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The Cost of Money

Since the inception of money, many items have been used as currency, from salt to animal hides, as well as assorted other things such as precious gems. No matter what though, gold and silver have been accepted as legal tender throughout the ages. Even Judas Iscariot received his thirty pieces of silver for betraying Jesus, only to try and return it to no avail. He threw it in a field and it became a burial ground for paupers.

The year 2012 saw gold hit all time highs, retreat moderately, and kiss the highs again. Silver was a clear winner when it hit $60 an ounce for the first time since the Hunt Brothers tried to corner the market in silver.

Though most analysts and technical traders are hawking gold, due to the impending global economic collapse, the National Inflation Association named silver as the “Investment of the Decade.” Since it is much lower priced than gold and has more of an upside potential percent-wise, it makes sense to buy more bang for one’s buck.  One can purchase run-of-the-mill Morgan silver dollars for a small amount above spot silver price; however, 2005 and 2007 uncirculated with certain mint markings are worth much more than a small amount over spot silver. Also, 1921 Morgan silver dollars with the correct mint mark that have been circulated can be worth $175 or higher. One thing to remember, however, is that in times of crisis, you are often trading only on the value of the silver in the coins, not the rarity. While they may be valuable to a collector, specialty coins may not see the same investment return during a market crash compared to plain-Jane silver dollars.

As for my own collection, I do own an 1886 silver dollar that is more valuable than most. Yes, I do own some gold coins as well, but very few. I acquired them in the mid 1970s when gold was not nearly what is it now. It was trading to the buyer at $794.70 an ounce. There was a run-up later that caught many off guard when the entire gold market sold off without warning to the everyday investor.  Spot silver was trading at $5.50 an ounce (for the 500-ounce contract) at the same time—quite a spread in the prices.

New book reveals gold-buying secrets that dealers don’t want you to know about…

Most precious metals analysts and experts expect to see gold, silver, and platinum hit the stratosphere this year (Bill Gross, Bill Rogers, Warren Buffett, and El Erian, just to name a few). While the ins and outs of gold and silver cannot be explained in one simple column, it would be beneficial to do your own research and learn how to understand the workings of precious metals. You will not be sorry. In the meantime, try to purchase a Morgan silver dollar or two from a reputable coin dealer (I use Blanchard Gold Coins with offices nationwide). It will not take a chunk out of any one check, and it will be an investment you can trust in.

In other news, 2013 is shaping up to be a very tumultuous year financially. The United States is being threatened with another credit downgrade due to our fiscal problems, as we do not have the runaway spending addressed in a meaningful manner. The “bipartisan compromise” was neither bipartisan nor a compromise. For every $1 saved, there was an additional $41 in taxes created.

Regarding cost savings, the federal government has finally decided to cease minting pennies and nickels. It costs one and a half cents to mint one-cent pennies, so I do not know what has taken them so long to decide to desist in this guaranteed-loss action. Nickels are biting the dust also.

As I’ve said, expect 2013 to be a year of ups and downs in the financial market. Congress is too spineless and the White House is too clueless to make any significant dent in our budget problems. It’ll be up to each of us individually to secure our financial health as best we can through conventional and non-conventional means. Remember the Boy Scout motto—always be prepared!

Editor’s note: Mary’s financial column is featured the second Friday of each month. Check back next month for more thoughts and tips from our leading financial adviser.

©2013 Off the Grid News

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  1. I have been “setting aside” nickels and 1981 and older pennies for a while now. Some 1982 pennies were still made of copper (You have to weigh them to see which ones are which. The copper ones weigh 3 Grams and the zink weigh 2.5 grams) but it’s easy to just set aside the 1981 and older ones as they were all copper. Nickels and those copper pennies are the only currently circulating U.S. coins with intrinsic value. Since 1965, dimes and quaters have been made with a zink alloy that is worth a fracton of their face value and since 1982, pennies have also been made of coated zink. The fact that the government says it costs more to make pennies and nickels now just goes to show how far the value of our money has erroded.

  2. Some say $2200+ gold and some say $850 gold. With the never ending $85 billion per month printing press running I cannot imagine a drop below $1500. Have some gold, silver, old pennies and nickles; just wish I had the funds for some platinum 3 weeks ago.

  3. My brother bought and actual ton (2000lbs) of the first buffalo nickel minted. Not sure what nickel is worth today but he wants to make a ton with his investment.

  4. Everyone should own some oil; after that, everyone should own some gold. And, just because stacking and unstacking a big pile of troy ounce silver rounds is so much fun: Get out there and buy some. $500 will get you started. When your pile of silver gets over a hundred ounces be careful. Barack and the Congressional Fun Police don’t like it when citizens are enjoying fundamental wealth building! On a serious note: For long term investing I like holding NGC graded Silver Eagles. My local dealer only fetches an $8 premium over spot. The premium is a small price to pay for knowing the coin is the real deal. More important: When it’s time to sell the dealer is going to know it’s the real deal too. In an uncertain world that $8 premium is almost priceless. For the rookie at numismatics: Silver Eagles graded as Proofs and those with the “W” mint mark put you in a nice collectible space. Investing is about having fun, and, making some coin, eh?

  5. I’m a little confused about spot vs premium. I went to a local coin store to look at buying some silver. I asked about the price on quarters and dollars. He said the silver dollars were about $5 over spot and sale price was something (I don’t recall how much) under spot. To try to get a better understanding, I asked that if the silver spot price stayed the exact same all week, if I bought a coin today, what would I be able to sell it back to you tomorrow for? I was just trying to wrap my brain around the process. He seemed to get irritated with the question and said it would depend on other factors like how much silver he had at that point. I said, ok, how about if everything was the same? Inventory, spot price, availability, etc. What would you pay me for the coin tomorrow? Again he wouldn’t answer and really seemed irritated at this line of questioning.
    It just seems to me that if I buy one of those canvas sacks of silver quarters this month, and the price goes up $2 and ounce, I should be able to bring that same bag back next month and make a little money.

  6. FarmerTim … you’re finding out that your local dealer has a percentage “commission” on both the buy and the sell side of the transaction. Before you take that bag of coins back to sell you have to wait for the market value to exceed the “commission” the dealer needs to earn in order to stay in business. Recently I looked into selling some gold bullion I had accumulated a few years ago at only 5% over the spot price. The dealer’s buy back commission was 18% … since I’m a regular numismatic buyer at his shop I was able to negotiate several percentage points off the commission. Buying and selling precious metals and numismatic coins is a lot like buying and selling a car. Learn to haggle and you can get along with your local coin dealer just fine. If you don’t like to haggle buy and sell on-line/mail order. For me: The haggle is a small price to pay for having the metals in hand… in lieu of boxed hard assets slowly moving across Kansas in a delivery truck.

  7. I did have a couple other thoughts to add to this discussion. Why the hell bother with bags of worn out junk coins just because the coins have a silver melt value? We invest in silver as a hedge against continued devaluation of the global fiat currencies. Seems much more productive to me to just buy a one ounce round, bar, or, even better than these, a good old US Mint Silver Eagle. When you’re going to need the silver to buy unleaded gas that Silver Eagle is going to be one heck of a lot easier to barter than a bag of worn out quarter dollars nobody wanted anyway.

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