Investing On A Shoestring: Silver

This post is by staff writer Cindy Brick. Cindy has several published books and many published articles on a variety of subjects. You can visit her business website at CindyBrick.com or visit her personal blog.

Investing in Silver on a Shoestring

So you’ve managed to collect some extra funds for investing — but they’re not much. And definitely not what they could be. So why put them into anything except a nice dinner out, or a hot fudge sundae?

Because investment on the shoestring level can still pay off — handsomely.

Take silver. Like its flamboyant counterpart, gold, silver prices have been rising steadily in recent years. They still have some ups and downs, but the general rise has been up. And as one silver enthusiast, Jack Barnes, points out:

  “A historic breakout in silver appears to be under way – in India. In other words, silver prices are starting to make a run in terms of the Indian rupee – but not in U.S. dollar terms. Silver is the last major commodity to break out, and the fact that it’s doing so in a foreign currency is tantamount to an early-warning signal that U.S. investors should place their silver bets in U.S. dollar terms.”

Silver has some interesting points in its favor:

* It’s still a major component for manufacturing. Silver has the highest conductivity rate of any element, and any metal, making it of special interest to energy companies, as well as computer giants like Intel. “Silver is looking cheap and we’re seeing strong investment demand for small ingots, as well as good industrial demand from solar-panel makers,” said Dick Poon, Hong Kong-based manager of precious metals trading at Heraeus Ltd., (Bloomberg News).

*It’s easier to store in ingot form than gold. And it’s not just the price, either — gold is heavy. A standard ‘London Good Delivery,’ the most common type of bar according to Grissoms, is 400 troy ounces — 27 pounds! Silver, on the other hand is most commonly in 1,5, 10 and 100 ounce bars. (Each ounce of .999, or nearly pure silver, weighs 31.1 grams. More on silver bullion here.) You can buy gold in smaller bar sizes, of course — but it will generally be larger and heavier than its ‘white metal’ counterpart — and far more expensive.

   *It’s legal tender in coin form.  (Not that you would spend these at face value…just saying.)  Junk silver  is what you want — half dollars, quarters and dimes minted in or before 1964, when coins were still 90% silver. (The term “junk,” by the way, refers to the coins’ value as a source of bullion. They’re generally not collectible for other reasons.) These cover Kennedy half dollars, Washington quarters and  Mercury and Roosevelt dimes — and, if you’re ok with less silver content (40%, vs 90%), Kennedy half dollars from 1965-70.

You can still find these coins occasionally in loose change. Check your local Coinstar machine, a la Donna Freedman.  (Or just keep your eyes open when walking.) Rolls and bags of coins are also available on Ebay for marked-up prices.

The Brick, my spouse, is a veteran junk silver buyer. His tips: look for a reputable seller who offers free or low shipping costs. Buy in larger quantities — half-rolls or more. (“They’ll really nail you on shipping and handling if it’s just one or two pieces.”) Although ‘finish’ (what the coin looks like), isn’t high on his list, the more circulated the coin has been, the less silver it will contain — so look for newer coins in better condition. (Silver wears off gradually as its handled.) His standard procedure: skim the auctions, then check Coinflation.com. “Start with their ‘melt’ price: how much you would get, if you melted that half dollar down. Subtract the shipping cost. That will be my base bid on Ebay, from 95-105% of that figure, depending on what the market is doing.”

*Wear it…or use it. How often can you actively handle your investments? If you’re displaying silver trays, tea sets, or wearing silver jewelry, you can. Get the highest quality possible. For purity, 92.5% in sterling silver is about as high as you’re going to get — and look for a reputable maker’s mark. (An excellent online guide is here.) Going to Mexico on vacation? Taxco is famous for its graceful silver jewelry…and reasonable prices.

Life may be “as good as gold” — but it’s silver that can make the difference for the frugal investor.

 

This is the first of an irregular series on shoestring investment options. Sure, you can get involved on a large scale, but small, regular investments are doable, too. Please note: I am a certified personal property appraiser — but not a professional investment counselor. These are my takes on the subject, albeit backed up with resesarch and expert opinions. Invest at your own risk.

16 Responses to “Investing On A Shoestring: Silver”

  1. Sarah Thomas August 22, 2012 at 6:36 am #

    Silver has an important role in your business. Because of its precious metal status, you can use it as a hedge against inflation. Now, you can invest directly in silver by buying and selling silver coins and bars and most probably you will love to invest in a silver mining company.

  2. Dana February 17, 2012 at 7:10 am #

    Very informative article. I hadn’t really thought of silver as an investment either—all you ever hear about is gold.

  3. Australian Financial Service License February 14, 2012 at 5:58 pm #

    The selling prices are still rising. It’s a great way to make some extra money I guess!

  4. Jon Petersen February 13, 2012 at 8:15 pm #

    The saying is silver is the poor man’s gold. Which doesn’t mean it has the same benefits as gold. Silver is a lot more speculative as we saw in its run up last year. The best view is to look at a chart of the SLV over the GLD. It may follow gold but at a much higher beta.

  5. Sherrian@FatGuySkinnyWallet February 13, 2012 at 7:50 pm #

    Very informative article. I also haven’t heard of/thought about silver as a good investment. Gold seems to get all the glory :D Thanks for the tips.

  6. Robert @ The College Investor February 12, 2012 at 6:50 pm #

    I think silver, similar to gold, is nearing highs. While it may be a good part of a portfolio, you may not want to buy right now.

  7. Evan @ Smartwealth February 11, 2012 at 12:04 pm #

    Very informative post. I never would have thought investing in silver would have a good payoff.

  8. Investment Professionals February 10, 2012 at 11:36 pm #

    I appreciate the information provided by you. This is interesting information provided in this post. Go to the link below to know something about Investment Professionals.

  9. cashflowmantra February 10, 2012 at 7:22 am #

    I worked with a guy in 1989 and 1990 who would buy 5 ounces of silver every two weeks when he got paid. He took me out one of those days, and I picked up 5 ounces of silver for about $5.20 each. I still have those ounces. I wonder if he kept it up over all these years? If so, he has a nice little stash.

    • Andy Hough February 12, 2012 at 3:20 pm #

      It has definitely gone up a lot since then. It would have been tempting to sell long before now but who knows.

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