Posted on 11/10/2010 11:29:31 AM PST by GilGil
Another question for this dummy. How do I know how many troy ounces of silver is in a dime, quarter, half dollar, etc? If there’s a 10th of an oz in a dime then I’d pay a 10th of spot price plus the mark up, right? So, to know I’m not getting screwed I need to know the ounces in each coin.
I am not happy with that 16:1 or 15:1 number, even if it is “true”.
Yes, it is certainly true that for many, many years, one could walk into a bank and freely exchange 1 qty $20 gold piece for 20 qty silver dollars.
But to get the relative valuations you have to consider the compositions and weights.
A silver dollar contains .7734 oz Ag = 24.057 troy oz Ag
A $20 gold piece is 33.431 gross wt of 97% gold = 32.42 gms pure gold.
Thus 24.05 * 20 = 481.14 gms Ag = 32.42 gms gold
That is a 14:84 : 1 ratio. That has profound implications for silver. But it is also, IMHO, the source of a potential self-delusion. If gold is now ~~~$1400, then shouldn’t silver be ~~~1400/15 = $93?
The number of year that was in effect was large, so when you say “long term”, that “long term” is distorted by the relatively limited amount of time that gold and silver have had actual market prices applied to them. Yet for all those years, gold was artificially priced at $35 an ounce. So, comparisons to that number are by nature distorted, IMO.
Silver will probably never get back there, because price rises in silver cause KILOTONS of “sleeping” silver to be coughed up from sterling silver flatware.
But it could get halfway “there”; “There” being say 1/30th the price of gold, 1400/30 = $46. Yes, it certainly could.
Even if gold were to collapse to $1000, then silver should hit $33.
There are many, many factors, all of which have been discussed at exhaustive length in many places.
What the heck is anyone, normal person that is, going to do with $5000 worth of gold?
Wear it of course!
That information is here:
www.coinflation.com
BUT junk silver is typically NOT traded on silver content, it is traded on the current multiple of face value.
If I go here: www.amark.com in the top center I will see that a $1000 bag of silver junk is $19,576.x meaning a 1961 silver dime is worth $1.9576 of silver. Almost 20 times face!!
BUT YOU (nor I) cannot attain that number on a sale, that’s what it will cost to buy. Like stocks, metals have a bid x ask structure.
Additionally, turning in scrap silver to a refiner has at least 6 separate frictions ALL OF WHICH work against you:
1: The cost of shipping to you when you buy it
2: The cost of shipping (insured, please!) to the refiner
3: The fact that the refiner will give you only 90% of the value of the refined silver (fair enough, you do not have to maintain nor fuel a 2000 degree furnace)
4: The fact that sterling silver is generally not “yielded” as .925, more commonly .915
5: The fact that the refiner will take off 1% for what is lost in the “pot”
6: The fact that your goods arrive at the refiner on day “X” and are processed about a week later, on day “X+7”. And the utterly uncanny thing is, the day the refiner gets done with your goods and weighs them, will be the lowest price silver hits during that week. How do they figure out what that day/hour is?
One refiner whom I have dealt with: www.midwestrefineries.com
I noticed your post saying silver was crushed. Why did you forget to note that Gold was down DOWN $ 50.00 today as well as silver. ???
Because a $50 hit on $1400 gold is a 3.5% hit, while a $2 hit on $28.7 silver is nearly a 7% hit. Plus, gold has been threatening these levels on a “creep up” basis for at least a few weeks. Silver is brand new at 28-29, having shot up for 3 successive days 4%,5%, quite parabolic. COMEX also raised margin req’ments on silver contracts, which is always good for a flush.
I like them both, I just happen to own loads of silver and pay attention to it more.
Anybody who watches metals should know that they have a tendency to have trouble at “round numbers”. Gold is now touching 1000 Euros, so there is that familiar form of indigestion from over the pond. Silver has been somewhat remarkable in the authority with which it blasted over $25. Long time watchers should be at least modestly surprised and SHOULD NOT be surprised to see it return there. I myself am comforted to see silver’s writhing take place sufficiently above $25 so that it can hold onto $25. Gold has not convinced me it will hold $1400, it’s only been $10 over. Still. These metals can take very long periods of time to attain and maintain higher levels. Silver took a hell of a long time to surpass $15. And $10.
What the heck is anyone, normal person that is, going to do with $5000 worth of gold? Barter it?
Or, you might do something so radical as to exchange it for smaller gold pieces, or silver pieces, or currency you intend to spend before inflation eats it too much.
Why is this so hard to grasp?
LOL. Yes it is. Unless the writer of this article is a mega gold holder or sits on the Federal Reserve Board, he has no idea what the price of gold will be in the future. However, there is one thing for sure: the price of gold will fluctuate.
I think the article was trying not to encourage the uninitiated into buying gold. Most people do not understand gold but the greedy will see an article like this and buy something they do not understand. When gold goes through its ups and downs the same uninitiated will sell at the wrong time and get their clocks cleaned.
I think the author was focusing more on the idea that gold going up means there are big problems everywhere.
I just wish someone would tell me what I should pay per ounce of silver. Either “junk” silver or silver dollars. Yesterday a dealer quoted me a 10% charge above current market prices. Is that way too much?
If you are buying less, shop around for a dealer, and negotiate the markup. be educated about what the larger sellers are selling for (and buying for (so you don’t ask for too much or too little).
eBay is a good source of rolls of silver coins in various quantities. Be prepared to do some bidding at just-right prices before you win, because some will overpay.
Interestingly, I or anyone else could run a business buying $20,000 bags of coins at spot, and selling them for 5-7% over spot on eBay (or to folks like you). The 3% paypal charge is a pest, but you get the idea.
Consider an ETF. This lets you “average in” without big premiums, although when you sell to make a big bullion buy, you may have taxable gains.
“Averaging i”n is critical. At very minimum, buy in two chunks. One now, and one in a month or two (or six months). Better still, six buys over a year or so. Buying everything at a momentary peak would be much more painful than buying half at a low price, and half at a somewhat higher price (after your first half has gained) during this bull rise. You could also buy half now, and vow to buy the other half when prices either increase or decrease by 10%, or 4 months pass, whichever comes first (insert your own numbers). Or, if you buy a few rolls a week on eBay, you’re doing this naturally.
Try to “buy on the dips”. Actually, this isn’t quite right, because a “dip” is a drop followed by a rise, and when you have the rise, it’s too late to buy at the low price. So buy on the “drops” (which is much more stomach-churning). Look at how much the market has dropped from previous peaks on the current multi-year runup, and consider watching for that kind of drop (5-10%?)
You asked about silver, and that is probably best, especially familiar “junk” US silver coins, which will always “spend” easily. But if you want to “save” money on Christmas gifts, look around for small jewelers that are buying gold. Tell them that before they send anything to the smelter, you might be interested in buying a nice gold piece (necklace, bracelet, etc) in the $xx-yy price range. Offer to pay full spot, which is 5% above what they are getting from the smelter. You’ll always be able to sell it on ebay for about the same price (assuming gold price remains the same), and you won’t have wasted money on another junky Christmas gift.
Ummm...I grasped it about 20 posts ago. :) Thanks, though.
>>This guy told me bars, junk, silver dollars are all different prices per oz. Is this true?
Yes, look at http://www.tulving.com/goldbull.html for market prices. Note carefully what they are buying for.
>>I seem to remember reading somewhere that each “junk” coin has different percentage amounts of silver depending on the size.
Except post 1964, they’re all 90%. Multiply face value by .715 to get silver content in troy ounces.
>>And, again, how much over spot should you pay?
As little as possible (10% might be too much for dimes and quarters - keep shopping).
Also, you might agonize over a few percent in markup, and then watch prices go up by 10% while you’re on the sidelines.
One risky option is to find friends who are looking for the same thing, and split a big bag. This risks revealing a delicate security matter, especially to those who decline the deal, and think you’re nuts (until they blab to their lowlife pals who later rob you). So keep your possession of precious metal an ABSOLUTE secret, including from family members who have no critical need to know. Otherwise, you’re putting a home-invasion gun against the head of a loved one. Plenty of people WILL gladly kill for a couple thousand in silver they can easily fence for full value.
As for the price... Silver usually bounces between 25 - 80 to 1 compared to gold. I think the avg is in the 40s.
The Silver to gold ratio is currently 52 : 1
And if platinum (now $1740) equalizes to gold price ($1400) buy platinum, because it will soon return to higher prices faster than gold (at least, so I have been told).
The long term historical ratio of silver to gold has been about 16 to 1...
Not a very good indicator for making transportation decisions today.
Not in 40 years has the ratio been that low. In the last 100 years (excluding the last 25) the ratio has been more like 30.
Platinum = ehhh, problematical, IMHO.
Automakers have apparently figured out how to use palladium (another interesting but phenomenally illiquid speculative precious metal) in their cat converters, which is a permanent dent in the demand market for platinum.
I have to confess that I watch Pt only through the corner of my eye. But among all these metals, I would be most hesitant on Pt returning to prior frenzy highs. After all, gold & silver at at secular highs. Pt was over $2100 a year and a half ago or so, no?
Don’t get me wrong, anybody who acquires sufficient knowledge can make money trading anything they know enough about. Pt will almost certainly rise if the remainder of the PMs rise. No argument. But a HUGE demand component of Pt’s former high prices has been permanently, it seems, removed.
How do I know how many troy ounces of silver is in a dime, quarter, half dollar, etc?
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