By John Fisher
Have you ever wondered why they are Silver bells, and not Copper bells, or Paper bells, or Government bells?? Well, there is just something about polished, shiny, valuable, tangible silver. “Don’t sell the silver (flatware)!”, mother would say!
Well, this Christmas is not just bringing presents under the tree, but also a tremendous buying opportunity afforded by investing in silver. Silver, also known as the “poor man’s gold,” has not gotten the attention it deserves.
This past year the traditional press and a minuscule (yes, minuscule) portion of the populace finally accepted the wisdom of owning some physical gold. I’ve been advocating that since the mid-1990’s. While gold continues to move steadily higher, silver gets little if any mention.
If you do not have a significant position in silver as a percentage of your precious metals investments, you are making a mistake in your portfolio!
Silver offers several advantages over gold.
Gold has increased more than 50 percent since November, 2008. The reasons include (but are not limited to) dramatic increases in central-bank buying, investor and investment-fund buying, paper (fiat) currency depreciation and inflation worries.
While gold has risen 50 percent, silver is up more than 90 percent in the same time period. Furthermore, many analysts (me included) think silver will outshine gold in 2010.
Silver has gone largely unnoticed by the traditional media and by most investors, too. Consider, too, that silver is nowhere near its all-time high of $50 per ounce, which it hit back in 1980. Gold meanwhile has risen far beyond its 1980 high of $850 an ounce. And these figures are not adjusted for inflation. Using the government (grossly understated) Consumer Price Index (CPI) numbers, the inflation adjusted highs are $2,380 for gold and $132 for silver. Both metals still have some catching up to do – gold would need to double – silver would need to increase eight times!
How much silver should you own? And inwhat form should you own it? I presently advocate a precious-metals portfolio that is comprised of 40 percent gold, 60 percent silver. I advise you hold all of your metals personally – barring extenuating circumstances.
How to Buy and Store Silver:
There are three “best ways” to buy and store physical silver. They are silver coins, silver bars and certificates. Following is some important information about each one.
Silver coins can be bought in many different forms:
• (1) ounce Silver Eagles, produced by the U.S. Mint
• (1) ounce generic silver “rounds” produce by private mints and smelters
• U.S.pre-1965 “junk” silver coins containing 90% silver content in dimes, quarters and half dollars
• (10) ounce, (100) ounce, (1,000) ounce silver bars
• Circulated Dollars, Peace and Morgan Dollars, 40% “clad” silver coinage and other forms
As with most things, it’s best to stick to the basics and not get fancy. Presently, 90% silver coins carry the lowest cost per ounce of silver content. These coins are self-authenticating, highly divisible, extremely popular and very liquid. FOR A LIMITED TIME, 500 OUNCES OR MORE ARE SHIPPED WITH FREE OVERNIGHT DELIVERY AND INSURANCE WHEN PAID BY WIRE TRANSFER.
One ounce generic silver “rounds”, while more expensive than 90% “junk” silver, are also somewhat easier to store and organize in that they come in tubes or boxes. I sell a tremendous amount of this type of silver.
One hundred ounce silver bars are the best way to hold and store large amounts of silver when the benefits of 90% “junk” silver are not of interest, or when one already holds some 90% silver. They are inexpensive and stack/store neatly.
Operating under the premise that silver is a commodity, I highly discourage the purchase of high markup (premium) forms of silver (and gold). Take for example, one ounce Silver Eagles by the U.S. Mint. These coins currently cost approximately 35% over the spot price of silver. 90% “junk” silver currently costs approximately 4.5% over spot, and one hundred ounce silver bars approximately 5.5%. Sure, when (and if you ever do) turn around and sell the Eagles, you will recoup some of that premium. However, two factors come into play here. One, just like when you drive a shiny new car off the lot, you lose a significant amount of value the minute you purchase the item. Such as it is with high margin items. Second, as this precious metals market continues to move up, all premium will begin to disappear until, at some time in the future, people will only be interested in acquiring silver with little regard for the pretty ensign on the item. In the end, silver is silver is silver. Period! It is a commodity just like corn, coal or copper. Anything more than the least expensive form of a commodity is some manner of marketing, promotion, excessive middlemen, hype, spin, etc.
Unless you can justify paying more, pay as little as possible. Over the long term, you will not recoup excess premium.
A significant portion of my personal holdings are in silver, primarily in two forms – 90% pre-1965 U.S. silver coinage and one-hundred ounce silver bars. I would be more than happy to share with you why I hold my silver in those forms.
May the silver bells you hear this Christmas represent the joy of the season and the safety of your investment.
