What type of silver to buy.
Posted 14th March 2010 at 02:33 AM by Andyhenry
'Junk-Silver'
The term junk silver is used by countries such as the United States, Canada, the United Kingdom and Australia to denote items that contain silver but are not necessarily up to the standard that an investor would seek. For example, your family silverware is probably not something an investor would be looking for, but nevertheless is valuable and is silver. The same applies to many old coins that have other metals in them.
Those coins often don't have any value for coin collectors but are valuable when it comes to the amount of silver they contain. Different coins have a different amount of silver in them. Some are 90 percent pure silver, some are only 65 percent pure silver, but the junk silver always has some silver in it and as such it is valuable to silver investors.
Obviously, coins and other collectibles all are a little bit more expensive than just buying raw blocks of silver. That is because the sellers of those collectibles expect you to understand the value that comes from the fact that it's a coin, that it has a pattern on it, that it has been handmade, et cetera. They will ask you to pay for the fact that the coin is unique. If you are not interested in that, you'll be much better off, and it will be a much decision financially to invest in regular silver.
On the other hand, if you don't have a huge amount of money to invest, and if you just want to kind of play around with the idea of buying and selling silver, then collectibles may be a good idea for you. This is a good start that will get you on the right track when it comes to dealing with silver. If you buy junk silver, you will not spend much money, and you'll still be able to learn from experience and by practice what it takes to be successful when trading silver.
That knowledge alone makes it worthwhile to you to invest in junk silver so if you just have a couple hundred dollars to work with, then I encourage you to do this. If you're in the US then you may already come across a lot of junk silver every day in the coins you have when buying goods and services. Check the dates and start to keep any old silver coins minted prior to 1965. Today, you rarely see these pre-1965 U.S. 90% silver coins in circulation because although these coins are legal tender, their actual and true value is substantially higher than the coins' face value but since they are out there, keep your eyes open for them and you could start a silver collection with no actual investment capital.
As we know that there are different types of investors and different kinds of silver would meet their needs. Basically, there are two types of silver investments: The first and traditional one is to buy an amount of material silver which is sold in different shapes. The second, more abstract way, is buying shares, funds, accounts and certificates.
Material silver can be bought in bigger or smaller pieces, bars, coins, jewelry, in different states of pureness, and even in abstract shares and funds. Let's take a look:
Bars:
According to standard, silver bars are made of 99.9 percent pure silver, or 0.999 fine silver. There are different sizes and weights, from less than one ounce (oz) up to 1000 oz. The most common sizes offered on the market are one kilogram, one ounce (31.1 g), ten ounces (311 g), and five grams. Silver bars are sold from specialized traders, or in some countries over bank counters.
Coins:
Coins can be bought either as original coins such as old U.S. half dollars, quarter dollars and dimes, which until 1964 were made of 90 percent silver, or 22.5 g silver per dollar. Many countries used silver coins in the first half of the last century. However, since the 1960's, minting silver into circulating "real money" coins isn't tenable for governments because of its important value increase during last century, so silver has been almost completely substituted by other alloys.
The second types of silver coins are the bullion coins minted out of 99.9 percent silver bars as a raw material. Different countries minted collectible silver coins in different years between 1988 and 2009: Canada, Mexico, China, America, Australia, Great Britain, Austria and Russia. The standard bullion coin weighs 1 ounce, with different degrees of purity, although there are some varieties of sizes available.
Apart from the governmental coin minting, there are also numerous privately minted silver coins, called rounds. It is common for these rounds to have a fixed weight of 1 ounce, and a purity of 99.9% and to be issued by different kind of companies all over the world.
The great difference between coins and bars is that in order to determine the value of a silver coin, apart from its physical value given by weight and pureness there must be considered the numismatic or collector's value of a coin. Age, rareness, and provenance can determine the value of a silver coin just as much as its weight. So, the market value can be higher than the physical factors - an advantage which can easily turn into a problem because there are fewer buyers so it could be harder to sell and convert to money.
Jewelry:
Although jewelry is a very traditional way to buy silver, it is not really considered in the investment manner to which we're referring because we're looking for reference to the spot price for our calculations and jewelry does not align with that.
Certificates:
A certificate is a symbolic buy of silver without having to store the physical silver bar. The advantage clearly is that the buyer can purchase silver over larger distances without shipment of the silver bar. A certificate represents a certain amount of silver and its value depends on the actual silver value.
There are other things you can buy when you want to invest in silver, but these are the most well known and common and more than enough to get you started.
If you don't want to store the silver, you can buy it and sign a contract. This contract states how much silver you have, what the purity of the silver is and other important factors.
The problem is that the United States and other countries in the world don't necessarily have the physical silver to back those contracts. They don't have the actual metal. Although they were supposed to exchange those contracts for the silver, which you should always be able do because in fact it is your silver, they would not be able to provide you with the actual metal.
What does this mean? It means that if the investor pressed to get the silver that he owns, they would have to go and buy this amount from other people that own the metal physically. Of course, when your customer is so pressured, so desperate to buy, the prices are going to go up.
Imagine this situation: let's say you just bought a metric ton of silver. You have it somewhere stored in the bank, or another storage facility. You own it. It's not just a contract that you have signed, you were actually given the metal.
Now let us say that someone comes to you and says that they want to buy the silver from you. Now, if you know that the reason they want to buy it from you is and they are under pressure to fulfill a contract for the metal, you'll be able to ask almost any price you want.
That's why, silver being at $15-$17 an ounce right now, is such an amazing investment, and such a great opportunity. The fact is, the United States does not have any silver. It has been trying to sell to increase the value of the dollar, but it is out of the silver and doesn't have any more.
I don't have to tell you what it means to someone who has it. I don't have to tell you how it changes the situation for them.
Now the whole thing I described may sound strange to you, and even a little shocking, but its truth. If you accept it and start investing in silver, you will always be secured because there is less silver on the face of the earth and there is less silver above the ground than is needed.
Andy Henry is the author of 'Now Invest In Silver' a beginners guide to investing in silver and the owner of http://www.nowinvestinsilver.com and http://www.sellingyoursilver.com the new auction site dedicated to silver buying and selling.
The term junk silver is used by countries such as the United States, Canada, the United Kingdom and Australia to denote items that contain silver but are not necessarily up to the standard that an investor would seek. For example, your family silverware is probably not something an investor would be looking for, but nevertheless is valuable and is silver. The same applies to many old coins that have other metals in them.
Those coins often don't have any value for coin collectors but are valuable when it comes to the amount of silver they contain. Different coins have a different amount of silver in them. Some are 90 percent pure silver, some are only 65 percent pure silver, but the junk silver always has some silver in it and as such it is valuable to silver investors.
Obviously, coins and other collectibles all are a little bit more expensive than just buying raw blocks of silver. That is because the sellers of those collectibles expect you to understand the value that comes from the fact that it's a coin, that it has a pattern on it, that it has been handmade, et cetera. They will ask you to pay for the fact that the coin is unique. If you are not interested in that, you'll be much better off, and it will be a much decision financially to invest in regular silver.
On the other hand, if you don't have a huge amount of money to invest, and if you just want to kind of play around with the idea of buying and selling silver, then collectibles may be a good idea for you. This is a good start that will get you on the right track when it comes to dealing with silver. If you buy junk silver, you will not spend much money, and you'll still be able to learn from experience and by practice what it takes to be successful when trading silver.
That knowledge alone makes it worthwhile to you to invest in junk silver so if you just have a couple hundred dollars to work with, then I encourage you to do this. If you're in the US then you may already come across a lot of junk silver every day in the coins you have when buying goods and services. Check the dates and start to keep any old silver coins minted prior to 1965. Today, you rarely see these pre-1965 U.S. 90% silver coins in circulation because although these coins are legal tender, their actual and true value is substantially higher than the coins' face value but since they are out there, keep your eyes open for them and you could start a silver collection with no actual investment capital.
As we know that there are different types of investors and different kinds of silver would meet their needs. Basically, there are two types of silver investments: The first and traditional one is to buy an amount of material silver which is sold in different shapes. The second, more abstract way, is buying shares, funds, accounts and certificates.
Material silver can be bought in bigger or smaller pieces, bars, coins, jewelry, in different states of pureness, and even in abstract shares and funds. Let's take a look:
Bars:
According to standard, silver bars are made of 99.9 percent pure silver, or 0.999 fine silver. There are different sizes and weights, from less than one ounce (oz) up to 1000 oz. The most common sizes offered on the market are one kilogram, one ounce (31.1 g), ten ounces (311 g), and five grams. Silver bars are sold from specialized traders, or in some countries over bank counters.
Coins:
Coins can be bought either as original coins such as old U.S. half dollars, quarter dollars and dimes, which until 1964 were made of 90 percent silver, or 22.5 g silver per dollar. Many countries used silver coins in the first half of the last century. However, since the 1960's, minting silver into circulating "real money" coins isn't tenable for governments because of its important value increase during last century, so silver has been almost completely substituted by other alloys.
The second types of silver coins are the bullion coins minted out of 99.9 percent silver bars as a raw material. Different countries minted collectible silver coins in different years between 1988 and 2009: Canada, Mexico, China, America, Australia, Great Britain, Austria and Russia. The standard bullion coin weighs 1 ounce, with different degrees of purity, although there are some varieties of sizes available.
Apart from the governmental coin minting, there are also numerous privately minted silver coins, called rounds. It is common for these rounds to have a fixed weight of 1 ounce, and a purity of 99.9% and to be issued by different kind of companies all over the world.
The great difference between coins and bars is that in order to determine the value of a silver coin, apart from its physical value given by weight and pureness there must be considered the numismatic or collector's value of a coin. Age, rareness, and provenance can determine the value of a silver coin just as much as its weight. So, the market value can be higher than the physical factors - an advantage which can easily turn into a problem because there are fewer buyers so it could be harder to sell and convert to money.
Jewelry:
Although jewelry is a very traditional way to buy silver, it is not really considered in the investment manner to which we're referring because we're looking for reference to the spot price for our calculations and jewelry does not align with that.
Certificates:
A certificate is a symbolic buy of silver without having to store the physical silver bar. The advantage clearly is that the buyer can purchase silver over larger distances without shipment of the silver bar. A certificate represents a certain amount of silver and its value depends on the actual silver value.
There are other things you can buy when you want to invest in silver, but these are the most well known and common and more than enough to get you started.
If you don't want to store the silver, you can buy it and sign a contract. This contract states how much silver you have, what the purity of the silver is and other important factors.
The problem is that the United States and other countries in the world don't necessarily have the physical silver to back those contracts. They don't have the actual metal. Although they were supposed to exchange those contracts for the silver, which you should always be able do because in fact it is your silver, they would not be able to provide you with the actual metal.
What does this mean? It means that if the investor pressed to get the silver that he owns, they would have to go and buy this amount from other people that own the metal physically. Of course, when your customer is so pressured, so desperate to buy, the prices are going to go up.
Imagine this situation: let's say you just bought a metric ton of silver. You have it somewhere stored in the bank, or another storage facility. You own it. It's not just a contract that you have signed, you were actually given the metal.
Now let us say that someone comes to you and says that they want to buy the silver from you. Now, if you know that the reason they want to buy it from you is and they are under pressure to fulfill a contract for the metal, you'll be able to ask almost any price you want.
That's why, silver being at $15-$17 an ounce right now, is such an amazing investment, and such a great opportunity. The fact is, the United States does not have any silver. It has been trying to sell to increase the value of the dollar, but it is out of the silver and doesn't have any more.
I don't have to tell you what it means to someone who has it. I don't have to tell you how it changes the situation for them.
Now the whole thing I described may sound strange to you, and even a little shocking, but its truth. If you accept it and start investing in silver, you will always be secured because there is less silver on the face of the earth and there is less silver above the ground than is needed.
Andy Henry is the author of 'Now Invest In Silver' a beginners guide to investing in silver and the owner of http://www.nowinvestinsilver.com and http://www.sellingyoursilver.com the new auction site dedicated to silver buying and selling.
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