5 Reasons Why Silver is Attractive for Long Term Investment

The short term fundamentals for silver, which has slumped 59% over the past five years, don’t look particularly great. It has become a troublesome investment material since the decline of the photographic industry. However in the longer term, supply and demand fundamentals of the metal look to be finally improving. The potential upside for investors is significant, as multiple industries find use for gold’s erratic little sister. Meanwhile, supply looks set to dry up due to the current market conditions. Explore the silver situation further. Check out these five reasons silver looks like an attractive option for long term investment. Continue reading “5 Reasons Why Silver is Attractive for Long Term Investment”

Protips for Gold and Silver Dealers

This post is for dealers and sellers of precious metals.  Precious-metal consumers are also welcome to post their suggestions in the comments.

Because I truly believe in sound money (gold and silver), I want all precious metal dealers to have a successful business with many satisfied customers. So here are a few important tips to improve your image and increase you customer base.

  • Be honest about your stock quantities. “In stock” means you have the product on location, in your possession. It does not mean the product has been allocated by a supplier and is on its way.  Don’t be afraid to list an item as out of stock.  If possible, provide even more transparency by specifying when the item will be restocked. Not only will this make you more reputable, it also provides a signal to consumers that there are shortages in the market.  Gold and Silver Online, for example, clearly displays the date when they expect delivery of out-of-stock items.
  • Be direct and transparent with pricing.  When listing prices on landing pages that contain a product assortment, display the price for a single item– not the lowest-price volume discount for that item.  A sure-fire way to instill mistrust in new customers is to list the volume-discount price for what appears to be a list of single items. When a potential customer clicks an item and discovers that the price is actually a volume discount for a quantity he can’t afford, the result is suspicion, and it detracts from your credibility.Make tables that display payment options and volume discounts on product-detail pages.  JM Bullion, for example, clearly lists all of the of the volume-discount prices and also includes the prices for different payment methods.
  • No hidden fees.  When people make purchases online, they expect to pay the cost of the product plus shipping, and sometimes tax.  That’s it.
  • Display live prices on your web site.  Dealers that do not have live prices risk losing customers online.  Nobody wants to call just to find out how much something costs, when there are plenty of other dealers who display live prices.  Dealers that do not have live prices probably get most of their customers by direct referrals and are losing a great share of potential customers that find the dealer via online searching.
  • Use consistent and clear names for your products. Each product name should stand on its own, without relying on page headings, for example, to provide clarity or other information. A product name should always include the metal, weight and if it’s a bar, the format (bar). For example, 1 oz Silver American Eagle, 1 oz Gold American Eagle,10 oz silver bar, etc.

Gold and Silver Brokers

Problem

I don’t have a lot of money, so my PM strategy thus far has been to save for long periods of time, then buy silver or gold in bulk in one shot to save on premiums and shipping. The downside of this strategy has been that I don’t buy as often as I would like, and it’s not always a good time to buy when I’m finally ready to trade some cash for precious metals. Another problem is that while I’m saving, it’s easier for me to dip into my cash savings, whereas I never touch my savings that are already converted to gold and silver. If I were better off financially, I would prefer to make a small purchases monthly, so buying precious metals would be more habitual.

Solution: Precious Metal Broker

To solve this problem, I’m thinking about trying a precious-metal broker. A precious-metal broker lets you purchase gold, by funding an account online, and stores the gold on your behalf. One benefit is that you don’t have to buy an entire once of gold at once, if you can’t afford it. You simply deposit as much as you can afford, and the corresponding fraction of gold is allocated to your account. In theory, you could deposit one dollar and own a dollar’s worth of gold. This doesn’t mean that they shave off a speck of gold and put it in a vault for you, but they do allocate a speck to you from a gold bar.

Physical Delivery

Some brokers also deliver physical gold, silver and other precious metals. So after you have allocated an entire bar’s worth of gold in your account, you can take delivery of the physical bar. My strategy will be to fund an account regularly and take physical delivery whenever I’ve allocated an entire bar of gold or silver.

The table below contains my findings so far. I will only add brokers that offer physical delivery. The fees are copied directly from respective sites at the time of this post

Broker Commissions Delivery Fees Metals Offered
GoldMoney Your metal purchase is based upon the prevailing gold gram, silver ounce, platinum gram or palladium gram buy rate, which is the metal’s current spot price plus a buy fee.The buy fee for a gold gram purchase ranges from 0.98% to 2.74% above the prevailing spot gold price, depending upon the size of the transaction. The buy fee for a silver purchase ranges from 1.99% to 4.24% above the prevailing spot silver price. For platinum the buy fee ranges from 2.19% to 4.67% and for palladium from 2.63% to 5.52%. Fees will depend on location and bar type. Gold, Silver, Platinum, Palladium
BullionVault
Transactions Sum of all purchases (or sum of all sales) in the year so far Commission Rates
On the first $75,000 or equivalent 0.50%
On the next $750,000 or equivalent 0.10%
Then 0.05%
In normal use you will receive your money paid directly to your bank account after you sell.You can withdraw bars at any time. The fees vary according to the circumstances:

  1. Where you cannot reasonably be paid safely by bank transfer you can withdraw physical gold for the reduced fee of 1%, plus transport and insurance costs.
  2. Where the normal exit route to your bank remains viable, but you elect a physical withdrawal, then the cost is 2.5% for withdrawing whole gold bars, with a further 5% surcharge for withdrawals below 400 oz – to cover the cost of sourcing the necessary small bars or coins.

 

The fee for silver (whole bars only) is 10%.

BullionVault gold and silver are both VAT (sales tax) free – for as long as they are held in our vaults. Upon physical withdrawal gold remains exempt, but 20% VAT then applies on silver.

Gold, Silver
GoldBroker

GOLD

Minimum investment = 20 000 euros

Amount Invested Commission
20 000 – 100 000 euros 2%
100 000 – 200 000 euros 1,5%
More than 200 000 euros via Matterhorn Asset Management

Note: 1 oz bars are sold with 2.5% commission on top of the spot price.

SILVER

Minimum investment = 25 000 euros

Amount Invested Commission
25 000 – 100 000 euros 3,5%
100 000 – 200 000 euros 3%
More than 200 000 euros via Matterhorn Asset Management
Not Specified Gold, Silver

Delivery Delays and Stock Shortages

The recent drop in gold and silver prices has caused a spike in demand, which has emptied the shelves and caused delays for many precious metal dealers. Below is a table of current (April 2, 2013) messages regarding delays shortages.  I commend the dealers who state which items are out of stock or delayed, so we have a clearer picture of what is happening in the markets.

Dealer Message
Bullion Direct “Due to a increase in market activity, please anticipate product and operational delays.”
Gainesville Coins “This item will begin shipping on 05/10/2013” on several popular silver coins.
Gold and Silver Online “SOLD OUT” on many silver items.
Golden Eagle Coins “Out Of Stock” and “Delayed Shipping Date: 05/18/2013″ on some silver items.“Delayed Shipping Date: 04/25/2013″ on some gold items.
GoldSilver.com “Estimated Shipment Date May 19, 2013″ on many silver items.”Estimated Shipment Date May 05, 2013” on many gold items.
JCSGold “Out Of Stock” on popular silver coins.
Kitco “Shipping only outside US. Due to high demand, this product is only available outside of the US.” on many silver and gold items.
Lear Capital “Because of the recent market swings, we are limiting online orders to $5000 after hours.””Delivery may take up to an additional 14 days due to supply postponements.”
Provident Metals “STOCK DELAYED” and “OUT OF STOCK” on many silver items.”STOCK DELAYED” on many gold items.
Texas Precious Metals “Out Of Stock” on many silver items.”Out Of Stock” on some gold items.

US Mint Sold Out of Silver Coins

Empty VaultAnd so it has begun: the divergence of physical and paper precious metals. The US Mint has sold out of American Eagle silver coins and will not restart sales until “on or about” January 28th.

Authorized Purchasers,

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins.  As a result, sales are suspended until we can build up an inventory of these coins.  Sales will resume on or about the week of January 28, 2013, via the allocation process.

Please feel free to call us if you have any questions.

Regards,
Jack A. Szczerban
Branch Chief, Precious Metals Group
Department of the Treasury
United States Mint

How could there be a shortage of silver when only one day ago iShares Silver Trust, a large silver exchange traded fund (ETF), added 572 tons of silver in one day? The answer is simple: ETFs trade in paper. The physical silver simply isn’t there. Of course the US Mint could be playing some kind of trick to boost demand or curb demand (Who knows what they’re really up to? After all, the government always lies, even when it’s in their best interest to tell the truth.). Regardless, this is another crack in the system and bullish for physical silver, as premiums at many dealers have already jumped 3-7% today.

Gold & Silver Legal Tender Legislation Status by State

According to Article 1 Section 10 of the Constitution

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.


However, when was the last time you paid for anything in gold or silver?  This table shows the current status of states that have passed or proposed laws to make gold and silver legal tender.

Arizona Passed in Senate April 2013 and the House on April 8, 2013. SB 1439, the Constitutional Tender Act, which allows businesses and the state government to accept payments in gold or silver was eventually vetoed by Governor Jan Brewer.

On February 14, 2014 a new bill (SB1096) passed the Senate by a vote of 18-12 and is awaiting a vote by the House.

Colorado Senate Bill 12-137 killed by Senate democrats in March 2012.
Georgia Introduced February 17, 2009.
Idaho Passed April 2012.
Indiana Introduced January 2013.
Iowa Cited in the news but cannot confirm.
Minnesota Introduced May 2011.
Missouri Passed April 2012.
Montana Rejected by 20 Republicans and  32 Democrats in March 2011.
New Hampshire Introduced January 2011.
North Carolina Introduced March 2011.
Oklahoma Passed in the state Senate on March 11, 2014 by a vote of 37 to 4. Senate Bill 862 (SB862) is now waiting to be voted on by the House.
South Carolina Passed April 2012.
Tennessee Introduced February 2011.
Utah Passed March 2011.
Vermont Introduced January 2013.
Virgina Introduced January 2011.
Washington Introduced January 2012.

Updated April 9, 2013.

JM Bullion Added to PM Pricing Tables

Yesterday I added JM Bullion products to the pricing tables and dealer-review listings.  So if you’ve used JM Bullion, please take a moment to write a review.

I’m a big fan of JM Bullion’s product offering, which focuses on core gold and silver products that are geared towards investors and precious metal stackers.  This is especially helpful if you’re new to purchasing PMs because you don’t have to worry about accidentally purchasing odd brands or numismatic coins.  To ensure authenticity, JM Bullion only buys directly from mints and distributors, and they do not buy any items from the general public.

I also like the JM Bullion attitude towards paper.  JM Bullion does not hold PMs on account or offer paper metal investments because they believe “the only way to truly own precious metals is to hold them in your possession.”

Check out the JM Bullion site here: jmbullion.com.

Silver & Gold by Burt Ives

In 1964, you were still allowed to teach kids about sound money on TV. It’s a miracle they still show Rudolph, the Red-Nosed Reindeer, considering it devotes an entire song to our favorite precious metals, silver and gold, and features Yukon Cornelius, the greatest prospector in the North. It won’t be long before they dub over the lyrics with Lady Gaga singing praises of fiat, like when they used CGI to replace guns with walkie-talkies in E.T.

Silver and gold, silver and gold
Ev’ryone wishes for silver and gold
How do you measure its worth?
Just by the pleasure it gives here on earth.

Silver and gold, silver and gold
Mean so much more when I see
Silver and gold decorations
On ev’ry Christmas tree.

Spoken
What’s a Christmas tree without tinsel
And pretty silver and gold decorations?
Can’t really call it a Christmas tree now
Can you?
And think of all the fun and joy
That would be lost on Christmas morning
If all the young folks didn’t get to see
That sparkling happy tree.

Silver and gold, silver and gold
Mean so much more when I see
Silver and gold decorations
On ev’ry Christmas tree.

Merry Christmas to you all!
/Mike

Win a 1 oz Silver Canadian Maple Coin

Submit a dealer review for a chance to win a 1 oz silver Canadian Maple coin. On October 31, I’ll look at the ten most thorough reviews and randomly select one to receive a shiny, new 2012 1 oz silver Canadian Maple coin.  It’s that simple.

If you’re the lucky winner, I’ll contact you by email, to obtain a shipping address. Your email will never be used for any other purpose or shared with a third party.