Silver is rising!

GFMS, the precious metals consulting firm, expects silver to reach $20/oz short term. Gauged by the London fixing, silver prices are up 70% this year. Gold has gained about 30% in that same time period. GFMS says

Silver has benefited from gold’s strength, U.S. dollar weakness, some investors’ rising concerns at the potential for higher inflation and investors’ interest in commodities in a very low interest rate environment.

Silver coins

Silver is an investment that will do well in both good and poor economic climates, but right now the perfect circumstances are in place for a meteoric rise in the metal’s value over the next few years.  Silver acts similarly to gold as a hedge, but it also has a tremendous number of industrial purposes which means it’s supply is ever dwindling.

You may not be able to name uses for silver beyond jewelry, silverware, and photography, but silver is an integral component of both the technology and auto industries. Silver zinc batteries fuel smart cars, and as the US and China each look for ways to decrease dependence on foreign oil the demand for these will explode. Dr. Wolfgang Bernhart, an expert analyst of the auto industry, predicts that half of Chinese automobiles will be electric or hybrid by the year 2020.  The population of China is currently 1.3 billion, which means a lot of drivers. Silver also is used to make LCD/plasma tvs and solar panels, two products that are also entering mainstream use in the US.

As economies worldwide rebound, there will be an even higher demand for silver than we’re seeing now.

The American Silver Eagle Bullion coin is the only silver bullion coin that has its weight, content, and purity guaranteed by the United States Government. Each of these histortic coins are struck in .999 fine silver and carries a weight of 1.000 Troy Ounce, delivering 0.999 troy ounces of silver.

The design on the obverse was taken from the classic design by Adolph A. Weinman known as “Walking Liberty,” which was originally shown on the half-dollar coin of the United States from 1916-1947. The reverse boasts a heraldic eagle with shield, created by John Mercanti in 1986.

Released in late November of 1986, the newly introduced American Silver Eagle enjoyed astonishing sales of greater than five million. These coins were sold by the U.S. Mint at $21.00 each, with the average price of silver at $5.47 per oz. The amount of bullion minted this year was remarkable because of the shorten work year. They managed to produce 5,393,005 coins. The Proof Silver Eagle also made history by minting 1,446,778 coins, a number that has yet to be matched. In 1987, the bullion mintage soared to 11,442,335 produced. Production of the bullion coins remained above five million until 1994. The slight drought lasted until 1999, when production rose to 7.4 million. The amount of bullion coins have not dropped below eight million since 2000, and had a record setting year in 2008, where over 20 million bullion coins were produced. However, that record might be broken soon as the Silver Eagle Bullion mintage for 2009, through late August, already stands at 17,989,500.

Some of the early 1990’s proofs sell for over $100, including the rare 1995W coin which is worth several thousand dollars. The 2006 Silver Eagle 20th Anniversary boxed set, with uncirculated, proof, and the previously-unreleased proof pieces were sold at $100 each, but are now worth over $350. However, most dates of the Silver Eagle are relatively inexpensive, selling at an average of $23 each. This is a small piece to pay to be a part of the world’s best-selling silver bullion coin, with more than 130 million sold since production.

How to Buy (Buying) Silver A Comprehensive Guide

I remember when I was 5 or 6 years old. My grandparents would take care of my brother and me for the Summer up in Northern Vermont. During one of our stays my grandparents decided to pack everything up (all of their material posessions) that they didn’t want and try to sell them at a local flea market that was nestled on a nearby mountain. One morning we packed up all their old antique furniture, old electronics, and other collectors items and set off to try to sell everything. We got there early (around 6am), unpacked everything, and the day began. Being young and cute, many of our products quickly sold with me manning the tables and pushing our wares. Around noon, the traffic slowed down and I decided to venture out to the other tables to see what was available. I had some cash – the cash my grandparents promised me for helping them with the sale – and so decided to make some strategic purchases. The first thing I noticed was a great big glass display case of coins at a nearby table. There was a large round silver coin, essentially a giant penny made of silver that I absolutely had my heart set on.

Being a coin collector I immediately asked the vendor “how much for that silver coin?”

“That coin there is $15,” he replied.

“Shit!” I thought in my head I don’t have $15… I only have $5! How am I going to do this. I asked the man if the price was negotiable, if he was willing to take $10. “Sure, for you little man, I’ll sell it for $10.” Okay, I was half-way there. I told him I would be back with the money.

I scoured surrounding tables and eventually found, and bartered down, a nice set of antique dishware for my available $5. I then took the goods back to my table and was able to promptly sell it for $10. I had doubled my money from $5 to $10 in the course of 30 minutes, and I then took my new found riches to vendor next door and purchased the giant silver penny for $15. To this day I still have my silver!

And that is how you buy silver!

Okay, so you aren’t 6 years old. And you don’t have the opportunity to purchase Silver in the mountains of Vermont at a hooky flea market. What are you to do? Thankfully there are a number of resources to quell your desire for silver. Many currently in the market believe that Gold, although it will still rise, possibly even exponentially, does not have the meteoric capacity that silver has. At roughly $13.50 an ounce spot price for silver, it is a much more easily assesible metal and it’s lower denominations may come in handy should the world’s fiat currencies completely lose their value .

Where to Buy Silver

I’m a bit biased, working (and purchasing) on the web for so long I understand the power of the digital market place. In a local community a vendor may deal with dozens of competitors, online there are hundreds if not thousands of retailers competing for a slice of the pie (albeit a larger pie)  and so prices online tend to be a lot less expensive when it comes to certain items. Additionally, the efficiency that computers lend themselves to mean orders can be easily processed, shipped, and distributed with little or no over head. So where do you buy silver?

Online!

For example, we offer the ability to purchase three types of silver:

Silver Rounds – Silver Rounds resemble most other coins, but they are not issued by the mint of any country and are therefore not recognized as legal tender. They are privately minted and may have any number of designs. These, like the giant penny I purchased, are solely valued based on their weight and value of the underlying silver. For this reason these are usually the least expensive of the 3 options. You are not paying any kind of premium for the location of the mint, and their ability to be used as legal tender.

American Silver Eagle – Minted from 1988 to the present the design on the obverse of these coins was taken from the classic “Walking Liberty” design by which had originally been used on the half-dollar coin of the United States from 1916 to 1947, while the reverse portrays a heraldic eagle. This is the official silver bullion coin of the United States and has several highly collectible mintings. This is probably one of the most recognizable coins (be it silver of gold) in the world.

Canadian Maple Leaf – Resembling both it’s silver and gold counterparts, the Canadian Silver Maple Leaf program began in 1988. It features the same obverse and reverse as the other Maple Leaf designs, but certain versions have slight variations. These include: proof (1989 only), privy marks, colored maple leaf (has a different design than regular maple leaf) and the holographic enhancement 5 coin set.

Things to Look Out For When Buying Silver

Shipping & Storage – What kind of shipping and/or storage options are offered. Regardless of where you purchase these are key questions. Additionally shipping prices, much like the brokerage and trading transactions for stocks affect your bottomline. The more you pay for shipping, the less your potential gain in value should the silver move up. Keep a keen eye on these factors as well as shipping insurance.

Quality & Age – If you are buying newly minted silver coins (less than 25 years old) or silver bullion you don’t have a lot to worry about, but get reassurance from the company you go with on the quality of the silver being provided. Finally, if the coins are investment/collectors coins, make sure to verify grading before finalizing the purchase.

Found a fantastic article about the history of silver and some tips should you decide to invest in it over on Mint.com, entitled: “Looking for a Silver Lining“. For those of you unfamiliar, Mint.com is a great finance management website that allows you to tie all of your banking, credit, and finance accounts together to see a more complete and clear picture of your finances, and plan for your future. One of the greatest features it offers is a quick highlight as to where all of your money goes. Make a daily trip to starbucks? Sure it’s only a few bucks here or a few bucks there, but Mint, for better or worse, adds them up and can show you over the last month, or quarter how much you spend at each of your favorite spots. And it adds up! If only you would have made your own coffee, and invested the $1000’s of dollars you spent! In a nutshell, Mint.com is like an automated, easier version of Quicken, albeit it’s not for paying bills. And best of all they even give you suggestions on how to save your money better (better interest rates at competing banks and credit cards).

Anyway, Mint.com aside, the article on their website goes into great depth on the history of silver throughout the last 4000 years including its start as the very first form of currency. It then goes on to illustrate how and why that changed, as well as it’s value and uses in recent history.

Silver and Gold

Silver lost substantial clout when it was replaced by the Gold Standard – first in Britain in the 18th Century, and then in the US and most other economies in the 19th century. Ever since, Silver has been priced in terms of dollar-per-troy ounce, and a silver-to-gold ratio as well. In the last 10 years, Silver has effectively been exchanged at an average of 59.83 troy ounces (with very few outliers) to one troy ounce of Gold; versus the dollar, silver prices have actually increased by nearly 300%. Many attribute these effects to the concurrent rapid increase in gold values, and steady devaluation of the dollar. While silver and gold were traditionally “loosely tied” to one another – meaning that if the value of one increases, the other typically does as well – recent market conditions have have led to unique circumstances.

So, if you were ever curious about silver, I highly recommend checking out the great informative article.