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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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Fri, 10/12/2012 - 15:35 | Link to Comment FreeMktFisherMN
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!

Fri, 10/12/2012 - 15:37 | Link to Comment strannick
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

Fri, 10/12/2012 - 15:59 | Link to Comment Clueless Economist
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!!!

Fri, 10/12/2012 - 16:10 | Link to Comment crusty curmudgeon
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 source...you 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.

Fri, 10/12/2012 - 16:17 | Link to Comment akak
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.

Fri, 10/12/2012 - 17:16 | Link to Comment crusty curmudgeon
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.

Fri, 10/12/2012 - 21:43 | Link to Comment SanOvaBeach
SanOvaBeach's picture

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

Sat, 10/13/2012 - 01:04 | Link to Comment jumbo maverick
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.

Fri, 10/12/2012 - 16:24 | Link to Comment Clueless Economist
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 

Fri, 10/12/2012 - 18:23 | Link to Comment UnpatrioticHoarder
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.

Fri, 10/12/2012 - 16:45 | Link to Comment vast-dom
vast-dom's picture

hold on to your ballsack and your gun, tight.

 

think different : silver apples :

 

http://www.silverdoctors.com/silver-is-the-new-gold-the-infographic/

Fri, 10/12/2012 - 18:30 | Link to Comment SanOvaBeach
SanOvaBeach's picture

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

Fri, 10/12/2012 - 15:49 | Link to Comment Ponzified Plebe
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.

Fri, 10/12/2012 - 18:08 | Link to Comment Pinch
Pinch's picture

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

Fri, 10/12/2012 - 18:35 | Link to Comment SanOvaBeach
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...........

Fri, 10/12/2012 - 20:01 | Link to Comment prodigious_idea
prodigious_idea's picture

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

Fri, 10/12/2012 - 21:42 | Link to Comment SanOvaBeach
SanOvaBeach's picture

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

Fri, 10/12/2012 - 19:27 | Link to Comment xtop23
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.

Sat, 10/13/2012 - 11:49 | Link to Comment monoloco
monoloco's picture

Pinche

Fri, 10/12/2012 - 15:52 | Link to Comment JoeSexPack
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.

Fri, 10/12/2012 - 16:19 | Link to Comment Whalley World
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!

 

Fri, 10/12/2012 - 16:34 | Link to Comment HoofHearted
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.

Fri, 10/12/2012 - 16:40 | Link to Comment akak
akak's picture

Really!

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).

Fri, 10/12/2012 - 16:58 | Link to Comment Canuckistan Al
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.

Fri, 10/12/2012 - 17:14 | Link to Comment akak
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?

Fri, 10/12/2012 - 21:09 | Link to Comment Diogenes
Diogenes's picture

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

Fri, 10/12/2012 - 22:52 | Link to Comment akak
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)?

Sat, 10/13/2012 - 06:38 | Link to Comment imaginalis
imaginalis's picture

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

Sat, 10/13/2012 - 16:24 | Link to Comment Jam Akin
Jam Akin's picture

Jimmy Carter

Fri, 10/12/2012 - 19:07 | Link to Comment Fred C Dobbs
Fred C Dobbs's picture

I am not sure she is powerless.

Fri, 10/12/2012 - 20:51 | Link to Comment Jim in MN
Jim in MN's picture

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

Sat, 10/13/2012 - 09:34 | Link to Comment HamFistedIdiot
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.

Fri, 10/12/2012 - 21:45 | Link to Comment SanOvaBeach
SanOvaBeach's picture

Does mommie charge you rent?

Fri, 10/12/2012 - 21:52 | Link to Comment Angus McHugepenis
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.

Fri, 10/12/2012 - 22:34 | Link to Comment Sovereignbeing
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.

Sat, 10/13/2012 - 07:08 | Link to Comment Almost Solvent
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!

Sat, 10/13/2012 - 19:42 | Link to Comment Angus McHugepenis
Angus McHugepenis's picture

@Sovereignbeing

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

 

Sun, 10/21/2012 - 12:48 | Link to Comment Nehweh Gahnin
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.

Sat, 10/13/2012 - 00:29 | Link to Comment jimmyjames
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-

 

Fri, 10/12/2012 - 19:58 | Link to Comment MrSteve
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.....

Sat, 10/13/2012 - 01:07 | Link to Comment jumbo maverick
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.

Fri, 10/12/2012 - 17:41 | Link to Comment Cap Matifou
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.

Fri, 10/12/2012 - 22:26 | Link to Comment goat
goat's picture

Where the hell do you find these at that price?

 

 

I'm calling bullshit.

Sat, 10/13/2012 - 03:51 | Link to Comment Cap Matifou
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.

Fri, 10/12/2012 - 16:29 | Link to Comment FreeMktFisherMN
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. 

 

 

 

 

Fri, 10/12/2012 - 16:18 | Link to Comment AGuy
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.

 

Fri, 10/12/2012 - 19:11 | Link to Comment Fred C Dobbs
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.  

Fri, 10/12/2012 - 19:37 | Link to Comment xtop23
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.

Fri, 10/12/2012 - 23:16 | Link to Comment putaipan
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.

Fri, 10/12/2012 - 16:23 | Link to Comment DoChenRollingBearing
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.

Fri, 10/12/2012 - 16:57 | Link to Comment FreeMktFisherMN
FreeMktFisherMN's picture

Appreciate it, DCRB. America has obviously been abandoned, and Obama is a nightmare for liberty, this country's sovereignty, and his attack on Christian virtues. Unfortunately the GOP candidate, while maybe understanding how business works better, is not only anti-Christian by being a Mormon, but also won't defend liberty and won't talk about the Fed unless told to do so to appease libertarians (and won't end this private central bank that is looting America, but rather thinks it is just that Bernanke is there and simply another replacement puppet is the solution), and won't tell the truth about the need to make cuts. It is a false choice.

Income taxes should be zero, and people should be able to actually own property and not actually pay rent, which just goes to fund the John Dewey dream of secular, atheist, state-is-god public school indoctrination machine.

 

But what is forgotten is, like with Reagan, for instance, he was great for getting govt's back off the private sector in many ways, but the spending didn't stop, and it instead went up at a very high rate. This is supposed to be the party for laissez faire, but cutting taxes is only part of it. The biggest tax is govt spending, because it is theft from today and from future generations, with the taxes paid in funding the interest payments to the Federal Reserve for it having the pleasure of printing the Treasury's money to fund the debt. And I can see where the GOP wants to do what it thinks is right for seniors by continuing SS and all that, because those people did pay in, but the truth is that was a ponzi. No, worse than a ponzi, because it was not even voluntary. And Madoff's victims didn't get their money back. It's terrible what happened what with the trust being raided, but pretending it wasn't just makes it worse and is lying. And those programs were unconstitutional from the getgo anyway, and that is the bigger principle of the matter. Some would say, fairly, that those people voted for govt officials like FDR and these programs foolishly in thinking these crooks could manage their money for them, and now that abdication of responsibility in managing one's own money in favor of 'security' which is what is always promised with welfare and warfare, has come back to bite these people. It's sad, because, as I noted, not everybody wanted SS. Tyranny of the majority is what happened there. 

 

Hopefully the Austrian School, Constitution-respecting old school conservatives have a resurgence and take back the Republican platform, or form their own party that overcomes this two (one) party sham of a system.

 

 

 

 

 

Sat, 10/13/2012 - 12:36 | Link to Comment Silver Bug
Silver Bug's picture

Not a bad suggestion at all. If you can handle the bulk this is a great idea.

 

http://jimrickards.blogspot.ca/

Fri, 10/12/2012 - 15:35 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

Awesome.  An ad for bags of junk silver.

Fri, 10/12/2012 - 15:48 | Link to Comment pods
pods's picture

I love junk silver, but do not plan on using it to scam the local coin dealer.

pods

Fri, 10/12/2012 - 16:07 | Link to Comment Lohn Jocke
Lohn Jocke's picture

It isn't a scam, it's a basis play. Any trader in any physical commodity trades that way from corn, to silver. Your premium can be positive or negative based on what they can sell it for, they hedge themselves with futures so that they're only operating on a margin.

Fri, 10/12/2012 - 17:01 | Link to Comment pods
pods's picture

I'm not a trader.  Silver, especially junk silver, is a symbol of honest money.  I'll be damned if I am going to try and skim off a guy that I talk to often to make a quick buck.  

On a sidebar, reading the story again I call bullshit.  No dealer is going to PAY you $4 over spot unless he has backed up orders to fill at something above that premium.  He might SELL you at that premium over spot, but isn't going to BUY it from you at that premium over spot.  Also, in dealing with junk silver, local dealers will quote you prices in relation to face value, not spot.  And that price usually comes in a bit UNDER spot.  Maybe Simon's super trader friend (is this the same guy who bought the car?) just translated the price to raw bullion prices, but I doubt it.

Either way, it IS a scam when you are profiting at another's expense.  Just because it happens to be dealing with silver does not make that honest.

pods

Fri, 10/12/2012 - 17:54 | Link to Comment Solon the Destroyer
Solon the Destroyer's picture

Firstly agreed, there is no way you can buy silver at spot, which removes all the cred from Simon's expert.

Secondly disagreed... all profit comes at someone else's expense.  Just that most of us around these parts prefer that profit to be obtained without coercion or fraud.

Fri, 10/12/2012 - 18:39 | Link to Comment Dr Benway
Dr Benway's picture

'Lawless' is not only saying he buys silver at spot.

 

He's saying he sells silver at spot PLUS 16%.

 

He had some silver, spot was 25, he got 29. Not hard to 'arbitrage' a complete fucking bullshit fantasy.

Fri, 10/12/2012 - 19:25 | Link to Comment The Alarmist
The Alarmist's picture

And no mention of the premium on the "swap" back into junk and all the transaction costs along the way.  If he really did this round-trip as described, it would have been a losing trade.

Fri, 10/12/2012 - 20:27 | Link to Comment MrSteve
MrSteve's picture

Well, you're almost, techncally correct. Yesterday I checked 50 coin rolls of Roosevelt dimes on eBay, only one roll offered, not 20 and the bid tab was at spot. Probably someone who had the roll at a much lower cost or got it as a gift.

I would think anyone dealing in volume would not be taking a beating. Dealers are in business to not lose money.

Sat, 10/13/2012 - 00:25 | Link to Comment juslen
juslen's picture

I bought silver at spot about 2 years ago when silver was starting to climb over 34 dollars an ounce. I bought 2 rolls of silver dimes at a coin show.

Sat, 10/13/2012 - 00:25 | Link to Comment juslen
juslen's picture

I bought silver at spot about 2 years ago when silver was starting to climb over 34 dollars an ounce. I bought 2 rolls of silver dimes at a coin show.

Fri, 10/12/2012 - 18:03 | Link to Comment foofoojin
foofoojin's picture

it is NOT a scam when all parties agree. the trader takes a risk that the promise of silver will be there. he takes on a risk and delay consumption of a good. the shop owner would only agree to such a deal when he himself has an order above 4 percent needing to be fulfilled or beleaves very strongly that the value of silver will continue to raise.. nobody scamed anyone.  there was no claok and dagger. all parties are inteligent and know how the market works.  i must ask, are you against profit?

Fri, 10/12/2012 - 18:40 | Link to Comment Dr Benway
Dr Benway's picture

The story is complete bullshit. 100% utter bullshit. Never happened.

Sat, 10/13/2012 - 09:59 | Link to Comment HamFistedIdiot
HamFistedIdiot's picture

I buy from a middleman who does maybe $200 million per year. The premiums are set by the wholesalers / market makers above them who do $5-$10 billion PM sales annually. The premium has nothing to do with the middleman's profit. His profit is in the spread which is there regardless, which fluctuates as well.

Fri, 10/12/2012 - 15:35 | Link to Comment francis_sawyer
francis_sawyer's picture

Simon... put down that silver dildo...

Fri, 10/12/2012 - 19:26 | Link to Comment The Alarmist
The Alarmist's picture

Gee Simon, that dildo looks really worn.  Sorry, but we have to mark it down.

Fri, 10/12/2012 - 21:36 | Link to Comment Angus McHugepenis
Angus McHugepenis's picture

Colon-al silver. He's just medicating himself analy rather than orally. If he uses that silver dildo too much his ass cheeks will turn blue.

Fri, 10/12/2012 - 15:36 | Link to Comment BigJim
BigJim's picture

Wow - a fairly useful Simon Black article.

Fri, 10/12/2012 - 15:39 | Link to Comment Gene Parmesan
Gene Parmesan's picture

You'll notice that someone else wrote half of it.

Fri, 10/12/2012 - 17:38 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Lets not kid ourselves, he 'outsources' the writing of almost all his articles.  From the guys who brought you the '4 Hour Work Week', itself a book whose content was outsourced (or crowdsourced). 

Fri, 10/12/2012 - 19:35 | Link to Comment Dr Benway
Dr Benway's picture

Useful article? Got brain injury?

 

The 'arbitrage' in this article is based on being able to sell PMs at spot PLUS 16% to an imaginary dealer.

 

LOL. Hey Simon, please introduce me to your dealer, who sometimes pays spot plus 16% for PMs? I wanna sell to him. But you can't, because he doesn't exist, you fucking lying scumbag tout conartist shithead fuckwit.

Fri, 10/12/2012 - 15:36 | Link to Comment zilverreiger
zilverreiger's picture

yep, handiest are coins of the same sort

 

gold maples + silver maples

gold philarmonikers + silver philarmonikers

Fri, 10/12/2012 - 15:37 | Link to Comment Jack Sheet
Jack Sheet's picture

What are they plating the silver on in those big bars?

Fri, 10/12/2012 - 15:53 | Link to Comment knukles
knukles's picture

Chocolate.
Then they put them in nice little plastic mesh bags....

Fri, 10/12/2012 - 15:38 | Link to Comment francis_sawyer
francis_sawyer's picture

Buy silver soldering wire at the hardware store... Never hear about peeps talking about that... You'll need it to solder together copper plates to make moonshine stills...

Fri, 10/12/2012 - 15:42 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

Right.  Because you wouldn't want the building inspector to fail you for using lead solder.

Fri, 10/12/2012 - 16:04 | Link to Comment francis_sawyer
francis_sawyer's picture

dipshit... Yeah ~ I'm also worried that the building & sanitation inspector is going to fail me for my solid gold toilet...

Fri, 10/12/2012 - 16:08 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

Are you sure your floor joists are rated for a 3000lb toilet?

Fri, 10/12/2012 - 16:13 | Link to Comment vamoose1
vamoose1's picture

speak  for  yourself     mine    r    before   dinner

Fri, 10/12/2012 - 16:51 | Link to Comment francis_sawyer
francis_sawyer's picture

It's a fucking THRONE bitch... Capable of withstanding a nuclear attack...

Fri, 10/12/2012 - 21:51 | Link to Comment steelrules
steelrules's picture

Look at these http://homedistiller.org/equip/types/fraction

My family back in Europe had a 200 year history of cooking what they called Palinka http://en.wikipedia.org/wiki/P%C3%A1linka 

I think when the SHTF this will be a good skill to have, take any waste fruit like wind fall apples let ferment then cook it in to a marketable product.

The older I get the more I see the importance of the skills my father taught me, from butchering my own hogs to making my own booze to having a safe full of silver & guns.

People that grew up during the depression and the second world war shure had their shit togther. 

Fri, 10/12/2012 - 15:43 | Link to Comment AT
AT's picture

Remind me how many central banks hold silver again?

Fri, 10/12/2012 - 16:02 | Link to Comment francis_sawyer
francis_sawyer's picture

dipshit 2...

The idea is to END central banking... Not follow their lead...

Fri, 10/12/2012 - 16:19 | Link to Comment ATM
ATM's picture

You're always going to have someone issuing currency. We won't be walking around with silver and gold coins. A free floating exchange sytem backed by gold seems the most plausible solution. Silver with have value but it won't have the same monetary value that gold does. Gold, after all IS money. 

Fri, 10/12/2012 - 16:49 | Link to Comment francis_sawyer
francis_sawyer's picture

All I can say is... U never know what kind of shit is going to happen... OR NOT...

~~~

http://www.silverdoctors.com/freudian-glitch-comex-futures-lists-silver-at-34000oz-gold-at-17700oz/

Fri, 10/12/2012 - 16:08 | Link to Comment masterinchancery
masterinchancery's picture

The U.S. is one, many large silver bars at Fort Knox were used for uranium enrichment.

Fri, 10/12/2012 - 17:00 | Link to Comment mark mchugh
mark mchugh's picture

I've never heard anything about silver in Fort Knox. 

 

 

Government Stockpile:

 

The Defense Logistics Agency (DLA) has transferred all of the remaining silver in the

National Defense Stockpile to the U.S. Mint for use in the manufacture of numismatic and bullion coins. Under an

agreement with the U.S. Department of the Treasury, the metal will continue to be carried as DLA stocks until the

metal is consumed by the Mint. The transfer marked the end of silver requirements in the National Defense Stockpile.

http://minerals.usgs.gov/minerals/pubs/commodity/silver/880303.pdf

The 2012 report says Treasury has 220 tonnes; stockpile=NONE

http://minerals.usgs.gov/minerals/pubs/commodity/silver/mcs-2012-silve.pdf

 

Fri, 10/12/2012 - 20:21 | Link to Comment MrSteve
MrSteve's picture

For the Manhattan Project, the Army requisitioned all the silver in the government warehouse  and used it to make high-efficiency electrical wiring for the Oak Ridge, TN uranium enrichment operation.

Fri, 10/12/2012 - 15:44 | Link to Comment Jack Sheet
Jack Sheet's picture

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.

Buy/sell spreads at the coin dealer ?

Transaction costs for the futures contract? Also, must be friggin' loco  to buy metals futures after MF global.

Processing/transport/delivery costs for a 1000 ounce bar?

I bet the transaction costs, spreads and risk eat up the profit on this little scheme.

 

 


Fri, 10/12/2012 - 16:25 | Link to Comment ATM
ATM's picture

I thought the same things. Who can sell at spot plus a premium? That's the buy price unless you do a private transaction. I was lucky enough to be able to sell some silver last year at $46.50/oz in a private sale but that's a one off.

Fri, 10/12/2012 - 18:25 | Link to Comment Dr Benway
Dr Benway's picture

The story is complete fucking bullshit. When the fuck have I ever seen my bullion dealer pay spot plus 16% for PMs? LOL 

 

I just can't comprehend how anyone in this thread gives this piece of shit article any credence. Never sold PMs? Never done maths? Simon Black and his new imaginary friend Jake Lawless. Just ridiculous...

Fri, 10/12/2012 - 21:26 | Link to Comment Angus McHugepenis
Angus McHugepenis's picture

My dear Dr. Benway. Simon's articles are posted on ZH for the same reason the sheeple like watching DWTS. Hell, even we need a comical diversion once in a while. I almost pissed myself laughing when I read about "Jake Lawless"!

Fri, 10/12/2012 - 15:44 | Link to Comment Dealer
Dealer's picture

hundred ounce Englehards stack nice

 

Fri, 10/12/2012 - 15:49 | Link to Comment Urban Redneck
Urban Redneck's picture

A good delivery bar takes up a hell of lot less space than a pair of monster boxes, but doesn't work as well for sterilization of drinking water if stored/hidden/dumped in a well water tank...  decisions, decisions, decisions

Fri, 10/12/2012 - 16:06 | Link to Comment seek
seek's picture

And they're sooo satisfying to hold in your hands. The majority of the Ag holdings I lost in my boating accident were junk or monster boxes, but I did get a few 100oz bars (man, those fuckers sink fast!)

Right before the accident I handed one to my girlfriend at the time, boy did her eyes light up at holding real deal money.

Fri, 10/12/2012 - 16:11 | Link to Comment quasimodo
quasimodo's picture

And here I thought you were going to tell us her eyes lit up at holding something else.

ba da ba bling......

 

Fri, 10/12/2012 - 22:04 | Link to Comment HellFish
HellFish's picture

I got a couple RCM 100oz-ers.  I feel safer for some reason with it being a government mint - not sure why.

Fri, 10/12/2012 - 22:53 | Link to Comment philosophers bone
philosophers bone's picture

Yes. There may be a greater premium on coins due to demand, but I don't fuck around. Royal Canadian Mint 100 oz bars.

Fri, 10/12/2012 - 15:47 | Link to Comment Professordoomfinger
Professordoomfinger's picture

I like pandas - and so will our Chinese overlords

Fri, 10/12/2012 - 15:49 | Link to Comment RacerX
RacerX's picture

Ah, already demonstrating loyalty. Smart move.

Fri, 10/12/2012 - 23:50 | Link to Comment Ag Tex
Ag Tex's picture

Good luck with that one.

Fri, 10/12/2012 - 15:49 | Link to Comment AG BCN
AG BCN's picture

mute point but they are the best looking coin out there. 

Fri, 10/12/2012 - 16:26 | Link to Comment ATM
ATM's picture

I like the Roos.

Fri, 10/12/2012 - 15:47 | Link to Comment thebirdbath
thebirdbath's picture

Was all great until he started selling the idea of getting in on futures contracts.  Sure he came out ahead last time...but he may lose his shorts this next time around.  STupid!  Stack Physical!

Fri, 10/12/2012 - 17:23 | Link to Comment NotApplicable
NotApplicable's picture

Yeah, I guess he's never heard of Gerald Celente or MFG.

Fri, 10/12/2012 - 15:48 | Link to Comment AG BCN
AG BCN's picture

ASE's, Maples, Libertads, Johnson Matthey 1oz bars.

I need stuff that is easily recognised in Europe. I like the thought of junk but too messy for over here.    

 

Fri, 10/12/2012 - 15:56 | Link to Comment DosZap
DosZap's picture

There is a NEW Buffalo 1oz out, that has been IRA approved.

It has an HM on the face of it, and they are more shiny than reg buffalos.

Contact your dealers, if they are IRA approved, they are as good as Eagles,Mapes, with 1/3rd the Premium.

Highland Mint makes them.If you call them, they will deny they offer them.(but that's BS).

Evidently a Dealer only offering.

Fri, 10/12/2012 - 16:01 | Link to Comment aerojet
aerojet's picture

I looked into these PM IRAs--I don't get it, frankly.  You spend all this money on storage costs, you never see the stuff you bought so you don't even know if it is genuine or more tungsten (in the case of gold) nonsense, or what. It just doesn't ring true.  I can see doing a real estate IRA, but this metals stuff is a fool's game. 

Fri, 10/12/2012 - 15:48 | Link to Comment akak
akak's picture

I much prefer to just spend $5 to dig silver from the ground .... I mean, the shit is everywhere!

 

 

;-)

Fri, 10/12/2012 - 15:57 | Link to Comment fuu
fuu's picture

I prefer following ZeroHedgers to the lake...

Fri, 10/12/2012 - 16:07 | Link to Comment francis_sawyer
francis_sawyer's picture

You hardly even need to dig... Everywhere I look ~ all I can see is silver blobbing up...

Fri, 10/12/2012 - 16:25 | Link to Comment akak
akak's picture

And the nature of ubiquitous silver blobbing-uppityness is eternal.

US 'american' silver citizenism is all about farming the ore and exploiting the weak (i.e., lovers of fiat).

Fri, 10/12/2012 - 16:54 | Link to Comment francis_sawyer
francis_sawyer's picture

Always happy to blob with the infamous akak... lol

Fri, 10/12/2012 - 16:31 | Link to Comment Temporis
Temporis's picture

I miss Math Man.

************

Fri, 02/25/2011 - 17:34 | Math Man

But it still remains below Monday's peak.

Face it.  Silver is over.

It ran 70% in six months, but it only costs $5 bucks to dig it out the ground.

It'll be back below $20 soon enough.

Fri, 10/12/2012 - 16:37 | Link to Comment Temporis
Temporis's picture

Words of wisdom...

**************

Fri, 03/25/2011 - 17:05 | Math Man

Puts on SLV baby.  You can just keep buying and reloading... your down side is capped at the option premium. 

April 35 puts are only 70c....  if silver doesn't break in the next 3 weeks, you lose 70c.  It if it does, you make multiples on your investment.

Or you could buy silver at $37/oz and hope it goes to $40 and then cry when it hits $20 bucks this summer.

Your choice.

Fri, 10/12/2012 - 16:41 | Link to Comment b-rad-is-rad
b-rad-is-rad's picture

WTF are you talking about? SLV April 35 puts 70c?

Fucking dumbass

Fri, 10/12/2012 - 17:04 | Link to Comment pods
pods's picture

You must not remember the wisdom of MethMan.

pods

Fri, 10/12/2012 - 21:34 | Link to Comment BigJim
BigJim's picture

 - whose nature is eternal...

Fri, 10/12/2012 - 22:15 | Link to Comment francis_sawyer
francis_sawyer's picture

OMFG ~ Thanks 4 the 'MethMan' nostalgia... My "O's" lost 2nite (but my 'Nats' are taking care of bidnez so far)... I needed the humor... :-)

Sat, 10/13/2012 - 07:21 | Link to Comment Almost Solvent
Almost Solvent's picture

Don't forget the eternal Master Bates and Johnny Bravo. 

 

Fri, 10/12/2012 - 16:48 | Link to Comment -1Delta
-1Delta's picture

Agree. The OI and volume spike on the last move was amazing.  that was probably the 2nd largest move I have ever caught with a put option- though i played it with the swissy as opposed to silver ( I think corn in 2008).

Fri, 10/12/2012 - 21:38 | Link to Comment SanOvaBeach
SanOvaBeach's picture

Did mommie fold your underwear right?

Fri, 10/12/2012 - 21:49 | Link to Comment SanOvaBeach
SanOvaBeach's picture

Do u own a car or do u sucker your friends for rides?

Fri, 10/12/2012 - 21:51 | Link to Comment Moe Howard
Moe Howard's picture

A blast from the past....

Fri, 10/12/2012 - 15:49 | Link to Comment KingdomKum
KingdomKum's picture

we few,  we happy few,  we band of silver holders  .  .  .  

Fri, 10/12/2012 - 16:01 | Link to Comment Oldrepublic
Oldrepublic's picture

http://comparesilverprices.com/
check for premiums over spot for silver

Liberty coins is selling $100 face value junk silver coins today for $34.01 /oz
Simon: 35 cents over spot (or $34.40

Fri, 10/12/2012 - 15:49 | Link to Comment ziggy59
ziggy59's picture

No silver bullets for zombies?

Fri, 10/12/2012 - 15:51 | Link to Comment Frank N. Beans
Frank N. Beans's picture

wait, he sold junk silver to a coin dealer and got a $4/ounce premium to boot!?  How does that dealer stay in business?  usually the dealer pays spot at most

Fri, 10/12/2012 - 15:55 | Link to Comment knukles
knukles's picture

Snow job...

Fri, 10/12/2012 - 15:59 | Link to Comment aerojet
aerojet's picture

Didn't make any sense, did it?  Nobody gets spot when they sell back, it's the same old scam with new faces.

Fri, 10/12/2012 - 16:10 | Link to Comment AG BCN
AG BCN's picture

Simon meerly walks among us and has a very expensive watch. 

 

Fri, 10/12/2012 - 15:51 | Link to Comment GrinandBearit
GrinandBearit's picture

It's simple, you want fractional pieces:  90% junk dimes quarters halves and 1oz bullion coins... that's all that's necessary.

In a SHTF scenario, who is going to be able to "make change" for a 100 or 1000oz bar?

Fri, 10/12/2012 - 16:03 | Link to Comment knukles
knukles's picture

Historical Tip:

Way back in the Medieval Days, sorta what it'll be like for all youse wonderin' about the post SHTF days, people wore gold chains.
Why?
Because one could, with a knife, prise one link open and shave a small piece of gold/silver from it to purchase everyday items like a aromatic bitter root, get a bath, a beer or a broad.
Much more common way to carry "money" about than Sir Richard the Retarded with his leather bag of coins and jewels.

Just sayin'

Fri, 10/12/2012 - 16:16 | Link to Comment quasimodo
quasimodo's picture

So my mercury dime may get me laid after all? who knew!

Fri, 10/12/2012 - 22:19 | Link to Comment francis_sawyer
francis_sawyer's picture

I use them as ball markers on the putting green... My roommate in college [Mitch Cumstein] gave me that piece of advice...

Fri, 10/12/2012 - 15:53 | Link to Comment devo
devo's picture

Why not include war nickels?

They have the highest silver content per face value. I see them under spot all the time...gladly snatch them up. I bought 25 war nickels for $7 last week. The dude just did not want them. I don't get it.

Fri, 10/12/2012 - 16:06 | Link to Comment DosZap
DosZap's picture

Why not include war nickels?

They have the highest silver content per face value. I see them under spot all the time...gladly snatch them up. I bought 25 war nickels for $7 last week. The dude just did not want them. I don't get it.

 

Beware 1942 WAR NICKLES, they were made in Regular style, and the .350 Slvr types.

On October 8, 1942, the wartime five-cent piece composed of 35% silver was introduced to reduce the use of nickel, a critical war material. A larger mintmark was placed above the dome. The mintmark P was used for the first time, indicating the change of alloy.

Fri, 10/12/2012 - 16:09 | Link to Comment devo
devo's picture

Thanks, I didn't know that for some reason. Now I need to go check the dates. I did a "ping test" in the field and each one I tested seemed good, and I saw the dates were mostly 43-45, but I will have to check the '42.

Still, I don't understand why people dislike the nickels so much.

Fri, 10/12/2012 - 16:11 | Link to Comment francis_sawyer
francis_sawyer's picture

I'm always looking around for those...

For that matter... NICKLES [any] are worth the effort... Make it a habit to exchange $2 for a $2 roll every time you go to the grocery store... Been doing it for years... I used to also do about $20 bucks a week at the bank, but I think the banks have gotten wise... Nowadays ~ It's almost always freshly minted nickles... The 'hit' rate at nickle rolls from grocery stores is higher (but diminishing as we speak)... Happy hunting... 

Fri, 10/12/2012 - 16:25 | Link to Comment devo
devo's picture

I only started searching rolls last year, and I got about $2200 from the bank in various coinage and only found 7 dimes. The last box of dimes I ordered were all 2012 uncirculated...it discouraged me from ordering any more.

I'm bullish on regular Jefferson nickels, too. If you can store them somewhere where they collect interest it's one of the better investments.

Fri, 10/12/2012 - 16:32 | Link to Comment ATM
ATM's picture

My wife got a 1868 Indian Head penny at the grocery store a few months ago. WTF is that? Who does that?

Fri, 10/12/2012 - 20:14 | Link to Comment pemdas
pemdas's picture

Kids who get into dad's coin collection.

 

Fri, 10/12/2012 - 21:43 | Link to Comment Uncle Remus
Uncle Remus's picture

Cretins.

Fri, 10/12/2012 - 16:12 | Link to Comment akak
akak's picture

"War Nickels", at only 35% silver, entail a much higher refining-cost-per-silver-ounce than any other common silver coins, hence their lower (actually negative) premium.

Fri, 10/12/2012 - 16:22 | Link to Comment devo
devo's picture

But in a doomsday/barter situation we'll be trading them, not bringing them to a refinery.

Wouldn't they be great for small day to day transactions?

Also, they could be a good long-term investment. As all the easy silver is refined..

Fri, 10/12/2012 - 21:35 | Link to Comment SanOvaBeach
SanOvaBeach's picture

What did mommie cook yea for dinner tonight?

Fri, 10/12/2012 - 16:08 | Link to Comment pods
pods's picture

I got one for change in a soda machine a while back. Heard the ping and laughed.  

pods

Fri, 10/12/2012 - 16:35 | Link to Comment whotookmyalias
whotookmyalias's picture

I got a silver 1958 quarter in change last week.  I kept looking at it funny because I thought it was a 1985 but it just didn't look right.  My wife was not nearly as excited as I was.

Fri, 10/12/2012 - 19:51 | Link to Comment Uncle Remus
Uncle Remus's picture

They almost never are...

Do NOT follow this link or you will be banned from the site!