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Thread: Buying Gold and Silver

  1. #1
    Regular Member Nevada carrier's Avatar
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    Buying Gold and Silver

    Recently, I've purchased a small quantity of silver bullion coin because if global unrest upsets the dollar more than it's already been upset, I have something that can hold value. When I say small quantity, I'm talking about 20 bullion Silver Eagle coins. Not chump change, but in the grand scheme of things, it's not a huge amount either.

    My question isn't about the pros and cons of buying gold and silver bullion, but about how it will be received by merchants if the **** hits the fan and a gallon of gas becomes $10 or more, bread becomes $20 a loaf. A month ago, I had no clue what to look for when investing in precious metal. And I would hazard a guess that the general public at large doesn't know much about precious metal exchange values either.

    So lets say that hyper inflation were to occur, and I were to need to buy something like penicillin for instance, today you can buy a 10 day script for about $16, but perhaps some event causes the price to jump ten fold. Presumably, the amount in silver bullion that the script costs today would be the same amount it would cost after the inflation event. But merchants are not accustomed to accepting anything other than paper currency thus the concept of accepting silver coin as payment for goods and services may be a foreign concept to them.

    Has anyone ever pondered this scenario? Do you believe that merchants can adjust rapidly to conditions where people are offering gold and silver as payment for goods and services? A 1oz. Silver Eagle caries a face value of $1, however it's actual dollar value is Dependant upon the amount of fiat money in circulation. Today, they sell for $35-$40. Using my penicillin example above, is it conceivable that merchants may one day list prices in terms of Silver and Dollars. Would they say to a customer, Your penicillin prescription will cost $0.50 in silver bullion coin or $160.00 in cash (paper)?
    Last edited by Nevada carrier; 03-11-2011 at 08:40 PM.

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    When the dollar collapses, gold and silver will also be worthless until the chaos is over.

    If you're worried about a SHTF scenario, buy brass and lead and feminine hygiene products.

    Those will be tradeable commodities for food and shelter.

    I would hurry and resell the silver while the prices are at their highest instead of buying more.

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    Regular Member Nevada carrier's Avatar
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    When I speak of SHTF, I'm not talking about running for the hills, I'm talking about when the Federal reserve increases the supply of dollars in circulation heavily in a short period of time. Right now, they are doing this slowly (called "quantitative Easing"), but if Saudi Arabia Falls to it's People, I see new money being created to compensate for what could be an unprecedented rise in fuel prices. Personally, I don't think we've seen anything yet.

    I don't think silver and gold is a bad investment, just not a short term one. By no means am I sinking my entire net worth into it, only a very small portion of it.
    Last edited by Nevada carrier; 03-11-2011 at 09:27 PM.

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    Buying gold and silver

    NV C: You may wish to buy 1oz. silver "rounds" from an established mint such as Kitco.com. I started buying silver several years ago on a whim. I don't know what your silver eagles are worth, but if you want to buy an item that cost $10 and your "eagle" is worth $50, what do you take in change?
    1oz. rounds can be purchased for a few pennies over spot price and, you can even buy 1/2 oz rounds. I'm just pointing out that large value items may be hard to use without taking a loss on the transaction.
    Mitch

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    It occurs to me that there is info on the web on what (Argentinians?) did when inflation their economy collapsed.

    Separately, in a run-for-the-hills SHTF scenario, the portability characteristic of real money will be important. I don't know about y'all but my donkey can only carry so many feminine hygiene products.

    And, the divisibilty charateristic of real money can help solve taking a loss. You've heard the term "pieces of eight"; people figured out they could cut up coins a long time ago. If I'm not mistaken a piece of eight was literally 1/8 of a Spanish dollar coin. I've seen photos of pieces of eight. It looked like they had been cut with a cold chisel driven down onto and through the flat face of the coin (which makes more sense than a saw that would make dust, or a shears which would bend the coin.)

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    Regular Member Nevada carrier's Avatar
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    Quote Originally Posted by MITCH View Post
    NV C: You may wish to buy 1oz. silver "rounds" from an established mint such as Kitco.com. I started buying silver several years ago on a whim. I don't know what your silver eagles are worth, but if you want to buy an item that cost $10 and your "eagle" is worth $50, what do you take in change?
    1oz. rounds can be purchased for a few pennies over spot price and, you can even buy 1/2 oz rounds. I'm just pointing out that large value items may be hard to use without taking a loss on the transaction.
    Mitch
    Silver Eagles come in two types, Bullion, which is simply a 1 Oz. coin whose value is based only on the content of the metal, then there are proofs whose value is based on variable other than their silver content like condition, circulation and brilliance. Much more care is taken in the production of a proof and the upraised portion of the coin is polished. People buy those as collectibles not just for the value of the silver they contain.

    As for your second point about possible disparities between the the value of the coin you are trading for some good or service and the actual cost of the good or service. If change is due, one solution is to perhaps purchase other goods that you need to get as close to the value of the coin as possible. Also if you are trading with someone worthy of your trust and credit, you can accept a promissory note, or IOU for a future transaction. Just be careful who you are putting your faith in. it is also conceivable that if you present 1 oz of silver as payment for something valued at 1/2 oz of silver that they could pay you the difference with cash at the value of the other 1/2 oz of silver. in my example I used, the prescription of penicillin was $160 or 1/2 oz. of Silver. he could conceivable accept your 1 oz. coin and give you $160 cash in change. If you are willing to take the risk that the value of a dollar is not going to diminish before you can spend the change you could accept this deal.

    Quote Originally Posted by Citizen View Post
    It occurs to me that there is info on the web on what (Argentinians?) did when inflation their economy collapsed.

    Separately, in a run-for-the-hills SHTF scenario, the portability characteristic of real money will be important. I don't know about y'all but my donkey can only carry so many feminine hygiene products.

    And, the divisibilty charateristic of real money can help solve taking a loss. You've heard the term "pieces of eight"; people figured out they could cut up coins a long time ago. If I'm not mistaken a piece of eight was literally 1/8 of a Spanish dollar coin. I've seen photos of pieces of eight. It looked like they had been cut with a cold chisel driven down onto and through the flat face of the coin (which makes more sense than a saw that would make dust, or a shears which would bend the coin.)
    Stagecoach silver bullion comes in bars and rounds that are scored and can be split into 1/4 oz potions specifically for making change. The cool thing about these bars and rounds is they have printed on them "For when you need to get out of dodge!"
    Last edited by Nevada carrier; 03-11-2011 at 11:35 PM.

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    Quote Originally Posted by Citizen View Post
    ...people figured out they could cut up coins a long time ago. If I'm not mistaken a piece of eight was literally 1/8 of a Spanish dollar coin. I've seen photos of pieces of eight. It looked like they had been cut with a cold chisel driven down onto and through the flat face of the coin (which makes more sense than a saw that would make dust, or a shears which would bend the coin.)
    Actually, a "Piece of Eight" is the entire coin. They were officially called an"8 Real" (pronounces REE-ahl). The Real was the base unit of denomination in Spain at the time (like the Pound in England, or the Mark in Germany).

    It had a marking on the back of it (a equal-armed cross in a stylized octagon) that allowed it to be easilly divided into smaller, equal parts visually. And since 8 Reals was a LOT more than most folks needed for daily expenses, it made sense to let them cut up Reals to make change rather than to mind multiple denominations. Since most of the Silver Reals were minted in the New World by relatively unskilled workers, and the Spanish were literally mining (and stealing) silver and gold faster than they could melt and mint it into coin, they mostly made 8 Real silver coins, to keep the mint operations simple and fast.

    So when you hear the term "pieces of 8" it would generally mean multiple 8 real coins--intact coins. The sub-denomination "clipped" bits would usually be referred to by how many Reals they represented. Thus, half a coin would be called "4 Reals", a quarter coin would be "2 Reals", and 1/8th of a coin would simply be "1 Real"...

    I'm not a numismatist, just a pirate history enthusiast, and a VERY obsessive researcher for my other hobby--historical reenacting...
    Last edited by Dreamer; 03-12-2011 at 06:58 PM.
    It is our cause to dispel the foggy thinking which avoids hard decisions in the delusion that a world of conflict will somehow mysteriously resolve itself into a world of harmony, if we just don't rock the boat or irritate the forces of aggression—and this is hogwash."
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    Regular Member Dreamer's Avatar
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    Stocking up on Silver and Gold for a SHTF scenario is not a good idea.

    Silver is too hard to cast into bullets without special equipment, and can damage your barrel.

    Gold CAN be easily cast into bullets, bit is too soft, and will foul your barrels even more than unjacketed lead bullets.

    Lead will be the most precious metal when the SHTF, followed closely by brass and copper...
    Last edited by Dreamer; 03-12-2011 at 05:51 PM.
    It is our cause to dispel the foggy thinking which avoids hard decisions in the delusion that a world of conflict will somehow mysteriously resolve itself into a world of harmony, if we just don't rock the boat or irritate the forces of aggression—and this is hogwash."
    --Barry Goldwater, 1964

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    Colorado accepts silver & gold as legal tender. Utah legislator has passed a bill to accept at actual value vice face value. I like silver bars 1oz to 10oz. Easy to store.
    Course, like has been said copper & brass is definitely in the mix!

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    Quote Originally Posted by Dreamer View Post
    Actually, a "Piece of Eight" is the entire coin...
    Thanks for the info!

    Since you are a pirate history enthusiast, can you tell me when Congress first...


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    What do you do when you are attempting to trade silver bullion that isn't a "minted" coin like the silver eagle? If you are trading a silver round and someone hasn't got the knowledge, tools and information necessary to verify the silver content of the item you are presenting, your silver might as well be tin.

    This is why I have chosen to buy Silver eagles, because their silver content is guaranteed. If the face of the coin isn't nicked and the edges haven't been disturbed it's likely to be easily verifiable with a simple scale. a silver bar you would need to be able to measure the weight and volume to determine it's silver content.

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    First I should mention that Silver eagles are nice but you will get more "bang for your buck"
    by purchasing regular bullion from someone like North West Territorial Mint or APMEX. If you decide to buy more silver later, you should consider that as an option.

    Now on to you question;
    Most merchants probably will not except silver bullion as payment for goods and services.

    The idea of holding silver or another commodity is that it is a somewhat better store of value relative to other commodities than the Federal Reserve Note (FRN). (a hedge against inflation).

    So lets say after prices rise you see silver trading for 50 FRN an ounce, most merchants still are not going to take your bullion, you will need to sell it to a mint or a scraper in exchange for FRNs and then use those to buy your goods.

    If you put away 350FRNs and 30 ounces of silver in a safe. Then come back to it 20 years later the FRNs will have less "buying power" then they did when you put it away, however the silver is very likely to have the same buying power as it did before.


    Here is an example.
    I have a Dime in my wallet that was coined in 1962 it is comprised of 90% silver. I have been told by folks that were around back then, that in 1962 you could walk into a store and expect to get a candy bar and a coke for about 10 cents. When I found the coin about a year ago the melt value was just under 2 "dollars". I noticed that the corner store near my work sold candy bars for about 85 cents each, and a can of coke for about the same.

    The silver has maintained it value compared to other goods much better than the FRN has. Obviously if I tried to give the merchant the dime for a candy bar and a coke he would laugh me out of the store, but if I sold the dime for 2 FRN then I could get my candy bar and a coke.

    Now I should warn you that this doesn't always hold true, for instance back in the 80's the silver price went from 50 "dollars" to 10 "dollars" in just a matter of days.



    I am no silver or monetary expert and as always "caveat emptor"
    Last edited by END_THE_FED; 03-13-2011 at 10:25 AM.
    A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.- Thomas Jefferson March 4 1801

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    Quote Originally Posted by Dreamer View Post
    ......So when you hear the term "pieces of 8" it would generally mean multiple 8 real coins--intact coins. The sub-denomination "clipped" bits would usually be referred to by how many Reals they represented. Thus, half a coin would be called "4 Reals", a quarter coin would be "2 Reals", and 1/8th of a coin would simply be "1 Real"...

    This is also where the term "two bits" came from. Each bit was 12.5 cents. Two bits was 25 cents.
    Last edited by END_THE_FED; 03-13-2011 at 10:27 AM.
    A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.- Thomas Jefferson March 4 1801

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    SHTF silver

    Quote Originally Posted by Nevada carrier View Post
    What do you do when you are attempting to trade silver bullion that isn't a "minted" coin like the silver eagle? If you are trading a silver round and someone hasn't got the knowledge, tools and information necessary to verify the silver content of the item you are presenting, your silver might as well be tin.

    This is why I have chosen to buy Silver eagles, because their silver content is guaranteed. If the face of the coin isn't nicked and the edges haven't been disturbed it's likely to be easily verifiable with a simple scale. a silver bar you would need to be able to measure the weight and volume to determine it's silver content.
    OK - not enough coffee this AM, but If the S does HTF who would guarantee the silver content of the silver eagle...

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    Quote Originally Posted by END_THE_FED View Post
    This is also where the term "two bits" came from. Each bit was 12.5 cents. Two bits was 25 cents.
    Ha ya beat me to it.
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    Well for the store to be open to spend your silver, wouldn't the checkout girl be making $120.00 an hour? Pay would have to go up dramatically too or civilization collapses right? A unit of work would still be worth the same purchasing power or we would just shoot each other and take what we need.

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    A rise in prices is often followed by a rise in pay-rates, but the rise in prices comes first and sometimes it takes years for pay-rates too catch up. The folks who are hurt the most by an inflation of the monetary supply are anyone who saves FRNs and anyone on a "fixed income" such as a pension or social security.
    A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.- Thomas Jefferson March 4 1801

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    Buy low, sell high. Right now, prices are the highest they've been in a long time, even accounting for inflation.

    Hint: NOT the right time to buy.
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    Quote Originally Posted by since9 View Post
    Buy low, sell high. Right now, prices are the highest they've been in a long time, even accounting for inflation.

    Hint: NOT the right time to buy.

    It reached close to 50 "dollars" an ounce in 1980 , it could do it again. If you adjust for inflation that is about 133 "dollars" an ounce.

    Of course it could also fall to 10 "dollars" an ounce next week, we don't really know.

    There are people/firms holding hundreds of thousands of ounces if they start selling in large quantities the price will fall fast.
    Last edited by END_THE_FED; 03-14-2011 at 02:59 AM.
    A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.- Thomas Jefferson March 4 1801

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    Quote Originally Posted by END_THE_FED View Post
    SNIP we don't really know.
    This being the important part.

    Gold could climb to $2000 oz for all we know. Especially if the Fed keeps printing money like Zimbabwe's Robert Mugabe.

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    Regular Member Dreamer's Avatar
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    The purchasing power of gold NEVER changes.

    The price of gold fluctuates, depending on the purchasing power of a given currency.

    One ounce of gold has ALWAYS purchased the same amount of goods or services. ALWAYS.

    In ancient Egypt, we have records that show one ounce of gold would buy a REALLY nice outfit for a priest or pharaoh.

    In Elizabethan England, for one Gold Sovereign (a coin of about 1oz), you could engage a reputable tailor to produce a VERY spiffy set of slops and a doublet of fine material.

    Today in NYC, you can walk into any reputable mens clothier and buy a pretty nice suit for the same amount of "dollars" as it takes to buy once ounce of gold...

    Dollars go up and down in purchasing power. Ours has been going down for the last 100 years. A "dollar" today is worth less than 2% what is was when we went off the Gold Standard in 1933.

    But the purchasing power (value) of gold NEVER changes. Period. End of discussion...

    It will only change when they figure out how to make gold as easily as they can make paper money, and men have been chasing that ghost for millennia...

    Silver is a different thing altogether. Silver is primarily used as an industrial metal these days (in technology). It's use as a store of wealth is relatively minor, compared to gold. Therefore, it is subject to market fluctuations of supply and demand as well as the purchasing power of currency for it's "price".

    Also, silver has never been a reliable measure of, or store of, wealth because it is subject to oxidation (and therefore it can be "destroyed" by corrosion, tarnishing, or just poor storage), whereas gold does not oxidize...

    All that said, I can neither confirm or deny that I have either Silver or Gold bullion in my personal possession as a hedge against inflation, or as a backup tender in the tragic occurence that the US$ should become worthless...

    But I DO have a LOT of lead...
    Last edited by Dreamer; 03-14-2011 at 04:15 AM.
    It is our cause to dispel the foggy thinking which avoids hard decisions in the delusion that a world of conflict will somehow mysteriously resolve itself into a world of harmony, if we just don't rock the boat or irritate the forces of aggression—and this is hogwash."
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    Prior to 1933 we were not really on a gold standard, we were actually on a silver standard with a fixed ratio of silver to gold.

    Our true Dollar is defined as: 371.25 grains of silver in the form of a coin containing 90% silver and 10% alloy.

    We then had a fixed ratio of dollars to gold at 20 dollars per ounce. When they demonetized silver in 1873 this put us on a de facto gold standard. Silver was re-monetized later. The fixed ratio of true dollars to gold created many problems. (The official ratio was rarely equal to the market ratio.)

    I believe that the demonetization of silver was unconstitutional because the term Dollar is a constitutional term,(mentioned twice therein) congress cant unilaterally change a constitutional term.

    When the constitution was written the main unit of currency was the Spanish Milled Dollar. After studying several samples of the Spanish Milled Dollar they determined it to be 371.25 grains of silver 90% silver and 10% alloy.

    I would like us to return to The silver standard that was setup by the constitution and the first Coinage Act of congress. I would also like the mint to coin gold stamped with a weight and fineness but not a dollar amount. The gold coins can trade at the market rate as compared to the true Dollar.

    And yes everyone, we can still have the convenience of paper currency and "debit cards".
    Last edited by END_THE_FED; 03-14-2011 at 07:19 AM.
    A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.- Thomas Jefferson March 4 1801

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    I'm stocking up on scales.
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  24. #24
    Regular Member Dreamer's Avatar
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    Quote Originally Posted by Kirbinator View Post
    I'm stocking up on scales.
    LOL

    That's probably the most rational statement I've ever seen regarding this issue.

    Well played...
    Last edited by Dreamer; 03-15-2011 at 09:00 PM.
    It is our cause to dispel the foggy thinking which avoids hard decisions in the delusion that a world of conflict will somehow mysteriously resolve itself into a world of harmony, if we just don't rock the boat or irritate the forces of aggression—and this is hogwash."
    --Barry Goldwater, 1964

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    Quote Originally Posted by Dreamer View Post
    SNIP

    1. The price of gold fluctuates, depending on the purchasing power of a given currency...

    2. Also, silver has never been a reliable measure of, or store of, wealth because it is subject to oxidation (and therefore it can be "destroyed" by corrosion, tarnishing, or just poor storage), whereas gold does not oxidize...
    1. Not sure if you have come across this info, yet. Passing it along for your evaluation. The short story is that gold does not follow monetary inflation, but does seem to respond to price inflation above 10%. I've been reading stuff by this author for about 1-2 years. Seems a pretty level-headed guy. Plus, he likes Austrian economics.

    http://www.garynorth.com/public/department32.cfm

    2. Oh, silver is a pretty reasonable store of value, I think. The Caribbean is littered with Spanish Empire silver coins that didn't make it to Spain. We had silver coin and specie (high purity coin). I forget where I heard recently that a 1960 US quarter (90% silver or some such) was worth $8 silver content. Of course, that would have been based on the contemporary silver market. I think the trick is to not get soaked by industry-driven price spikes. Ditto market manipulators. The main idea being that market forces like industry and manipulators will affect how much value you store and recover (or lose), but that the storage-ability is still there.

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