As the price of silver drops and we hear more and more stories about coming possible shortages of physical silver as opposed to paper silver, this just might be the time for those of you who have not yet invested in physical silver to stick your toe in the water and get started. The first question people should ask themselves is what are you goals – what are you looking for – investment, do you think the financial system is going to collapse and you are looking for a safety net, or you are not sure and just wanted to get started?
This video gives some good starting points but I believe there are some important points that should be added. The most important thing I think to know is that today counterfeiting is widespread. American Silver Eagles are counterfeited as well as the Canadian Maple Leaf. But junk silver coins, older coins with silver content, collectible coins, bullion bars, generic rounds and just about any form of physical precious metal you might be interested in have been counterfeited. Counterfeits have gotten so good that it is no longer easy to tell them from the real by the relatively easy tests that worked in the past such as appearance, weight, size, magnetism. You can check out videos of factories in China churning out thousands of copies of older American coins often called junk silver that look genuine to the casual examiner
So although it may cost you a little bit more make sure you buy from a reputable vendor. By reputable I mean someone who has a reputation for selling genuine coins and fulfilling your order in a timely fashion. There have been instances of coin dealers being fooled and buying counterfeit coins. There have also been coin dealers selling counterfeit coins unknowingly and instances of less than reputable dealers selling counterfeits knowingly.
So the first rule should be to do your research and only buy from those you thoroughly trust. It doesn’t pay to think you are saving a few per cent or getting a great bargain only to discover what you bought is a worthless counterfeit.
The major types of physical precious metals you can invest in are:
– Junk Silver
– Private Minted Coins or Bars
– Government Issued Coins
– Fractional Silver
– Silver Bars
They all can be great options depending upon your reason for buying physical precious metals. Many people argue that junk silver is the best option because you will be paying the lowest premium. Premium being the cost above the melt value of the precious metal itself. All coins, bars, etc have some premium above the melt value of the metal to cover the costs of minting, marketing, and distribution. It is often argued by proponents of junk silver that they have the smallest easily exchangeable unit of precious metal value. It’s often argued by those who see a financial collapse coming that you will be able to trade your junk silver quarter for the value of the silver and get five or ten dollars worth of groceries. I personally believe that since there are so few people in the US that are knowledgeable about precious metals that you will have a hard time convincing you local merchant that the junk silver quarter you are offering him is worth any more than twenty five cents.
For this same reason I think you may have the same problem convincing someone that your generic round is what you say it is and worth what you claim. It seems today that there are hundreds of different firms producing generic rounds, some from well known precious metals mints and some from places I have never heard of. Since today the reliability of the easy tests to separate genuine from counterfeit can no longer be counted on and the only reliable tests either require expensive testing equipment or destructive tests like the acid test or actually cutting into the center of a coin or bar, for me this is also an option that I’ll pass on.
Bars present an attractive option since the premium is lower, especially on larger bars. However you might have the problem of convincing someone your bar is genuine and with the larger bars the unit of value may be too large for the average person to buy. Often a prospective purchaser of one of the larger and more valuable bars will require you to have it assayed befor he will purchase it. This can be quite expensive.
For me I feel the best option is to invest in government issued coins like the American Silver Eagle or Canadian Maple Leaf. I realize of all of your options the premium will probably be the highest. But in exchange for that premium you are getting one of the world’s most widely recognized precious metal coins. People know what it is and know what the value is. It is also a relatively small unit of precious metal value that almost everyone can afford. If there is a question about value you can just refer them to what is stamped on the coin for weight and check the current pricing for value. What the author of this video says is true – this also makes these coins one of the worlds most highly counterfeited coins. But I think that risk is largely eliminated if you only buy from reputable vendors you trust.
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