Question about buying silver bars and rounds

Moonbiter · January 3, 2008 1:05AM

This is a coin question but I've seen some people discussing silver so I'd thought I'd ask here.

I want to start purchasing silver bars and rounds and would like to know what to watch out for. The local shop has rounds at a fair price but they are pretty generic and just say .999 silver 1 troy oz, no brand name or anything. On the web, I see that bars and rounds have name brands also. So, how should I purchase? Is 1 oz of .999 off brand going to get me the same price as a brand name 1 oz .999 if I sell later on?

Thanks

kiyote · January 3, 2008 1:17AM

It depends on the dealer. I've seen dealers sell with the "It's Englehard, so I have to charge more." then turn around and buy for barely what spot is. People like Englehard, Johnson Mathey, Sunshine and Silvertowne. It's better to stick with name brands.

direwolf1972 · January 3, 2008 1:23AM

Somewhat off topic from the original post.

Sometime around 96 or 97 I thought about buying Sunshine silver stock. It was a "penny stock" back then. Now they've been bought up by another company. Just wondering what happened to their stock. I've searched the web and I cant seem to find any reference to when they sold and what the buy out price of stock was. They are now delisted or at least I cant find any reference to sunshine stock nor their parent company. Maybe they were delisted before the buy out? Just curious if anyone knows anything about this.

Moonbiter · January 3, 2008 1:24AM

So not all .999 fine silver is created equal? Would you get a better buy price from a name brand vs a non name brand? That's strange.

mnmcoin · January 3, 2008 1:32AM

It shouldn't matter really. Occasionally my bullion buyer pays a premium for eng and jm stuff, but its only a nickel. We buy everything for the same amount...generic or not.

morris

fc · January 3, 2008 1:35AM

my only advice is to buy larger bars, 10oz and up, which allows you to get more
silver for your money. there is normally a premium for each item you buy.

so if you can get 1oz rounds for 15.50 and you buy 10, that is a total cost of 155 dollars for 10oz.
maybe you can get a 10oz bar for 151?

that saves you 4 dollars and covers the cost of your gas to get to and back from the local dealer.

every penny counts on stuff like this.

Moonbiter · January 3, 2008 2:24AM

This doesn't answer direwolfs question but it's something concerning Sunshine mining.

For disastrous management decisions, Sunshine Mining and Refining Company comes to mind. Once a favorite of silver stock investors, Sunshine traded at $13 in early 1998 on the NYSE. However, by 2000 Sunshine was in Chapter 11, and its stock has traded at less than a nickel on the NASDAQ.

In 1996, Sunshine's management borrowed $30 million and in 1997 an additional $15 million for development of its West Chance ore body at the Sunshine Mine, after which the company is named. Part of the borrowed funds were used to delineate what the company calls a "world-class" ore body in Argentina.

Although management claims the West Chance efforts were successful, management misjudged cash flow and was unable to meet interest and principal payments on the $45 million. Efforts to refinance were unsuccessful, and the lenders took control of the company and mothballed the famed Sunshine Mine. Shareholders wound up with about 3.6% of the company. Unfortunately, this was not Sunshine's only brush with disaster.

In 1972, a fire in the Sunshine Mine nearly destroyed the company. While Sunshine's stock price suffered, the company managed to survive. Now, Sunshine Mining essentially has been taken over by its creditors.

SilverBaron · January 3, 2008 7:21AM

In answer to your question...
I will assume that you are in the lower 48 of the U.S. You may even be in a P.M. sales tax free state...a real plus.

Every one has their favorite way of buying silver, with good reasons to back them.
I am talking phisical silver...NOT ETF's, receipts or stocks.

Lets look at 2 different ways to own silver.

90% U.S. coin. This form is also known as "junk" silver.

Pros....
Many folks like to buy this form of silver because of the fact that it was made by the U.S. mint and so has less odds of being "bad" i.e. NOT real or full weight. 90% coin is seen as a great barter medium if the banking system fails. 90% is readly bought and sold in most coin
and pawn shops. It is easy to count into small amounts that are easy to carry.

Cons...
During the great price run of 1979/80.... 90% silver coin stalled out at about 20x face (+/-) due to the fact that the refiners would not pay
any more, even though it was worth much more. The problem was that they had so much pure silver that required no refining that anything of less purity ended up on hold. Another factor that has come up in the past few years is that refiners are some times NOT counting the coin but just weighing it....there is just so much "thin" and "cull" coinage that they are tired of being shorted on the back end.

Bar .999 Fine.

Pros.... .999 fine silver is avaliable in MANY forms and sizes.... from 1/10 oz. to 1000 oz.. Normally, the larger the bar, the lower the price per. oz.. Fractional silver can be hard to find and very expensive per. oz. when you do. 1000 oz. bars are not normally sold due the weight of a single bar... and they don't come with handles!! I have found that the 1,5,10 and 100 oz. bars are the most traded sizes. The most popular brand names are Engelhard and Johnson Matthey. Yes, there are many other trusted and respected names... so no disrespect to them. Personaly, I have found that while you will some times pay more for a name, when it comes time to sell.... it is all the same price. Many dealers will sell silver bars or "rounds" ( normally 1 oz. ) all for the same price.

Because of the purity and the fact that bars and rounds are just as liquid as 90%, are NOT normaly subject to being worn "light",
and are sold in many sizes.... This is my prefered method of owning Silver.

Cons... Because this form of silver is NOT minted by a government... you must be carefull to check ALL bars and rounds to be sure that they
are marked ".999 Fine Silver" and " TROY OZ.". I once worked for a Northern Indiana dealer that knowingly sold "1 oz. .999 fine silver." A regular / avoirdupois ounce is 28 grams... a TROY ounce is 31.15 grams.... a 10% difference!! This guy also sold " 1 Troy oz. .999 fine" bars. The only problem was it was NOT silver!!

A few tips...

The good news is that bad .999 Fine Silver bars and rounds are rare.... and NEVER feel funny about asking your dealer to point out the purity mark on a piece of silver if you do not see it.... some times it is really small or on the rim!!

Do not buy any coinage of less than 90%. Yes, some folks buy 40% Halves or 35% war nickels thinking that the higher face value will
limit the down side risk. While this is true... when it comes time to sell, the price pr. oz. is usually lower due to refiner fees and lower demand.

Do not buy bars or rounds of less than .999 Fine quality. There is a lot of Sterling ( .925 Fine ) on the auction sites and in dealers "dead" inventory... same reasons as above.... refiner fees and lower demand.

Hope this helps!!

ahooka454 · January 3, 2008 7:28AM

SilverBaron,
Awsome, thanks for answering alot of my questions, I didnt even have to ask them.

direwolf1972 · January 3, 2008 8:11AM

<< <i>Once a favorite of silver stock investors, Sunshine traded at $13 in early 1998 on the NYSE. However, by 2000 Sunshine was in Chapter 11, and its stock has traded at less than a nickel on the NASDAQ. >>

what a bummer. May have been late 95 (hard to remember so long ago) but at one point in the mid 90's it was a very cheap stock. Thought about pulling the trigger at the time. What a ride that would have been. From penny stock to $13 a share two or three years later.

vplite · January 3, 2008 8:15AM

Good discussion Silver Baron.

Another suggestion:

You can often find silver Eagles at a little above spot. As a bullion investor, I would not pay much above spot for Eagles, even the 1996 "key date."

Milk spotted Eagles can be found for slightly under spot. Eagles are minted by the US, a guarantee of weight and purity.

Don't feel you have to buy immediately from one B&M source. Take your time and aim to buy at spot or below. Visit different dealers if you can. One will be looking to unload bullion. Some dealers make a tight market in bullion and go for the turnover. It also helps get people in the door.

There are often good buys at flea markets, and coin shows are a wonderful source.

I see people paying well above spot for unknown (or branded) silver bars and rounds, and I think they are wasting their money. They will get no more than spot when they sell.

Don't pay sales tax! That would hurt the investment potential. This might limit you to flea markets and coin shows, depending where you live.

BBN · January 3, 2008 8:20AM

I've been having alot of good luck buying 90% silver under the melt value on ebay lately.

nickel · January 3, 2008 8:42AM

to poster vplite-- paying more for a 1996 eagle is not buying
for bullion .much like the 1938 D half . it's more than bullion ,
it's a better date worth more

vplite · January 3, 2008 9:15AM

<< <i>to poster vplite-- paying more for a 1996 eagle is not buying
for bullion .much like the 1938 D half . it's more than bullion ,
it's a better date worth more >>

I knew that would pull somebody's chain.

The thread was about buying silver bullion.

But since you brought it up how about a rhetorical question? What is the population of MS65+ 96 Eagles to BU examples of the 1938 D half? OK, I know the prices are much different.

I might be wrong, but I find it hard to believe that a "coin" that was preserved in high grade and quantity can be compared to the 1938 D half. The 1996 is only scarce relative to the massive numbers of other years' Eagle produced. Maybe I am just an old fuddy-duddy who finds it hard to believe that any modern silver Eagles will be much other than often milk spotted bullion many years in the future.

Also the 1938 half is beautiful and Eagles are not. JMHO.

Question about buying silver bars and rounds

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