalty" dominate 54 commonwealth nations (among which are canada and australia). The queen shuts down different countries' parliaments at-will when the plebes get unruly through her "Governor General", rendering the thought that these countries have political and econonic freedom a delusion. The identity of the private shareholders of the Federal Rerserve are a secret, and much power is said to be exerted by the bank of england. Obama bowed to the queen and prince philip on a trip to england not too long ago. Check out the city of london (the square mile financial district) that is not subject to british or international law -- where the derivative black hole is spun from - run by the rothschilds who are said to be the force behind the throne -- in fact the queen routinely bows to the mayor of the city of london, the only person on the planet to whom she does this.

SanOvaBeach's picture

Does mommie charge you rent?

Angus McHugepenis's picture

akak - Ya gotta look past the logos on the coins and feel the silver itself. I couldn't give a rat's rump if Mr. Bean was on the face as long as it is recognizable as a legitimate mint-issued coin.

As for growing some balls, I haven't paid taxes or filed in 12 years and I'm still roaming the streets. Sadly I'm not the majority and I got tired of telling other sheep how to do it. They either thought me to be crazy or the smarter ones realized what I was saying to them and the look of fear in their eyes told me they were too enslaved by the system to even think about changing anything but their dirty shorts before going to bed.

Want to see a Canadian with HUGE BALLS? Google Dean Clifford and watch his vids.

Sovereignbeing's picture

I would like to know your secret for not paying the illegal, unconstitutional income taxes. I filed a zero income tax return in the mid 90s for four years until they caught up with me. They twisted my arm and I settled.

Almost Solvent's picture

If you have any reported income via W-2 or 1099, the IRS will catch you eventually. 

The only way out is to deal only in non-reported income that is not transmitted to the IRS via a 1099 or W-2, unless you want to "borrow" a SS or TIN # and use that, but better make sure to have a phony address on it!

Angus McHugepenis's picture


I'm sure both of our stories are far too long to be posting on ZH and trying to reply back and forth via posts. I can tell you this... there was a time in my life many years ago when things were not good. During that time several "government bills" were due which I did not have the money to pay for. I literally woke up at that moment and asked myself, "Who the fuck is the governent that I never voted for and why do they think I owe them anything"?

I have a major advantage. I am not married and don't have children. I don't own a home. I drive a late 80's pickup truck that I bought for $1,000 four years ago. As far as the government is concerned I have nothing that they can hold me hostage over. I am simply not worth pursuing unless they wish to incarcerate me at a cost of $65,000 per year just for being me. But before they do that, they have to find me. That will take too many resources only for them to find out THEY OWE ME MONEY! But I have no intention of ever doing business with any government regardless if they try to bribe me with my own money.

Last but not least... I support myself with my many skills (welding, carpentry, drywall, computer tech, etc, etc) that I trade for CASH, which I then convert to silver once I have bought what I need from the grocery and gas station using the worthless paper fiat.

My lifestyle ain't for most people. I understand that. I do like to think that I am truly "walking the walk and talking the talk" from my actual experience during the past 12 years. I do hope you find your own path.

Cheers - Angus


Nehweh Gahnin's picture

A lot of folks are not going to understand or appreciate your successful de-leveraging, Angus.  More folks on this site than most others though, I suspect.


An interesting aspect to that lack of comprehension is that for most peeps in our society, the de-leveraging does not start voluntarily.  Mine didn't.  I am not as far along as you, but close.  The beautiful thing, though, is that my de-leveraging is now intentional, and I celebrate it every day.  I have shed six figures of indebtedness, and I'm getting it pretty close to zero now.  I accept not one penny of government bribes ("assistance"), and my garden grows.  


My youngest brother "worries" about me.  He thinks I'm hitting bottom and that my financial situation is simply poverty -- because, doncha know, he's got a $32 k pickup and his wife has a $32k car and his son has a $15k truck, and they're living large.  No amount of explanation is sufficient to help him to recognize the chains that bind him.


Kudos to you, man.

jimmyjames's picture

Canadians should grow some balls and throw that bitch off their money, like, 100 years ago!


Well you said something i agree with AK-

That old bag lady is everywhere you look here-inbred royalty defacing gold and silver-

Canada is still an immature society-

Problem for you guys is--you had it and now you've lost it-


MrSteve's picture

Are you Arsh? I know the Arsh won't have nuthin' ta do with no money showing da Queen. If the Queen's on yer money, yer English!

So I have been schooled by good Irish friends.....

jumbo maverick's picture

You should ask them, "Hey I don't know anything bout Canadian money is that what you guys call the loon?"

That should get them pissed.

Cap Matifou's picture

I get for below metal value 75+ year old Reichmarks with Hindenburg and swastika on them, and throw them into a box also holding 5 and 10 Lirot coins. Latter got minted in the ME apartheid state 40+ years ago, and branded with a distinctive star of David. I give a sh!t to what totalitarian regime made it, just thank them for the 90% silver content.

goat's picture

Where the hell do you find these at that price?



I'm calling bullshit.

Cap Matifou's picture

Look in countries where they are relatively unknown, i.e. never in circulation. RM+DM in UK, France, Spain, Italy and US, Austrian schilling in Italy, Canada, Australia and so forth. Crazy people are after swastika (and star of D) and sometimes drive up the price. Much of the time i come out with postage below metal value, otherwise they can keep it.

FreeMktFisherMN's picture

I like the Austrian phillies, too, and not just because of my ardent support of the Austrian School. As you say, the RCM maples/wildlifes are really nice, but the royal lineage reminder definitely is too bad. I am obviously focused on stacking as much as possible, but once in awhile like to try a numismatic play, especially if not outrageous. Will buy t-wolves and grizzlies, for instance, but not these proofs and rarer ASEs. 





AGuy's picture

I was thinking of minting my own coins, but instead of using the Latin phrase "e pluribus unum" ("Out of many, one") I will use

"Bernanke basia culos meos" ("Bernake, Kiss my Ass"). Perhaps I will hire WilliamBanzai7 to create the relief design.


Fred C Dobbs's picture

I always thought it would be nice to have Rufus T. Firefly of Freedonia on one.  Groucho's face on the front with Freedonia written on it and his butt on the back.  

xtop23's picture

Charlie Chaplin's Dictator would also be humorous.

Him lying on his desk , with banners in the back ground , decked out in a TSA uniform , while kicking a balloon of the globe off of his boot.

putaipan's picture

i'm very happy with my "alfred e.newman"s... a couple of keisers (max, not wilhelm) a very angry andrew jackson-"by god i'll rout you out!" and a couple of disney's happy the dwarf. not to mention my cannabis indicas and the rest in monarch bars.

DoChenRollingBearing's picture

+ 1  As do I, FreeMktFisherMN (Eagles in my case).

Kudos to you for your recent very civil response to my comments in the "Drones Thread" recently here at ZH.