40% Silver IKEs..smart silver play?

bushmaster8

Interesting Letter to Editor in last weeks Coin World touting silver IKEs.

What say ye??

Bear

I would stay with the 90% silver. But what do

I know. I am just an Old Bear.

jmski52

He waxes prolific about the beauty of the silver Ikes. However, based solely upon the silver play, a silver Ike has 0.31625 oz. of silver, which is worth about $4.21 based on Kitco's current price.

So, if he's paying $5.00/coin (which I highly doubt), he is paying an 18.75% premium. If he's paying $6.00/coin (which I'm not certain he can do at today's price), then he's paying a 42.5% premium.

If you really like silver Ikes, that's fine. If you're looking for a silver deal, you can do better.

If you have storage space issues, then keeping 40% silver isn't as efficient as keeping either 90% or 100% silver.

Weiss

Is it along the lines of the 40% kennedy play? Each coin has .14792 oz of silver, meaning it takes 6.76 40% kennedys to make one ounce of silver. 6.72 x $.50 face value = $3.36 per ounce bottom floor protection--if silver drops below $3.36 per ounce, you can simply spend the coins at face value. Compare that to .36169 oz per 90% half dollar, which makes your bottom floor way down at $1.38 per ounce before you're protected.

gecko109

<< <i>Is it along the lines of the 40% kennedy play? Each coin has .14792 oz of silver, meaning it takes 6.76 40% kennedys to make one ounce of silver. 6.72 x $.50 face value = $3.36 per ounce bottom floor protection--if silver drops below $3.36 per ounce, you can simply spend the coins at face value. Compare that to .36169 oz per 90% half dollar, which makes your bottom floor way down at $1.38 per ounce before you're protected. >>




Interesting way of looking at it! Although I cannot fathom the possibility of this "protection" ever coming into play with today's global financial instability, I DO like the way you analyze this.

Weiss

<< <i>

Interesting way of looking at it! Although I cannot fathom the possibility of this "protection" ever coming into play with today's global financial instability, I DO like the way you analyze this. >>



I'd take credit for it, but it's not mine.

It's a way that Tulving and some others originally began pushing $1000 bags of 40% halves when nobody wanted them. It's actually a legitimate play, especially to those who are afraid of deflation. Remember that silver hit ~$4 per ounce as recently as November '01.

One other aspect that nobody has really capitalized on is that each 40% half contains 6.9 grams of pure copper. Multiply that by 2000 coins in a $1000 bag, and you're talking something along the lines of 30 POUNDS of "free" copper per bag. Copper hit $4 a pound several times in the last few years.

Metal is metal. It may not be practical to value the copper at $4 per pound, but it will be at some point.

streeter

I think you can buy a blue Ike for $4 right now. I've been buying them for a couple of years for between $1 and $4.

They represent ONE out of 20-30 low end bullion plays but the suckers take up a lot of room.

garsmith

Too much work to seperate the 40% that is from the 60% that isn't

ttown

40% anything is heavy and takes up too much space and talk about getting ripped off when selling most dealer in this area won't give you anywhere near spot.

Coll3ctor

<< <i>Is it along the lines of the 40% kennedy play? Each coin has .14792 oz of silver, meaning it takes 6.76 40% kennedys to make one ounce of silver. 6.72 x $.50 face value = $3.36 per ounce bottom floor protection--if silver drops below $3.36 per ounce, you can simply spend the coins at face value. Compare that to .36169 oz per 90% half dollar, which makes your bottom floor way down at $1.38 per ounce before you're protected. >>




So if silver goes to zero wouldn't you be better off with the 40% halves ?

SilverEagles92

<< <i>

<< <i>Is it along the lines of the 40% kennedy play? Each coin has .14792 oz of silver, meaning it takes 6.76 40% kennedys to make one ounce of silver. 6.72 x $.50 face value = $3.36 per ounce bottom floor protection--if silver drops below $3.36 per ounce, you can simply spend the coins at face value. Compare that to .36169 oz per 90% half dollar, which makes your bottom floor way down at $1.38 per ounce before you're protected. >>




So if silver goes to zero wouldn't you be better off with the 40% halves ? >>


No, you'd be better off with a bomb shelter and a stockpile of weapons because the world is about to end!

Coll3ctor

<< <i>

<< <i>

<< <i>Is it along the lines of the 40% kennedy play? Each coin has .14792 oz of silver, meaning it takes 6.76 40% kennedys to make one ounce of silver. 6.72 x $.50 face value = $3.36 per ounce bottom floor protection--if silver drops below $3.36 per ounce, you can simply spend the coins at face value. Compare that to .36169 oz per 90% half dollar, which makes your bottom floor way down at $1.38 per ounce before you're protected. >>




So if silver goes to zero wouldn't you be better off with the 40% halves ? >>


No, you'd be better off with a bomb shelter and a stockpile of weapons because the world is about to end! >>





STOP !!! You're scaring me

Weiss

<< <i>


So if silver goes to zero wouldn't you be better off with the 40% halves ? >>



Umm, yeah, that's the point. Theoretically it doesn't matter what the vehicle is--you buy 1000 ounces of silver in the form of 40% halves, you buy 1000 ounces of silver in 90% halves, you buy 1000 ounces of silver in one .999 bar. It's all still 1000 ounces of silver. But the premium for the 40% halves is almost nothing. And because the coins have a face value, you never have to worry about silver dropping below ~$3 per ounce. If it does, the coins can still be spent at face value.

It's a beautiful play. Theoretically. But in practice, nobody wants 40% halves. And very few people think silver will ever drop below $4 per ounce again.

topstuf

I can remember asking Jimmy Vollmer at Jack Hunt who actually BOUGHT 40 bags.
Not refiners, but actual silver speculators.
He said only the smart ones that bought HUGE quantity.
That was back in 1980 or so.

They DO take up room. I'd prefer 90 or bars and just run with a stop.

Things CAN be overthunk.

jmski52

Is it along the lines of the 40% kennedy play? Each coin has .14792 oz of silver, meaning it takes 6.76 40% kennedys to make one ounce of silver. 6.72 x $.50 face value = $3.36 per ounce bottom floor protection--if silver drops below $3.36 per ounce, you can simply spend the coins at face value. Compare that to .36169 oz per 90% half dollar, which makes your bottom floor way down at $1.38 per ounce before you're protected.

That rationale has been around since they stopped making 40% silver halves for circulation in 1970. Yes, there's a floor under the spot price of the silver. No, that rationale has never been a factor in reality.