Gold versus silver, what are advantages

[Jose Diablo]

I have become very pessimistic about the value of paper currency. Recently I converted dollars to silver bullion, both coin and bar of various weights. I am only interested in melt value and will not pay a premium for collector value.

I choose silver because the value exchange,if paper became worthless, is small enough and would closely match items needed (like food) to be exchanged if a total collapse occurred. I now wonder if there is some hidden, to me, reason gold is better than silver or visa versa for holding value during a currency collapse.

Gold is more portable for sure, but are their better reasons to use gold over silver? Both gold and silver have "intrinsic value" due to needs in industry. Is one more favored?

[kclown]

1. Some of silver's industrial value is in conventional photography,

and that's on a steady decline.

[gmoney]

2. I'm on the lead standard...

If the country and the economy get to the point where the only way to pay for something is trading gold and silver by weight, and the survivalists are proven right, I'll just put a hunk of hot lead through my temple...

[Jose Diablo]

5. I am cautious, not a survivalist

I don't plan on living in a cabin in the woods. To me it is about planning for the worst and hoping for the best. It doesn't hurt to hold metals as a hedge against the worst that can happen. No tinfoil hat here, just caution.

[madrchsod]

3. gold is the standard

thru out history. always will be.

[EstimatedProphet]

4. Either one is good

Gold is somewhat more desireable "emotionally", so there's the greed factor to figure in.

[FloridaPat]

6. Gold prices go up and down dramatically. Silver hasn't

done much in the last 50 years. There was a small run-up several decades ago when two brothers played the market and ran it up. They got caught and I think they went to jail.

As for gold, I got into that for the same reason. But watch the bid and ask price. You loose 1/3 of your investment immediately.

Someone said you can have an account at a bank done in Euros. Any bank should do it and it's suppose to be easy to do.

[Jose Diablo]

7. Yes, I remember it was around 78 or so

Silver went from $5 to about $50 when gold went from $100 to close to $850 per ounce.

It was almost overnight silver was back under $10.

The guys were from Texas if I remember right, first name "Bunker" I think, forget the last name. They had managed to get 2 billion ounces. At least thats how I remember it.

I though about other currencies, but figured if the dollar tanked, the rest would too.

I didn't buy from the commodities market on the silver, I used a dealer. The price was about $.25 per ounce over Kitco quote, I think thats the spot market, right?

[EstimatedProphet]

8. The Hunt brothers

Nelson and Bunker.

It would have been nice to have had silver then! Wow, what an increase!

[Art_from_Ark]

10. A brief history of silver

Silver's price was relatively stable for a long time. In the 1930s, it was a little more than 60 cents/ounce. In other words, the intrinsic value of the silver coins of the day was about half of the face value ($1.29 in 90% silver coins = one troy ounce of silver), meaning that the Mint was making about a 50% profit from every silver coin it produced. That started to change in the late 1940s and early 1950s, when demand for photography products (and other uses requiring silver) began to dramatically increase.

Gradually, the silver price began to rise so that by the early 1960s, the silver in the coinage was approaching its face value. Experiments were conducted with cheap substitute alloys until an alloy composed of mainly copper with some nickel was found that would produce the desired metallurgical characteristics (same ratios as the alloy used in the 5 cent pieces). The Coinage Act was then passed into law in 1965 to eliminate silver from dimes and quarters, and reducing its purity in halves from 90% to 40%.

Silver rose to above $1.29/ounce after that, making the silver in coins more valuable than their face value and putting Gresham's Law into effect (bad money drives out good). Silver coins were being sold at about 10% above face until approximately 1968, when the government stopped redeeming silver certificates and Canada stopped making silver coins.

The price of silver got another boost in 1969, when restrictions on melting silver coins were repealed. Two years later, after the last bit of silver was removed from circulating coins (when the half dollar officially became completely non-silver), silver had risen to near the $2.00 level. By 1973, it had doubled in price, and would seesaw for a bit until the Hunt Brothers tried to corner the market in 1979-80.

[54anickel]

11. Thanks Art, so do you have a feeling or any speculation on the

future of silver? There will be decreased demand for photography products, yet increased demand for certain electronics.
Does silver still have that intrinsic "monetary" value? Is it still a good buy at 6-7 per ounce?
Curious what your thoughts are, as you seem very knowledgeable in PMs from your posts on the subject.

[Art_from_Ark]

19. My feeling about silver

Silver has been called "the poor man's gold" in that it is much cheaper than gold and nearly anyone can own an ounce or more if they want to. However, silver has been a disappointment since the market crashed in 1980 (although you could still get 9 times face value for "junk" silver in 1981). With a few exceptions (such as when Warren Buffet started loading up in 1998), the price since then has been lackadaisical or downright frustrating.

What's more, silver has been falling behind behind its historical proportion to the gold price. When the Mint opened for business in 1793, the world ratio was about 16 -1 (sixteen ounces of silver equal one ounce of gold). An effort was made to support this ratio throughout the 19th century, but the vast quantities of silver that were being discovered and mined outstripped the traditional proportion of new gold, leading to calls in the US for "demonetizing" silver (I've never understood this concept), and spurring Germany to adopt the gold standard in 1871 (it was the second European country to do so-- Britain adopted it in the 1820s). By the time the gold standard was officially adopted by the US in 1900, silver had become a subsidiary coinage. I have read that in some places, there were even different prices for goods, depending on whether they were paid for in gold or silver-- or paper. (It always gives me a laugh to see cowboys in Westerns getting paid in paper money, because people in the West hated paper and preferred precious metals).

At any rate, the current silver-to-gold ratio is close to 70-1, meaning that since 1793, gold has quadrupled versus the price of silver. Having sat on a holding of silver coins since 1989, I haven't seen any good really good chance to sell, except in February 1998, but I did not have access to my coins at that time. The only silver that I've sold recently has been some 1996 silver eagles, which apparently have collector value now! The 1994s are also a good date if you can find them, as are the 1986s. I don't know if any other dates have come into collector demand.

So in a nutshell, if you want to invest in silver, be prepared to hold on to it for a while. Or you can try your luck in finding "special date" silver eagles. Don't mess with the 90% "junk" silver, unless you want to try to build date collections of Roosevelt dimes or Washington quarters.

[54anickel]

20. Thanks Art. Helpful as always.

I've recently picked up some silver eagles, not so much for collecting interests, but more of a "safety" net for survival in case of hard times. I don't mind sitting on them forever, that would be better than ever having to need them.

I picked up a couple of silver pandas as well, simply because I found them to be absolutely beautiful. Those I have taken a hankerin' to collecting.

Thanks again.

[Art_from_Ark]

21. The silver pandas are quite beautiful

I have a gold 1/10 oz panda, and the "tiger eye" effect of the temple is striking.

The silver eagles are nice, too, especially the ones with the brilliant luster*. I still have a couple of rolls, but I don't know if I could get what I paid for them. If there is a collector market for them, though, I would definitely be in the market to sell, because I could always recycle the cash into newer eagles at a lower price and end up effectively getting a few extra eagles.


*Note: Luster must be NATURAL. It is very bad to polish coins, take an eraser to them, or otherwise try to artificially enhance their shine. Dealers can spot an amateur shine job a mile away and will deduct from their buy price accordingly.

[54anickel]

22. I didn't know about the "no polish" rule. Good to find out now,

since I was thinking about ways to get my eagles to shine like the pandas. I'll just leave them alone now. Thanks!

Always learning things here. :hi:

[Art_from_Ark]

23. Absolutely, polishing is "verboten"!

At a recent coin show in Tokyo, I saw a $10 gold piece that had been polished at one time for use as a pendant. If it hadn't been tampered with, it would have been worth about $350. As it was, the dealer was happy to get rid of it for $200.

At the same show, I saw a Mexican 50 pesos (37 grams of pure gold) that not only had been polished, it had also been brutalized with an eraser. The dealer was selling it for less than the actual value of the gold (usually they're sold at a nice premium to the gold value), so I'm sure that his buying price was even less than that.

[54anickel]

9. Here are a couple of articles from different perspectives on Silver

I think a bit of both is good to have around if you are into the market as a "survival" investor. There's a bit of blather on that as well. I've included that link as well.

http://www.financialsense.com/editorials/morgan/112202.htm

http://www.gold-eagle.com/editorials_03/bainerman120103.html


http://certifiedmint.com/y2k-1.htm

[Jose Diablo]

12. Thanks for the links

This is the type of information I wanted.

[54anickel]

13. You're welcome. I think there are many of us in the same frame of

mind as you these days. Not looking for a quick buck, get rich scheme, but rather preparation for a time we all hope doesn't come.

JMHO, I think both PMs are still a decent buy, not too overly priced so that if they would revert back to their "average" values you wouldn't loose your shirt, and you still have something tangible to hang onto for the next possible rise. Certainly can't say that about today's equities.

[Jose Diablo]

14. It is hard for me to understand the relative value

of gold or silver versus dollars.

I look at what a dollar can buy today versus say 20 years ago and compare that to what gold/silver could buy 20 years ago. I think the dollar has diminished far more than the price of gold/silver has gone up.

It seems to me both gold/silver are way under priced compared to the dollar. More so for silver.

It was once said that a ounce of gold will by 20 barrels of oil. Not today. To me that means gold is under priced as compared to oil. But wait, is it the dollar? Or has oil gone up in relation to everything else? You see my confusion?

Using precious metal as a 'standard' for money has its own problems. But one of those problems is NOT determining relative value between different commodities.

[BeHereNow]

15. All I know is...

The PMs will always have SOME value-
can't say I believe the same where the dollar is concerned.
So, the way I see it, having SOME PM means you will always
have some assets.
TPTB are manipulating the hell out of everything, that's
for sure.
BHN

[54anickel]

18. The buck will always be worth at least the 1/3 of a cent the paper

it's made out of, could maybe add another 1/5 for the fancy colored ink these days.
:evilgrin:

Good to see you BHN :hi:

[54anickel]

16. The fiat buck has confused things, hasn't it.

20 barrels of oil, a decent suit (toga) with a pair of shoes (sandals). Using a lowball of $25 for oil puts gold at $500, the suit and shoes would be 500-600, depending on where you shop.

I don't know if gold and silver will see their relative values again, but my bet would be on the side of history. I think anything under 420 an ounce is a bargain myself, but who knows.

Much luck and wisdom on your ventures.

[Jose Diablo]

17. Not to be a chicken little

but I have also heard a saying, "we are always one meal away from revolution".

This should be remembered by the cheap labor conservatives.