The Basics of Precious Metals, Part 2

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Q:  Will the prices of gold and silver go up or down?

A: The answer is BOTH.  What you need to see is the long-term trend and forget about the day to day, week to week NOISE.

If the governments of the world stop printing money, the price of precious metals will go down. However, in my opinion, there is way too much debt (both real and derivatives) to be paid off without printing money.

Q:  Regarding 90% silver coins versus 40% silver coins, would the 40% coins retain the same value in a bartering situation?  In other words, would it at least be valued at 40% of the price of silver?

A: I personally don’t like 40%.  You are adding another variable for people to remember, and forget!  For me, it’s easier to remember that coins minted in 1964 and prior are 90% silver.  It’s much harder for me to remember that coins from 1965-1970 (and only in half-dollars) are 40%.  Plus, the 40% halves have the “sandwich” look on the edge.  You can see the alloy.  When you look at a 90% coin, there is no ambiguity.  It’s solid in color.  This is only my opinion, but I don’t like the 40% coins.

Q:  What about stocking up on nickels?

A: I know James Rawles recommends buying nickels, and he may be absolutely right. Personally, I don’t like nickels.  War nickels are silver, but even I have to look up their content from time to time because I don’t see them every day.  Imagine someone with no experience or reference materials trying to decide how much a nickel is worth.  I prefer easy – 90% silver is very straightforward.  Now if the nickel goes up in price, the coins may be good as an “investment”.  In a collapse scenario, I do not like them.  I very much respect Jim Rawles but would disagree with him here.

Q:  If there is an economic collapse, what will be used as money?

A: Food, bullets, water, cigarettes, and booze (I especially like the airplane-size booze bottles.).  Toilet paper, tools, fingernail clippers, etc.  Anything that would be hard to find in the event of a collapse.  Even diapers might be used as money. Think creatively!

Q:  What’s the best form of precious metals in a collapse scenario?

A: Silver, those 90% silver dimes, quarters, halves, dollars, Silver Eagles, silver rounds – in that order, will be especially useful as a currency because they are all easily identifiable.  Everyone knows that a 1960 dime, for example, is 90% silver, and it has the denomination right on the face of the coin. Fractional gold might also be a useful currency.


Q:  What about sterling silver flatware?  Could it be used as currency?

A: Typically, sterling silver is marked as “.925” but not always.  The problem comes when trying to value the flatware.  Will people have a scale to accurately weigh the flatware?  When weighing the knives, how much of the flatware weight is the cement and rod in the handle?  In my opinion, convert the sterling flatware to silver rounds, Silver Eagles, etc., but know that when you convert flatware to silver coins, you will only be paid anywhere from 75-85% of the melt value for your flatware.  Our refiner, for example, gives us 86-88% of melt value for Sterling Silver flatware.  In addition, some refiners won’t accept less than 500+ ounces of Sterling, thus placing a lot of market risk on dealers.

Here is an interesting caveat though.  I have heard that the rich survived better during economic, social crises because of their silver flatware.  Supposedly, the silver’s medicinal qualities protected against a lot of diseases.  I personally want to research this more and am considering getting an old set of Sterling silver flatware to use as our main “silverware” just in case things go sideways.

Q:  How do I find a legitimate precious metals dealer?

A: Ask a few key questions.  How long have they been in business?  What is their reputation?  By the way, don’t bother with the Better Business Bureau because members get a good rating by paying them a fee.  Call local coin dealers and see what they have to say.  Compare prices and fees.  There are some really good online retailers and some really bad ones.

DISCLAIMER:  I am not a registered financial or investment adviser.  Please do your due diligence because I do not share in your gains, or your losses!  Research, research, research. This information is MY OPINION ONLY!  I recommend to all my customers – do your homework, constantly!!!!



13 thoughts on “The Basics of Precious Metals, Part 2”

  1. Mike in Virginia

    One comment in favor of those nickels… for very small purchases even the silver content of a 90% silver dime may be too much money. So the "real" nickels that we have now (as opposed to the debased junk nickels we're about to get) could serve the function that copper coins have always served through history as kind-of real money for small items. A single fishhook, a cookie, a small spool of thread, whatever. Think of them as the new penny!

  2. Chief Instructor

    Disclosure: In addition to my training business, I am a co-owner of a PM shop.

    Regarding 40% silver, I agree wholeheartedly with your interviewee. There is also another trap with them – well, with all Kennedy halves. The 1967's (and perhaps all of the 40%ers) are fully dipped in silver, meaning you can't see the tell-tale copper stripe on the edge. In our shop, the way we do a quick-and-dirty check on our 90% coin purchases is to hold them in a stacked fashion in our fingers/palm and look for the copper stripe. With the Kennedy's, you can't use that – the copper stripe is covered, and you may buy a 1967 40%er at 90%er prices. Gotta look at each and every coin for the correct date.

  3. I received a beautiful silver necklace with a diamond and silver pendant & matching earrings for Christmas from my husband and I swear my first thought after how pretty they were was "if SHTF then these will be good barter items". then I had to laugh at myself for my train of thought! LOL.

  4. I'm not sure if I said this in part 1 so pardon if it's a repeat.

    I am absolutely against 40% or 90% or whatever-percent coins less than 100%. IMO Joe Average Citizen on the street, the people you may need to be trading with, have no idea what a 90% silver coin or a 'real' nickle is in terms of metal value. In normal times they may have value to collectors but if you're buying them as metal sources for barter IMO they are not worth the effort. Better to buy 100% silver coins, waffers and ingots (yes, I know they are more like 99.9925-something percent but that's better than 40% or 90%).

    ps- And if I didn't mention it before, don't count on the 1099 reporting requirement of Obamacare being repealed. 🙁

  5. We've taken the leap into silver. Just recently purchased American Silver Eagle 1 oz. rounds and 90% silver dimes. The dimes are currently worth over $2 in melt value. If (or when) hyperinflation hits, I'll be thankful to have them!

    1. No insult intended, if you were to offer me a dime saying it was 90% silver I'd wouldn't take it. I have no way of proving that.

      1. Po, I think the reason silver dimes and quarters are generally recommended is that they are "official" and have the date stamped on them. I'd gladly accept one of those coins dated 1964 or prior because I would know I was getting 90% silver. I think in a collapse, people will become savvy about what can be used as trustworthy currencies. Have you read some of Ferfal's articles about using gold as a currency in Argentina? Seems the people there learned pretty quickly that even links from gold chains can be used.

        1. Yes, I've read his articles. NTL gold is self evident (presuming it isn't fake or just plated). Silver in coins isn't. Maybe over time people will "learn" but I don't think many will. The cost between a 90% coin and a 100% Liberty or ingot isn't that much.

        2. BTW, there is an article on today discussing why a confiscation of Silver rather than Gold is a far more likely scenario. 🙁

          1. I'll take a US mint stamped dime or quarter pre-1965 anyday over some ingot you claim is 100%. How the heck do I know if it it is the purity or the weight you say it is? Do you have a mint you trust more than the 1950 or 1950 American Treasury? I don't. That trust to me is actually worth more than the 10% loss of purity. I have a feeling I'm not the only one.

            You say "No insult intended, if you were to offer me a dime saying it was 90% silver I'd wouldn't take it. I have no way of proving that."

            Do you know which numbers are less than 1965 and which are higher? Then you should be able to tell. Maybe you can tell me: How do you prove an ingot stamped 99.725 is 99.725% silver?

          2. And if you know what Credit Suisse or APMEX is then you would know the value of the ingot too. 😉

            One can make that argument for any coin or ingot. And I'm sure there will be a lot of counterfitting too eventually. But by then as previously stated people will have likely learned what is legit and what isn't.

            Either way, that's why I'm infavor of full gold or silver coins in general rather than year's coins. There is no debate about an Eagle or Maple Leaf or Kugerrand.

  6. " Silver- A drugstore in every ounce"

    By all means do some research. Gold Silver Platinum it is all Medicinal. You don't need a lot but you do need some and the knowedge to use it.

    The anecdotal evidence truly does suggest that Silver flatware , and cups and straws will protect you and yours.

    The phrase "Born with a Silver spoon in his mouth" Refers to Health-Not wealth.. Copper plates to eat off is also a good idea.

    God blessed us with the internet. Do some research while you can!

    1. OK, Tommy, I'm now going to be on the lookout for real silver flatware! I live near a really big retirement community — maybe I'll get lucky at an estate sale one of these days.

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