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Buying Gold and Silver

Nevada carrier

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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)?
 
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flb_78

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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.
 

Nevada carrier

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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.
 
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MITCH

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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
 

Citizen

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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.)
 

Nevada carrier

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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.

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!"
 
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Dreamer

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...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...
 
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Dreamer

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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...
 
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Room C

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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!
 

Nevada carrier

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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.
 

END_THE_FED

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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"
 
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END_THE_FED

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......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.
 
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Contrarian

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SHTF silver

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...
 

Mas49.56

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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.
 

END_THE_FED

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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.
 

END_THE_FED

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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.


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.
 
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