I recommend buying silver in bars of 1 ounce to 10 ounces.( See warning at bottom of page; China is counterfeiting bars and dollars) 10 ounces are the less inexpensive way to purchase. Generally 10 ounce bars are currently goung for $2 over spot or you shouldn't pay over that unless you are using a credit card. You may be able to get 1 oz. bars for a similar or a little higher price. Dont buy the fancy special coins issued by governments or you could pay as much as $5 over spot. it is nice to have a few eagles or those canadian Grizzley Bear coins but invest mostly in plain silver just get plain bars. Bigger bars may be harder to sell and large checks received from the sale of them will likely be reported by banks to the IRS. if you buy out of state through the mail you pay no tax. if you live in Wisconsin and buy there you do pay sales tax. If you live in Illinoise and buy there you pay no tax. Many bullion dealers are in California, they charge no tax to those out of state. Remind them you are not a resident or you may be accidentally charged tax.
Another way to invest in silver is to get the old coins circulated back when silver was used in coins on a daily basis. This is also an economical way to buy silver, but you will be reported if you sell more than a bag at a time. A bag is $1000 face of coins, or 4000 quarters. Some places may not report a half bag when you sell it, it may vary from place to place, generally the less you sell at a time the less likely you will be reported to pay taxes. When selling bags or junk silver you generally get below spot (what silver market is trading at) or occassionally spot, when you buy it you may pay 'spot' or a little higher. Bars tend to buy $2 or a little more over spot and sell at spot. When you sell and get your check you can be reported by the bank when you cash your check. a computer program is tripped at $2000, $3000 and $5000. the $2000 Im not totally sure of but this is another reason I say buy silver in smaller size bars.
The following is how much silver is in each coin:
1. Morgan and Peace Dollar:
Has .7723 of an ounce of silver when melted down. they are 90% silver.
2. All half dollars from 1900 to 1964:
has .36 of an ounce of silver as melted. They are 90%
3 All quarters from 1900 to 1964:
Has .1818 of an ounce of silver as melted, they are 90%
4. All dimes from 1900 to 1964:
Have .0723 of an ounce of silver as melted, they are 90%
5. 1965 through 1970 half dollars:
have .14 of an ounce of silver as melted, they are 40% silver.Some later mint sets are also silver, they are generally proofs. 1970 halves are rare and may be worth more than their silver.
6. 1942 to and including 1945 nickels:
has .032 silver melt. These coins with the large mint mark on the back above the building are 35% silver.
if you have 100 quarters multiply .1818 times spot, the market at the time. It is around $35 right now so 100 times .18 = 18---you have 18 ounces of silver. multiply 18 times the spot price or it is around $35 now so it is worth about $630. If you sell the 100 quarters you will likely get a little less than spot for them, you might get $600 and if you buy you may pay $600 to $625 for them. they usually sell in lots of $500 face though but places do buy in smaller quantities. Coin stores may charge more due to taxes, but online bullion sellers often have some competitive prices, check a few places and compare prices before buying or selling.
I recommend having mostly bars but also have some coins because you may want some smaller units of silver as well. Do not buy rare dates or uncirculated coins, just get the "junk silver" or circulated coins (coins before 1900 are kind of rare.) Try to avoid paying a premium over the silver content for rare coins. When you buy know exactly what you are paying per ounce for the silver content or you may over pay and it will take a while for silver to go up to re-coup the spread. Generally rare coins make the seller more money than the common bars and common date coins.
Gold: I recommend US gold Eagles. Small denominations cost more per ounce than 1 ounce coins but smaller coins are easier to sell. 1/2 ounce eagles sometimes go for the same per ounce as 1 oz. eagles, watch for this when shopping. If they are the same favor buying the 1/2 ounce coins. what I mean by this is Gold may be $1400 per ounce. 1ounce Eagles may be $1435. if you can get 1/2 ounce Eagles around $717 then get 2- 1/2 oz. eagles instead of one coin. Eagles are also available in 1/10 oz. and 1/4 oz. , they may cost a little more. Canadian mapleleafs are also a good investment, they have the same amount of gold if melted but are more pure in gold. eagles are .916, and mapleleafs are .999 or 24k so they look more golden.
Gold Jewelry: look on the inside of the band or on the clasp, dont buy jewelry on the street! Only the link or clasp may be gold! The silver will wear off to reveal gold color brass on cheap jewelry, note the coppery smell or taste.Pure Gold, silver and platinum has no taste or smell and gold and platinum if even only 14k will not tarnish or taste of anything, a silver or gold plating can wear off fast revealing the bad tasting metal undernieth which may be gold in color or copper in color. 14k may have a slight taste but brass will have a strong taste,( sterling should be nearly tasteless) you may even smell copper or brass. Brass will tarnish, 14 k gold may turn a little green if outside for extended years in bad conditions but generally even 10k gold will not tarnish. Look for" 14K". If "gold" tarnishes indoors it is brass.
Gold jewelry is harder to sell and plenty of people will give a fraction of what it is worth because people do not know how it is valued.
pure gold is 24 karat or .999 fine gold. Chinese and Vietnamese Gold jewelry, many modern coins and bars
22 karat is 22/24= 91.6% gold This is Indian Gold jewelry, some coins including old American gold coins as well as modern US Eagle coins.
20 K is 20/24= .8333 or 83.33% gold-- Middle Eastern gold jewelry
18K is 75% gold-- the european standard or some europeans use it.(jewelry)
16k is 16/24= .666 or 66.6% gold astrological stone settings purity (Hinduism).
14k is 58.33% gold, most American gold like wedding rings and chains.
12k gold is 50% gold, some cheaper pieces are this in America
10k some class rings are 41.66% gold.
White Gold can be up to 18 k gold, platinum may look like white gold but platinum is much more expensive to work. Most white gold is 14k. a platinum setting will have "PLAT,or Pt, and is 90% platinum unless otherwize stated. Sterling jewelry or silverware will have .925 stamped or a lion or the word ster or sterling on the back or bottom sometimes rather hard to see. Multiply .925 by the weight in ounces of the piece then multiply by the spot price. a typical dinner fork may weigh .9 of an ounce-- .9 times .925= .8325
.8325 times $35 = $29.13. If you have a 14k 1/2 ounce chain---.5833 times .5 times $1400( gold spot price)= $408.31. Be careful many jewelry stores will only give you $100 for it because few really do their math! When jewelry stores sell 14 k jewelry like in American malls or jewelry stores they generally charge three times what it is worth in gold, at least they used to do this a few years ago. What a rip-off!
Jewelry stores often work in grams, there is 31 grams to an ounce. This will further throw you off balance when selling or buying, either have them weigh it in ounces or convert. if you have a 22k gold chain that weighs 12 grams--to find the value:
12/31 = .387 oz. .387 times 22/24 or .9166 = .3547 oz of pure gold. If gold is around 1530 SPOT price then multiply 1530 times .3547= $542. You might pay $700 for this at an Indian jeweler-a cheaper way to buy gold jewelry than the American gold jewelry. The best way to invest in gold or other metals is coins or bars.
Silver SPOT prices from Kitco.com: http://www.kitco.com/charts/livesilver.html
Gold SPOT price from Kitco.com http://www.kitco.com/charts/livegold.html
About buying and selling of silver:
If you think you will need to sell your silver or gold within 2 years and you are buying presently i would not recommend buying physical metals. instead buy SLV ot GLD or similar ETF. You will avoid paying the spread over the spot price and the ETF will perform very close to the perspective metal. Generally the fee to buy and sell is around $10 for any size order if you do the buying and selling yourself. With physical buying you can pay $2 or more per ounce and if you sell soon you could lose money even if the spot price went up-- if you buy the ETF though you will come out with a profit. Open a brokerage account such as Etrade ot TD Ameritrade and buy the ETF there.
Why buy silver and gold and the risks of ETFs:
Silver and gold are hedges or protections against inflation or financial disasters. America has a large national debt which may cause inflation. A sudden disasters could cause a fall in the value of the Dollar, it could also cause a stock market crash or a panic. if people panic, they often buy silver and gold, sometimes they have to sell it to pay margins though so there may be volatility both ways. if there are unexpected expenses silver or gold may be sold but sooner or later if things do not get better people will sell dollars and buy metals, stocks could also be sold in favor of silver and gold as in early 2009. This is why I say if you need to sell within 2 years consider ETFs because metals can correct down for a while. if you buy physical silver and gold plan to hold 3 or more years or you may lose money. keep in mind an ETF may not protect you in a big disaster but physical will as long as someone doesnt steal it on you. Keep in mind people are losing silver to robbers, one person in Wis. Rapids lost 100,000 worth of coins, some people I know lost $2000 to $4000 worth of silver they had at home. If you dont have anywhere safe to put it buy an ETF or pool account with Kitco or get a safety diposit box. Safty diposit boxes can be locked in the case of a national emergency, see your fine print when you sign up to get one. ETFs are generally safe but you have to trust that they actually have the metal to back up the investment. You can take delivery but to take delivery you have to have a minimum amount of the ETF and fees may have to be paid. I do not recommend buying silver contracts unless you have the money to pay for all of it, if you get the minimum delivery contract there is a delivery option but it may be in large bars. if you buy silver ETFs they will diversify your stock portfolio, because of silver's volatility they have a high risk rating but generally they will lower your net risk on your portfolio due to diversification benefit. ARR stock has a 120 risk and silver has around a 200 but with 20% silver (SLV) ETF and the rest ARR the risk grade is 110. ( This is not a recommendation, just an illustration of the benefit) I recommend at least 10% of all portfolios be in silver or gold no matter what stock you have!
Difference between Silver and Gold as investments:
silver is an industrial and monetary metal, it may go up with the stock market due to businesses needing it for production of various items from cell phones to jewelry. The more things we buy and build the more silver will be needed. Silver is hard to recycle and is in relative short supply. in nature the silver to gold ratio is 1 ounce of gold to 16 ounces of silver but the price is more like 1 to 35-- it varies from day to day but right now it favors buying silver.
Gold is a monetary metal, it is also more stable. Gold will not be as volatile but it will go up with inflation. Gold is a very safe place to park your money. Platinum is more an industrial metal as well as palladium and rhodium. if you want to protect your portfolio i say stick to silver and gold especially if you have limited funds. If you buy something people are not familiar with it may be hard to sell.
Warning: China is flooding the US with fake silver Dollars, fake Eagles , fake sterling chains and other fake jewelry using Ebay and other sellers. Do not spend a lot of money at any one dealer especially if they sell used or re-sold merchandise. Old silver dollars are being copied in a convincing manner in China and shipped to US sellers in the US to sell online or in stores. As far as I know dimes are safe to buy. Be careful about coins that are collectable that are vintage coins because Chinese can get a genuine one and make copies of it. Do not buy anything from known Chinese dealers on Ebay, we should boycott all Chinese goods if we can and we should consider not buying Chinese in stores as well.
Other pages of interest by same author: