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Posted 08/17/2011 4:04 pm
"Have I been advised wroungly?"
You probably received this advice because he knew you were a beginner.
Private silver rounds or silver bullion put out by a goverment have a known weight. If you look at some silver rounds they should say something like "1 oz. fine silver" or "1 troy oz. 99.99 silver." (Stay away from any rounds that are not marked properly, they may or may not be silver). A lot of bullion type coins have these markings also. If you look on the back of an American Silver Eagle it lists the fineness and weight.
There are exceptions to this. For example, the thaler. But since whe know what kind of coin it is we can look up the value. http://en.wikipedia.org/wiki/Maria_Theresa_thaler
Fineness = the percentage of silver in the alloy. (Sterling silver is 92.5% silver with other metals added in to make it harder.)
Troy Ounce. You can get burned if somebody lists a half a pound silver round and you think it is 8 oz. instead of 6 oz. Troy pounds have 12 oz. in them, not 16 oz.
Also, things like "silver plate" or "silver mil" should be avoided because they are not solid silver. They are probably copper, lead, etc. plated with silver.
China. Very important, DO NOT buy any silver, or silver coins from a seller in China. At least until you are more experienced. All sorts of fakes come out of China. You can search the forum for chinese fake and see a bunch of examples. Some of them link to ebay listings where people paid hundreds of dollars for a fake coin.
So if you start buying silver for investment the rounds or bullion are good and safe because they are put out by trusted entities.
However, once you start making connections and learning the terminology then you can start brancing out. It will probably happen naturally because you'll start getting different years for the bullion (the Britannia's have different images on the reverse depending on the year).
The are a lot of older coins that are silver and many of them go for spot or under spot. There are also a lot of newer commemortive coins that are silver. (These are called NCLT, or none-circulating legal tender, meaning they have a dollar amount on them but they were not meant to but used to purchase goods and services).
What I would do if I were you when you get to the point you are wanting to start branching is to get the latest edition of Catalog of World Coins 1901-2000. It will list what a coin is made of and what years they were produced, along with the price. If you want silver just flip though the catalog and find something that interests you then try to find it on ebay or a coin shop.
For example (I have the 37 edition), if you turn the G section you will find Great Brition. If you start browsing you will come to the 3 Pence (coins are listed from smallest to largest, slit up between the different currencies). A 1920 3 pence is sterling silver (0.9250 or 92.5% silver). The next number is 0.0420 ASW. ASW = "actual silver weight" for a brand new coin (coins in circulation will have silver worn off them). Then what you do is take the spot price x the ASW = value of silver (then adjust for how worn down they are from being circulated).
You will notice that the nicer the coin the higher it is listed. Real nice coins will command a higher price because they are usually in higher demand and, in theory, there are probably less of them (this rule is for circulating currency, not for NCLT). If you are just wanting the silver I would try to pay closer to (or under) what you worked out. Just do not expect some one to sell you a mint condition rare coin for spot. It could happen but not likely.
A word about ebay. If I am buying a coin or a round off ebay I will work out what the silver price is and then subtract the shipping value. Some of the shipping prices are really high. This is just me and I know some people do it differently.
Cost Averaging. At some point silver is going to either go up really high or it is going to drop really low. It happens. Do not panic! In theory you want to buy when it is down low and sell when it is high, but it doesn't always work out that way.
Are you looking to buy while it is high? Some people will say yes, other will say there will come a day when we talk about "the good old days" and $40.00 silver. I don't know and I will not venture a guess.
So say over the next month you purchase 20 oz. of silver and then silver drops down to $10. A lot of people get ticked and then either sell or just forget about the whole deal.
But that is a bad idea. What you need to do is buy some more silver. If you buy 20 more oz. of silver then you cut down the amount you have invester per oz. of silver. Which means that it doesn't have to go back up as much before you can get your money back or make a profit.
20 oz. of silver @ $40.00 = $40.00 an oz.
(20 oz. of silver @ $40.00) + (20 oz. of silver @ $10.00) = $25.00 an oz.
That means silver only need to go back to $25 to break even.
So many people bought silver when it has high back in the 1980's then had the bottom fall out. So they had silver on had that they bought at $80 an oz. but could only get $8 an oz. for. Most of them just left it alone and didn't do anything with it for years. If they would have cost averaged they would have been better off then holding on to it for decades waiting to get their money back.
Any way, long post with some ideas for you to research. But by the time you are getting there you will be probably looking at all sorts of different coins.
You probably received this advice because he knew you were a beginner.
Private silver rounds or silver bullion put out by a goverment have a known weight. If you look at some silver rounds they should say something like "1 oz. fine silver" or "1 troy oz. 99.99 silver." (Stay away from any rounds that are not marked properly, they may or may not be silver). A lot of bullion type coins have these markings also. If you look on the back of an American Silver Eagle it lists the fineness and weight.
There are exceptions to this. For example, the thaler. But since whe know what kind of coin it is we can look up the value. http://en.wikipedia.org/wiki/Maria_Theresa_thaler
Fineness = the percentage of silver in the alloy. (Sterling silver is 92.5% silver with other metals added in to make it harder.)
Troy Ounce. You can get burned if somebody lists a half a pound silver round and you think it is 8 oz. instead of 6 oz. Troy pounds have 12 oz. in them, not 16 oz.
Also, things like "silver plate" or "silver mil" should be avoided because they are not solid silver. They are probably copper, lead, etc. plated with silver.
China. Very important, DO NOT buy any silver, or silver coins from a seller in China. At least until you are more experienced. All sorts of fakes come out of China. You can search the forum for chinese fake and see a bunch of examples. Some of them link to ebay listings where people paid hundreds of dollars for a fake coin.
So if you start buying silver for investment the rounds or bullion are good and safe because they are put out by trusted entities.
However, once you start making connections and learning the terminology then you can start brancing out. It will probably happen naturally because you'll start getting different years for the bullion (the Britannia's have different images on the reverse depending on the year).
The are a lot of older coins that are silver and many of them go for spot or under spot. There are also a lot of newer commemortive coins that are silver. (These are called NCLT, or none-circulating legal tender, meaning they have a dollar amount on them but they were not meant to but used to purchase goods and services).
What I would do if I were you when you get to the point you are wanting to start branching is to get the latest edition of Catalog of World Coins 1901-2000. It will list what a coin is made of and what years they were produced, along with the price. If you want silver just flip though the catalog and find something that interests you then try to find it on ebay or a coin shop.
For example (I have the 37 edition), if you turn the G section you will find Great Brition. If you start browsing you will come to the 3 Pence (coins are listed from smallest to largest, slit up between the different currencies). A 1920 3 pence is sterling silver (0.9250 or 92.5% silver). The next number is 0.0420 ASW. ASW = "actual silver weight" for a brand new coin (coins in circulation will have silver worn off them). Then what you do is take the spot price x the ASW = value of silver (then adjust for how worn down they are from being circulated).
You will notice that the nicer the coin the higher it is listed. Real nice coins will command a higher price because they are usually in higher demand and, in theory, there are probably less of them (this rule is for circulating currency, not for NCLT). If you are just wanting the silver I would try to pay closer to (or under) what you worked out. Just do not expect some one to sell you a mint condition rare coin for spot. It could happen but not likely.
A word about ebay. If I am buying a coin or a round off ebay I will work out what the silver price is and then subtract the shipping value. Some of the shipping prices are really high. This is just me and I know some people do it differently.
Cost Averaging. At some point silver is going to either go up really high or it is going to drop really low. It happens. Do not panic! In theory you want to buy when it is down low and sell when it is high, but it doesn't always work out that way.
Are you looking to buy while it is high? Some people will say yes, other will say there will come a day when we talk about "the good old days" and $40.00 silver. I don't know and I will not venture a guess.
So say over the next month you purchase 20 oz. of silver and then silver drops down to $10. A lot of people get ticked and then either sell or just forget about the whole deal.
But that is a bad idea. What you need to do is buy some more silver. If you buy 20 more oz. of silver then you cut down the amount you have invester per oz. of silver. Which means that it doesn't have to go back up as much before you can get your money back or make a profit.
20 oz. of silver @ $40.00 = $40.00 an oz.
(20 oz. of silver @ $40.00) + (20 oz. of silver @ $10.00) = $25.00 an oz.
That means silver only need to go back to $25 to break even.
So many people bought silver when it has high back in the 1980's then had the bottom fall out. So they had silver on had that they bought at $80 an oz. but could only get $8 an oz. for. Most of them just left it alone and didn't do anything with it for years. If they would have cost averaged they would have been better off then holding on to it for decades waiting to get their money back.
Any way, long post with some ideas for you to research. But by the time you are getting there you will be probably looking at all sorts of different coins.
smithersjones
