Edit: This is not financial advice.  I’m not a financial advisor and I’m wrong 100% of the time.  Investments are risky and nothing mentioned here should be considered financial advice.  Invest at your own risk.

 

I got a call yesterday from a friend of a friend about my posts with silver.  I wanted to write this out for everyone who has any interest in “investing” in silver.  For anyone who has followed the silver community for awhile, “investing” in silver is a really bad thing to say.

Let me start off by saying this.  In previous posts I did discuss physical silver.  If you are involved in this, either keep extremely minimal amounts in your home or buy a vault, get lots of guns, security systems, and guard dogs.  There are many services out there that you can send your metals to in order to vault them for you at a very tiny cost.  Do NOT…I repeat…DO NOT have lots of metals in your home.  Banks, vaults, or digital would be my preferred path.  I do have a few rolls of dimes and quarters in case SHTF.  So no one is going to risk dying for $100 in silver.

As Mike Maloney says, “you can’t invest in money”.  Gold and silver have been money for 5,000 years.  Today, the fed is just clicking buttons and creating currency out of thin air.  Anyone who invests in precious metals knows that it creates a lot of pressure upward on the price of them.

It is thought that the only real money is gold and silver.  Everything else is worthless.  In my last post, I also wrote about how our forefathers had the good sense to specifically state in Article 1 section 8 and 10 about how only gold and silver are money.  Yet…here we are.  You see, back in the day, our currency stated that it could be exchanged for gold or silver.  Carrying the paper around ensured there was enough gold and silver to service the paper being printed.

Take a look at the US Debt clock going out of control.  Specifically, take a look at:

The dollar and silver to gold ratio now and in 1913.

Gold – in 1913, $28.79 per ounce.  Today, $19,276.

Silver – in 1913, $2.64 per ounce.  Today, $2,325 per ounce.

In 1913, the Fed was created.  What started happening was that we ran a tight ship with finances – DESIGNED by our forefathers and those in the banking system started figuring out ways of conjuring up counterfeit money.  For example, pre-1933 gold has $20 for a double eagle on it.  That’s because…it was legitimately used for $20 of goods.  Today, that piece is worth close to $2,000.

I also want you to look at something else…ratios and numbers.

  • In the above example, 10.90 ounces of silver in 1913 would buy you an ounce of gold.
  • Today if you were to just use the currency examples, it is set at 8.29 ounces of silver to gold.  There is more silver around that 100 years ago, which drives this down a little.
  • Yet, if you take the “spot” price of silver and gold today ($15.49 and 1,686.60) you get 108.8 ounces of silver needed to buy an ounce of gold.
  • Silver comes out of the ground at a rate of 9 times that of gold.
  • 97% of all gold ever mined is in existence today in jewelry, bars, coins.  It is highly recycled.
  • Silver has now taken on a lot of industrial uses.  In 1964, we stopped using them in US coins because the silver was more valuable than the face value of the coin.  Much of silver is lost in production and cannot be recovered.  It is used with circuits, bandages, solar panels, clothing (antibacterial properties) and cannot be recycled – at least for this price.  So – it is thought that there’s roughly 3 billion ounces of silver and 3 billion ounces of gold above ground, today

In 1971, Nixon signed an order to take us off of the gold standard.  The French president called chicken on us.  Apparently, we “were” on a gold standard and started printing lots of money out of thin air.  The French president said “dude, I’ll give you my fake paper for your gold” and a bank run started in the late 60s on US gold.  So…they then got off of the gold standard.  Not by constitutional amendment, but by a stroke of a pen by a president.

Here is the historic gold to silver ratio – note it swings every so many years.  Gold right now hit 125:1 recently and now it’s silver’s turn to outperform gold.  Given it is a MUCH MUCH smaller market, any big move can make the price skyrocket.

Gold-to-Silver-Ratio-Long-Term

So given all of that, big banks use gold to settle debts between countries at high levels.  It is what they call a “tier 1 asset”.  But over the last 20 years, less and less people think of silver as “precious”.  I’m not going to go that deep into this, but there has been a lot of banker manipulation to keep the prices of these metals down.

The thought is, with this recent bubble popping, they cannot hold it down anymore.  In fact, one of the biggest manipulators, JP Morgan, may actually stand aside and let silver take off.  Depending on the source, it is thought that JP Morgan has between 100 million and a billion ounces that they have hoarded over the years.  Let me explain – the entire silver market on the planet, in today’s dollars, is worth about $45 billion.  At this spot price.  It has been thought that bankers had been keeping the price down artificially through shorts and the COMEX to acquire as much as possible before letting it fly.

Apparently Bear Sterns (?) was the great silver manipulator, and JP Morgan took over them in 2008 or 2009 along with their silver manipulation scheme.  Not going tin foil hat – there are prosecutions ongoing now against JP Morgan for this.  So – yeah.  One thought is they would be going to the top and charging racketeering.  This has been going on for 2 years.

Silver spikes…historical-silver-prices-100-year-chart

In 1980 and 2011, silver hit $50.  But when you account for inflation, in 1980 it was thought to be $120-$150 per ounce.  In 1980, this was the Hunt brothers trying to corner the market.  They were charged.  In 2011, this was just after the 2008/2009 real estate crash and there were thought to be silver shortages.  Given its industrial uses, companies then bought as much as they could which then really did create a shortage – until…JP Morgan shorted the market with “paper” and drove the prices down.

So there were 2 different reasons for the spikes.  I’m going to demonstrate why I think there will be a spike again.  This spike could be muted at $25.  Or it might even go well into the $100-$500 range.  I want you to consider the below:

  • There is a Hunt brothers in existence today (JP Morgan) who have a massive stockpile of silver.  They are being investigated for spoofing.  With the microscope on them and prices thought to shoot to the moon, they might just let it go and drip silver in to the market over time to cash in big.
  • Today, there are a million industrial uses for silver.  Bandages and medical supplies.  Mirrors.  Solar panels.  Electric cars.  Pretty much any electrical circuitry that needs the best conductor of heat.  It’s also big in 5G technology.  In 1980, the only industrial usage was photography.
  • There is a legitimate production shortage at the moment.  Mines are shut down worldwide.  Refineries are closed.  Mints are closed.  Travel to get metals is problematic.  Like in 2011, with a shortage, you might see companies going from the just in time delivery method of 1,000 ounce bars to raiding the futures markets to buy large hoards.  This is now being seen with a $.45 cent difference between futures market prices and spot prices.
  • Institutional investment WILL see an opportunity.  I’m some schmuck at a low level and can see how this is going to the moon.  With things like pension funds needing to get 7% return on their investments, and many items being knocked down to junk (not legal for them to invest in junk bonds), it may move them to funds backed by metals.  Gold is up on the year.  Silver and gold were smacked down with the crash, but that was paper smack down.  Gold has recovered in price and silver has recovered about 70% of its price where the market has only recovered 20% of its losses.  Remember what I said about the “small” market of silver?  If you get a Vanguard or Van Eck to really start buying up, it will force the price higher.  To put it into perspective, Apple can buy all of the known silver on the planet 5 times over.  That tells you how small it is.
  • In times of worry, people flock to precious metals for investment and hedging against inflation.  Remember what I said about the debt clock above?  If you had that $20 gold from 1913 and somehow had a yoda-like life and still had that $20 gold piece that is now worth $1,700 – they had about the same buying power.  So when they are printing money like it’s going out to style, this LEADS TO INFLATION.  You take $1,700 and buy an ounce of gold.  Or 108 ounces of silver.  In 5-10 years, the price of that ounce of silver might be $5,000.  But it will have the same buying power as the $1,700 today.
  • Gold to silver ratio is at an all time high.  It went over 125 last week and is at about 108 today.  In ancient times, it was 2.5:1, and for most of history was about 15:1.  Given it is a precious metal AND highly used in industry, and gold is only used for bars in a vault and jewelry, one must wonder if gold is highly over valued or silver is highly under valued.  If you look at the clock above and see that the amount of currency printed to gold and silver would tell you that gold is undervalued by a factor of about 10, and silver is undervalued by a factor of about 155.  That is telling me that if it were undervalued only as much as gold, it would be about $225 per ounce, give or take.  Now – what happens with the trillions upon trillions being introduced weekly now on that pressure?

 

Ratios….

  • If the ratio of silver was adjusted to its historical norm of 15:1, silver would be $112 per ounce.
  • Given money has been printed out of thin air, if everyone with cash decided to buy gold at the current rate, people would be stuck with paper currency and no metal. Price would have to go up a lot for people to part with it.  See above with the $19000 per ounce?  If silver was adjusted to that at 15:1, it would be $1,285 per ounce.  At 50:1, a more “reasonable” modern ratio, it would still be $385 per ounce.

Spot price is $15?

 

Hedging

I used this example in some of my writings to convey to the reader what “storing wealth” means in precious metals.

Back in 1964, if you had 2 silver 1964 Roosevelt dimes, you could buy a loaf of bread or a gallon of gas.  Today, if you took those two silver dimes and went to a coin shop or other places, they give you “spot” price for this and you would get about $2.20 for those two dimes.  It’s higher or lower on any given day.  But, if you then took that $2.20, you’d be able to….buy a gallon of gas or loaf of bread.

The 1965 dimes were made of “clad” with copper and nickel.  In 1965, two clad dimes could buy you a loaf of bread or gallon of gas.  Today, those 1965 dimes have no value other than $.10.  This means you might buy a slice or two of bread with it.

Now, imagine in 1965 you had $10,000 in your vault.  Back then, you could probably buy a small family sized home for that.  $10,000 today might be 5-8 mortgage payments.  Had that been put into gold or silver then, and converted now…you could buy your small family sized home.

This is what inflation does to your bank account and cash in your bank account.  Over time, it degrades in value.

So – when countries right now are printing trillions out of thin air, it is helping a lot of people…TODAY.  But what it is doing today to help a few is taking the value of the dollars in your bank account and decreasing the spending power.

THIS THIS THIS THIS IS WHY BANKS WILL MOVE TO PRECIOUS METALS, AND SOON.

JP Morgan spent a decade driving silver prices down to hoard.  All countries over the last 5 years have been re-patriating their gold stores and buying up at will.  China and Russia have been BIG players in this.  China sends us low quality cheap goods with a devalued currency.  Americans buy the big screen TV made with semi-slave labor. China takes that currency and turns around and buys gold out of our vaults.

Our citizens are left with cheap big screen TVs.  China is sitting on a pile of gold.  Our government gets the paper currency back.

But paper currency loses value?  Let’s print more.

So as you can see, the paper currency game is a really, really bad idea. If you have 50k in your bank account right now, you feel you might be safe.  Well, what happens with this inflation is you see what happened hundreds of times over thousands of years.

Currencies fail.  All have failed once they go off of gold.  Every one in history.  They last 30-40 years, and politicians debase the currency through high spending.  Every.  Time.  You need to watch Mike Maloney’s hidden secrets of money series.  SPECTACULAR.  Number 7 is what just happened, and is continuing to happen now.  He created this in 2016.  Part 1 talks about what money is.  But part 7 is what just happened to us.  many are worried our recovery right now is a “dead cat bounce”.

So how do I get it?  This specifically was the question I was asked.  I need to discuss what forms it comes in, and how you can get exposure to it.

Forms:

  1. bars, coins, rounds.  You can go to a local coin shop and they will have “bullion”.  This can mean 1-5-10-100 ounce bars of silver.  Usually smaller sizes in gold, like 1/10th, 1/4, 1/2, 1 ounce gold.  The larger the size, the smaller the premium.  There’s a category of bullion called “junk” silver.  This is far from junk – it’s pre 1965 dimes, quarters, and half dollars like talked about above.  You have “rounds” which are generic mints just making decorative coin-looking items.  These have low premiums – like silver buffaloes.  Then, you have “American Silver Eagles” and “Canadian Maple Leaves” which are minted by the country of origin.

 

This is where most of your “investor” class is.  This accounts for about 200 million ounces of silver per year in demand.  That being said, demand skyrockets during times of turmoil and subsides during times of idleness.  That’s 200 million ounces per year during normal times.  This year, it will spike significantly.  Countries like India/China dial up their silver purchases in tough times.  The more wealthy Indian families buy gold, but silver is affordable for everyday folks, so that’s how they have stored their wealth for thousands of years.

Today, spot price is artificially low.  It was $17/$18 before this pandemic.  Then, everything sold on Wall st.  Spot price went down to $11 and change.  Every single ounce that could be bought, was – if you could afford it.  See – the local coin shops may have bought that inventory for $14/$15/$16 per ounce.  Just because “spot” price drops, doesn’t mean they will give it to you for that.  Then, DEMAND comes flowing in.  Watch this…

BEFORE the crisis, spot was $17.50 or so and I could buy an american silver eagle (with premium) for $20.

NOW if I was to go there, IF they even had any, spot is $14 and the list price would be $25 or higher.  Those who bought before this crisis are not going to sell to you for $14 per ounce because…there’s a crisis, and we bought to protect against it.  That being said, many people lost their jobs.  And, with it, many people may have to sell what they bought.  MAYBE you can get it for $17 per ounce from them.

That all being said, your local coin shops are not out to rob you blind.  They will pay $1 above spot for silver eagles and around spot for silver rounds, and just under spot for “junk” silver.  They run tight margins on this, and depend on volume for profit.  Spot price is more or less an arbitrary number that says “the market is paying this”.  Well….in times like this, there’s dissonance between spot and physical.

2. COMEX/FUTURES – if you want, you can buy 1000 ounce industrial bars at the prices listed.  Let’s say you have a microchip plant and you might by 10 of these per month.  Maybe you feel the price of silver may go wayyyy up in 2 months.  Now you might buy up tons of COMEX silver at today’s low spot price.  This will drive up futures prices.  But you have your year of metal, so be damned with everyone else.

I can tell you with mines and refineries shut down, as all of these plants in China are now coming back online, I can see an explosion of these companies trying to get as much silver as they can.  JP Morgan may be allowing the prices to move now.  This can mimic the shortage issues in 2011.  I’ll get more into it below, but China uses over 200 million ounces per year in demand.  They produce silver domestically, but nowhere near their demand needs.

3. Metal ETFs – I personally don’t like these, but I have a diversified portfolio to play all angles of silver and I have a few options on SLV and did on GLD.  ETFs will give you exposure to the metals.  However, I want you to also go back to that debt clock.  Look in the bottom right side.  You see 88.37:1 for gold and 174.88:1 for silver – what this means is many of these ETFS might not actually have dedicated gold/silver in their vaults.  Meaning, there’s a lot of “paper” ETFs out there that use these as derivatives of the metals.

Let me explain, if shit hits the fan a lot more than now, only the BIG institutions can pull silver/gold from ETFs.  Not you or I.  Maybe they only have 10% of the metal.  Maybe more, maybe less.  HSBC runs SLV.  Run with me on this…

35% or so of all of HSBC’s business is Hong Kong.  Apparently, their mortgage bubble is far worse than anyone on the planet at the moment.  Most of their mortgages are ARMs.  With deflation now hitting their market at 20%, you now have a whole bunch of people who cannot refinance and ARMs WILL increase.  Defaults will go out the ass.  Further deflation in their home values.

HSBC could fail.  What happens to their vault of silver or gold during defaults?  My guess is big banks have a higher stake to that metal than you or I.  So if HSBC fails, we may get pennies on the dollar with our ETFs.

So – don’t put a lot of money in these due to the underlying risks.

3. Mining stocks – if you take a look at their stock values in 2011 and 2016 when metals prices spiked, these guys trailed the spike by about 2-3 months.  All of the big miners today have been running tight operations the last 7-8 years and have put a lot of investment in big machinery to drive down costs of mining.  So – instead of taking big profits, they made their businesses more profitable for years to come.

For gold miners, the big ones are Newmont (NEM) and Barrick (GOLD).  For silver, they are Pan American (PAAS) and First Majestic (AG).

I had been a big fan of First Majestic for awhile.  If you go on youtube, you can find AG’s CEO Keith Nuemeyer all over the place in interviews.  Likable guy who knows his shit about the money back end of the business.   What you find about their operations more than a 10k or balance sheet is they put in something called a HIG.  This is “high intensity grinding”.  If any of you ever watched “Gold Rush” on TV, you know they have tailings after processing the pay.  What this HIG does is take their efficiency of recovery from like 65% to 97%.  This means, you run less pay for more product.  One of the largest costs of mining is energy.  When you can make massive efficiencies with your recovery, at less costs, this improves the bottom line.

That being said, PAAS has the better on-paper business model.

The silver companies are “primarily” silver, but they also produce other metals.  For instance, AG is 60% silver and 40% gold.  So what then happens when gold prices shoot up, well, this is also good for silver miners.

You have these other massive gold companies like Barrick and Newmont – as gold prices go up, their share prices will too.

The “big” money is in finding mid to small miners where you could have a 10 or 100 bagger.  The big issue with this is mining is capital intensive and an overwhelming majority of small miners fail.

4. Mining stock ETFs.  I have one of these – and what they do is buy/sell mining stocks.  THEY will find the mid and small mining stocks as well so you don’t have to.  The one I did have money in that I moved out of was SGDM.  This is Sprott, one of the best names out there.  I moved the money out of there to attack Kohl’s and Norwegian Cruise lines.  I will move back there after some of my plays are over.

5. Prospecting/exploration companies – many BIG companies like Barrick may want to purchase something tomorrow and start mining next week to make their money.  Sometimes, these things take 10 years to open.  So there are companies out there who have the geologists that find the good ground, purchase it, get the permits, then turn around and sell a ready to mine project to the big companies.  These are lucrative when metal prices soar.

6. Streaming companies.  I’m just learning more about these, but one I’m looking at is Metalla (MTA).  What they do is provide funding for projects, then turn around and have x% of the ounces that the miners mine for a period of time.  For example, maybe they lend a junior miner $1 million in return for 10% of their profits for 10 years.  If that junior strikes it rich, that $1 million can be $100 million in return.  Looking at these hard, but their financials are somewhat opaque….and I don’t like that one bit.

7. Vaulted – segregated.  Mike Maloney mentioned above owns goldsilver.com.  You can buy precious metals through their company at a premium and it is vaulted.  Then, there’s a small fee you pay on your stash monthly to hold it.  I do this because I don’t want more than a handful of ounces at my house for security purposes.  Once you buy your product, it goes in a tub or the like in a vault with your name on it.  At any time you want, you can sell it back to them or demand physical delivery.  Still – some people don’t like this because if shit goes to hell, who is to say the gold/silver is there and they will hand it over to you?

8. Vaulted – digital.  I like this more than above because there’s VERY VERY small premiums and storage is cheaper.  And, you can sell back in seconds.  An app like OneGold I was able to use extremely easily.  Get this, when silver prices were under $12, you could not find physical silver at $12 (or even $20) anywhere.  So how do you take advantage of this?  I bought through them at below $13.  Price below $12 didn’t last long, and it took 3 days for them to link my method of payment.  By then, I still was able to buy a small fortune at about $12.50.  At $15, it’s still a steal, considering I feel it may go back to that $50 high soon.  Even if it returns to the $18 range it was just 3 months ago, you’re still looking at 20% return if you cash out at $18.  THIS is how you play the lows and highs RAPIDLY.  When you have physical silver, the problem then is…how do you sell it?  It may be $50 spot, but if everyone is selling, who is buying?  OneGold is owned by Sprott and Apmex, two of the best names out there, so I trust the product.  Like the way the gold standard was, when they sell you the silver/gold, it’s backed by product in their warehouse.  You can demand delivery, but you would then go through Apmex with a credit and pay the premiums then. Or, skip that and just sell it back to them in seconds.  If you want to sell your physical silver, you could also go to one of the big bullion dealers like Apmex, SD Bullion, JM Bullion, etc.  While price may get to $40-$50, someone is always buying for FOMO.  Fear of missing out.

 

There you have it.  WHY I think silver is going to move big, and why I feel the value of it now is supremely undervalued.  The catastrophic market conditions are causing fear, there’s not a lot of product available, supply chains are down, and big silver consumers like China are coming back online and will demand silver.  Higher investment will drive up the value, as when people start getting into the silver ETFs, they then start buying more silver.

All – get your apps to monitor silver spot and future prices.  It’s going to be a fun ride over the next few years.

What I would ask of you is if you get a stash somehow, never sell all of it.  Imagine a scenario like below.

You buy 1000 ounces of silver for $15,000 today.

Silver hits $30 per ounce.  You sell 500 ounces, and pocket $15,000.  you now have your initial investment back plus have 500 ounces for “free”.

If silver then goes to $40 per ounce, maybe you sell another 250 ounces for $10k?  maybe it then goes to $50 per ounce and you sell 150 ounces for $7500?  Maybe it then moves to $100 per ounce and you sell your last 100 ounces for $10k?

Your initial 15k could bring back $42,500?

Or, you hold it all until it is $100 per ounce and get $100,000?  If you hold too long, it could go back down to $10 per ounce?  You need to develop an exit strategy WELL before you go in on buying metals.  What happens if it doesn’t move for 6 months?  You sell, and the next day it hits $75 per ounce?

Have a plan.  Have patience.  Have an exit strategy, or multiple strategies.

 

Looking forward with demand….

I have spoken about the supply side.  Somewhat.  There’s about 700-800 million ounces mined every year and about 900 million consumed.  This has been the trend the last 5 years.

Take a look at some of the charts on this article from 2018 by Jeff Clark – who also works with Mike Maloney.  Long story short on this is china’s industrial demand continues to increase and is at over 250 million ounces per year.  China is coming back online NOW and needs silver.  Silver mines, refineries, and mints are closed.  India will be coming back online soon and wants investment silver.

Solar panels are now using 100 million ounces per year?

Now, the CEO of AG had mentioned that electric cars use “3-5kg” of silver, each.  I heard somewhere else it was 1kg.

Today, silver production is about 800 million ounces.  We consume 900 million, and a lot of the world’s mines are in degrading states for silver.  Some estimates say there may be only “20 years” of silver left.  I doubt that very much, but the point is at$15-$18 per ounce, that statement might be true if it takes $60 per ounce to mine it.  What that will tell me alone is that if it becomes more costly to mine silver, the prices will go up.  If not, you have less mined and…the solution for low prices….is low prices.  Mills will shut but the demand will skyrocket.  This pushes up price.  More companies get back in when it is economically viable.

Keith Nuemeyer had stated their AISC (all in sustaining costs) were about $12 per ounce of silver.  There’s variation here.  It takes like $600-800 to mine an ounce of gold.  So as costs go up to mine silver, so will the price of attaining it.

With the electric cars – 1 KG equals about 32 troy ounces.  Even if it’s 1kg, let’s use that.  Today, there are 3 million electric cars on the road.  It is estimated that over the next 10 years, that number will go to 125-150 million.

Ask yourself…do the numbers add up to you?

If over 10 years, on a low end, avg, you are looking at 10 million cars per year.  This number will be far higher in 2030 and far lower in 2020, but it averages out to 10 million per year.

10,000,000 * 32 = 320,000,000 troy ounces per year of silver.  Just for electric cars, averaged over 10 years with a low kg number and low car number.

The world’s total supply being mined is 800 million per year.  Oh…and 5G is coming.  Currently, that’s using only 7 million per year but will surely be rising.  Solar panels.  Chinese using 100 million ounces a year just on solar panels?  All new houses in CA need to have solar installed?  In a state of 47 million or so, you’re telling me new houses all need to have this?  What about the rest of the world?  Would it be fair to say solar might double over the next decade?

So if in 2030 you have the higher end of electric cars made (maybe 450 million troy ounces) and double solar panels (200 million) you are seriously putting a demand shock on the market.  Which by then might only be mining 600-700 million ounces per year.

Point is – demand is now at 900,000,000.  Without double solar panels and 150 million electric cars.  And the birth of 5G.

Question…if JP Morgan does step aside and silver hits the “free market” – and supply/demand laws really do come into play here…

Is it really, really, really out of bounds to think $100-$200-$300 silver?

Before you squawk at that, palladium was at $2800 per ounce, platinum at $800 per ounce, rhodium at $10,000 per ounce, gold at $1,700 per ounce.

Now, you have silver that is only 9 times as plentiful as gold.  Significant demand.  Supply issues.  Price issues.  JP Morgan and others working for 10+ years to drive down the price of silver facing prosecution – and the government now watching every trade?

So it was at $17 per ounce and dipped for a hot minute to $11 per ounce.  Back up to $15, almost $16 per ounce (futures touched $16.05 on Thursday).

If you can get it for $20 per ounce, it still might be a steal.  Remember, it HAS moved to $50 per ounce twice and the gold/silver ratio is way out of whack.

 

 

Note on “junk” silver – and how much to pay for it.  

If you take a pre-1965 dime, for example, it is 90% silver.  If you have a roll of these dimes, it’s $5.00 face value.  One “quick” calculation you can do to estimate silver in coinage is to use the .715 rule.  This is what many use for buying things on eBay at face value.

Let’s take the $5.00 roll of times.  Multiple that by .715 and you get 3.575 ounces of silver.  I’ll get back to the ounces in a second.  But you take the 3.575 ounces and times that by spot (let’s use $15 as spot+premium) and get $53.625.  Divide that $53.63 by $5.00 face and you get…$10.72

So if you are looking for $10 face value of quarters, half dollars, dimes pre-1965, take that and times it by $10.72.  This means a $10 roll of quarters, 2 $5 rolls of dimes, or a $10 roll of half dollars would cost $107.20.  However, the supply today is tight, so maybe this should be $110…$120?  What you are seeing now on eBay is prices at $160-$200 for $10 face.  Maybe even higher on APMEX.

When/If things settle down with supply, use that formula to get close to spot.

One trick I used to do was to find large stashes of what seemed like people needing to move things, now.  $50 face value in dimes all at once tells me someone needed to dump their stash.  Instead of bidding, you will see them under “make an offer”.  At the time, silver was at 12x.  That means, I’d be looking at around $120 for $10 in face value if buying at spot.  For a $50 face value, that’s somewhere around $600.  I’d offer $550 and BAM.  done.  I’d get it at 11x.  Or…buying UNDER spot.  This lowers your dollar cost average for more expensive silver like eagles.  So you go and turn around and sell that $50 of junk silver on ebay or the like when prices are higher, $5 face at a time, with bidding.  You can get a nice 10-20% profit doing that.

Taxes and reporting.  

Why I would buy American Silver Eagles over silver rounds?  The silver rounds may have a very low premium, but over so many dollars in sales, it must be reported to the IRS.  Not so with ASEs.  For example, if I bought a lot of Silver Maples (Canada), when the LCS bought my silver, they’d have to report sizable purchases with the IRS.  Not so with ASEs.  Junk silver has a limit I think of $5,000.

Ounces….troy ounces

When you see “ounce” many of you think of a standard ounce, which is roughly 28 grams.  However, a “troy” ounce is 31.1g.  So – if you weigh your junk silver in grams and convert, you might wonder why your ounces seem off.  All metals are measures in troy ounces.

About the author:

I’m not a Harvard grad.  Or a Wharton Grad.  I have 2 master’s degrees, one of them in business administration.  I run an organization with a large number of people.  My MBA concentration was management studies – to do what I’m doing now.  My other master’s was in cybersecurity, and that is also in the context of what I do now.  While I did have some of the finance and accounting classes, my focus was not reading a 10k or focus too much on the ratios of a balance sheet – my focus was more like, “how would I run a large corporation”.   With this, you start to understand legal issues, supply/demand, SWOT, risk analysis, trend analysis, metrics, supply chain, operations, global cultural implications to business – and overall, how to make a profit.