Investing in silver

I see one of the silver dealers on the web reminding us that the high price for silver in 1980 was $49 per ounce. Adjusted for inflation, this would be $132 today. The implication is that silver today is a tremendous bargain. This may be the case, but there is a major problem with the analysis. Silver only hit $49 for an instant in 1980. It's typical price was much lower. The price of silver was manipulated by the Hunt Brothers. By hoarding the silver, the price skyrocketed. The problem was that when they tried to sell, the price collapsed.

Silver Bullion coins

Silver American EAgleOne way of investing in silver is to purchase and store the physical metal. The United States prduces silver American Eagles in the same manner that they produce gold an platinum bullion coins. "Collectable" silver eagles, struck in proof hav been made available to the general public by the mint. Shortages of silver blanks, however, has led the mint to cancel the production of proof coins in recent years. The "regular issue" silver American Eagles are sold to distributors for resale. The problem here is that in order to buy them, one has to pay the mark-up, which has improved in recent years. Currently the coins can be found for about $2 above the silver price.

Buying old silver coins as bullion

A cheaper way of getting silver bullion is to acquire older US coins. Prior to 1965, United states dimes, quarters, and half dollars were struck in 90% silver. Half dollars contain 0.36 ounces of silver, while the quarters have 0.18 ounces and the dimes have 0.07 ounces. As a caution, these are the weights when newly minted. As coins wear down and grow thin,thier acutal wights can be less. These coins are readily available by the roll or bag, often for very little mark-up. Kennedy half dollars minted between 1965 and 1970 were composed of 40% silver. The cheapest way to acquire bullion is to purchase war nickels minted between 1942 and 1945. War nickels are 35% silver, with each coin containing .056 ounces of silver. Besides official coins from the US mint (or a foreign mint) there are many private companies that mint silver rounds, generally containing an ounce of silver.


Storing Silver bullion

While an ounce of gold or an ounce of platiinum is way over $1000, an ounce of silver is under $20. While $10,000 worth of gold can hide inside a desk drawer, $10000 in silver takes a good amount of space. I have heard of people burying the silver in the backyard, hiding it in closets, or putting it in a fireplace flu.