Out at the peak

Sunday, February 05, 2006

Silver Bug

Precious metals have been heating up for awhile now. Everybody has been getting in on the action to some extent. However, it can feel really expensive. You can spend $10K on 17.5 ounces of gold. If you look at silver, you get much more quantity for your money. $10K will get you about 1000 ounces of silver.

I almost feel that silver has more room for upward movement especially if the silver ETF is approved. As a kid, I felt like four silver coins would be equivalent to one gold coin. Silver was like a quarter to me as gold was a dollar. There are definitely reasons why there is a discrepancy today, but that could change.

The Silver User Association avocates inexpensive silver so everyone can use it. They are trying to stop the silver ETF because a purchase of 130 million ounces in silver would drive up the prices and possibly expose supply shortages. This would be bad for future silver purchases, but is great for past purchases.

The above is my basis for attraction to silver. However, when I look at my options, I love it more and more. My favorite coin has got to be the Canadian Maple Leaf Silver 1oz. It has a $5 (loon) face value, and it's diversified from USD at the same time. I don't see any other precious metal coin with a better face/trading value ratio (except for some 100 peso silver coins I was able to buy for much less than $9.8 USD, but I think that is a fluke). I still have dozens of silver American Eagles (Proofs), but they are less impressive because of the $1 face value. I guess all that really matters is the trade value, but it makes me sleep better when looking at all factors.

I think I'll turn into a silver bug and end up collecting many different forms of it. I still have my single ounces of gold and palladium, but making that a hobby is relatively too expensive.


  • I concur with your thoughts on silver. I would also recommend MS65 Morgans for their long-term profit potential. Currently, they cost about $150 each, but when the economic crapola hits the fan, they will be worth > 10X that amount.

    By Blogger contrarian2day, at 6:46 PM  

  • Thanks for posting, Randy.
    Collectible coins could become an expensive hobby. Although for now, I'm trying to stay within a 2:1 value to melt ratio (except coin proofs, 3:1).

    It would seem harder to offload collectible coins in a time of dispair. Or no?

    By Blogger Out at the peak, at 12:23 AM  

  • so what's the story with the silver ETF? lots of talk I guess. you think it'll happen anytime soon?

    holding high values of physical silver is cumbersome. gold coins are e.z. but any substantial silver holding is gonna be a pain in the ass to secure.

    By Blogger CMYK, at 10:20 PM  

  • The best coverage of the SLV ETF has been tracked by Ben's Money and Metals. It's possible that it could be approved this year, but I haven't seen any official timetable.

    Are you just concerned with secure storage constraints? This site lets you trade physical gold and silver and they secure it for you.

    If you want to store it yourself, you could get 1000oz COMEX silver bars for $9600 on apmex.com and on other sites (although I am more fond of smaller pieces).

    By Blogger Out at the peak, at 6:58 PM  

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