More On Buying Gold And Silver

In Part 1, We Looked At “Junk Silver”….

So now, before we move on to other options, let’s look at STORAGE. Silver is the first choice for most precious metals buyers, for a few reasons:

  1. Inexpensive. Silver generally is running between 15.00 and 20.00 per ounce, while gold is around 1300.00/ounce.
  2. Silver is easy to recognize, and spend. Everyone can identify older American silver coins.
  3. Not mentioned before–but you sometimes still find 1964 Roosevelt dimes, “war nickels”–1942-1944 nickels were silver, and 1965-1969 Kennedy Half Dollars, which were also partially silver.

So, what are the drawbacks to buying silver, then?

  1. STORAGE. 2.2 pounds / 1 Kilo of junk silver runs around 400.-500.00 dollars. Great price, but the coins take up space, and are heavy if you’re going to be on the move.
  2. Because it is so inexpensive, it’s getting tough to find. Even in my largish city, there are regular occasions when NOBODY has any.

Best Ways To Store Junk Silver Coins.

Around here, we roll them up, and mark each roll with the weight in grams. We also keep a few handfuls of the larger coins–half dollars, as a rule, loose so if we need to we can sell/spend them. But storing the rolls does take up space, and if you end up with 30-40 POUNDS, you’ll need a small safe. We store ours in a portable Sentry fire safe, inside the gun safe.

If you are tight on storage space, then gold is the best option, as the 1/20th of an ounce “Panda” coins, from China, are extremely small. You can easily carry a few ounces of gold in a small change purse, or more.

We also like to roll the silver as that way, it is less subject to tarnishing and easy to keep track of.

How Much Gold And Silver Do You Need, Anyway?

Well now–that depends. As a general rule, we keep about 30 pounds of silver and 10-15 ounces of gold around, though the amount of gold can vary wildly based on the amount of cash available and current prices. We try to keep enough cash around to buy a few ounces in case the price temporarily drops by more than 5% or so, or we run into a really good deal.

The ultimate goal for US is to have a year’s worth of coins around to pay bills if needed, and a few months’ worth of paper money as well. But it takes TIME to get there, and dedication–buying coins week in and week out. We taught our children to invest 10% of each paycheck into metals, with the proviso that if they needed cash for emergencies, we’d buy the coins at the spot price for the day, saving them the premium.

Wait–I Thought There Was Only A Premium On BUYING!

NOPE. Most dealers also charge you a premium when they buy gold or silver from YOU. That’s why it’s a good idea, when possible, to sell your coins to a friend or see if you can use them to pay for services. Many small business owners, self-employed professionals, and even doctors will take precious metals in payment for services–we have made arrangements in the past with everyone from the guy we bought our house from to my doctors.

The key to properly stocking up on metals is being CONSISTENT. ANY amount you can commit to monthly, or per paycheck, is a good place to start. This is especially true with silver as the rise in price is typically a higher percentage at one time than gold. It’s not uncommon for the price of silver to rise 10-15% on a “hot” day, while a change in the gold price of more than the typical premium–therefore yielding a profit for you even if you sell back to a dealer–is far less common.

By spending the same amount over time, you can take advantage of “dollar cost averaging”, in two ways. “Dollar cost averaging” simply means you spend a set amount each week or month on an item, like stocks or metals. In weeks when the market is hot, you get less. But on weeks with lower prices, you get more.

Another thing you can do with silver is when there is a good spike in price–sell 1/4 of what you have. Then, when the prices drops down again–use the cash to buy more. In the nest article, we’ll look at buying metals online, and start to look at other options, like mining stocks.


One thought on “More On Buying Gold And Silver

  1. Pingback: Investing In Gold and Silver Part 3–The Markets Option. | fortunesthoughts

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