Chapter fourteen. Inflation or deflation?

 Our medium of exchange is . . .

 Today we use currency to pay for "stuff". Here in the USA we use dollar$. Usually they are a small slip of paper which proclaims it is a "note and legal tender" for some printed amount of dollars. WTH does that even really mean? IT ISN'T REALLY MONEY! It has zero store of value. It is only worth the amount printed on it because a government fiat tells you that.


People argue with me about this topic. They laugh and tell me that they can still go buy a TV with a few of those pieces of paper. They chide me about, "If I think it is worthless then trade me a few of those with 100 on them for some with a 1 on them." My favorite is, "You can't eat silver!"

As for not being able to eat silver. You can't eat paper either!
The difference is that today people readily exchange products for our fiat currency, but today they wont accept silver in payment. Today, the accepted medium of exchange remains fiat paper currencies. So silver, which you indeed "cannot eat", would first need to be exchanged for that fiat currency, then used to buy whatever product you wanted. The only difference therefore is that to "eat" silver would require two steps to acquire what you needed instead of just the one. But, that is just for TODAY.

As in many things in life, sometimes "facts" today become "lies" historically. Take the Zimbabwe dollar as an example. It replaced the Rhodesian dollar in 1980 and started off on a par with it. After a while they actually printed $100 trillion banknotes. No joke.

So, do I believe we will have inflation like they had? No! Ours will be far worse! In its effect at least. The Zimbabwe problem had little effect on people beyond their borders. In fact - most of you had no idea about what happened there. But let me assure you of this:
WHEN THE US DOLLAR CRASHES IT WILL BE FELT WORLD-WIDE!

When dollars are recognized as just paper - what will be used then to buy a TV? Food? Maybe I'm wrong, buy I suspect a person would then accept a one-ounce silver coin as a "medium of exchange". We will see how this shakes out. Since nothing even close to this has ever happened - all ideas are at best speculation.

It is quite possible there will be a strong deflation prior to the hyper inflation. Some believe it will go that way and it will entice people to dump stored value (precious metals and land). Many will, of course, sell off because they need to do so, or just through ignorance. It happens regularly when a stock drops. People try to cut their losses by getting out while they can, while those stocks still have some value. I believe that would be a big mistake for precious metals.
Hang in there!

Chapter thirteen. Obtain a safe or otherwise secure your investment


Place slabbed coins in one of these -
Place it all in something like this.

Silver has a problem. That is - it is a bulky way to store value. Historically, an ounce of gold is worth fifteen ounces of silver. So, basically, silver storage takes 15 times as much space as gold. As I mentioned early on, possession of precious metals is a balancing act between value and liquidity. An ounce of gold is far more valuable than an ounce of silver today, but what will it buy for you when the dollar crashes? Are you going to be able to buy groceries and get a clerk to give you back a pile of silver as change?

Remember when I said I DON'T KNOW what is going to happen? It applies here too.

What I do know is if you invest in silver, before long you will have enough to need a safe place to store it. Unfortunately, I haven't had this problem yet since every time I begin to collect some, I need to sell off to pay a bill etc.

Anyhow, you may be a smarter investor than I am. I hope so. So, you may need a safe place to keep it. Buying a home safe is one answer. A gun safe works well for this.

The cost of a safe can be pretty high. Depending on the size and quality they can range into the thousands of dollars. Cheaper safes are better than none. But a heavy-duty one bolted down is best.

 The safe pictured has both a combination lock as well as a key lock. Both are required to open it. Buy one like that then store the key off site someplace like at work or whatever. So, no matter what nobody can get in it without knowing where the key is and then going to get it. In my case that would by my job site which has a dozen armed guards working at any given time!

I am not going into the various ways to hide your stash here. That is available online in dozens of places. What I am saying is do something. Don't pile silver on a living room table. Think about the problem for yourself. But do something.

Chapter twelve. Storage


A ton of American Eagles!
Storage and/or display.
After you begin to accumulate silver in one form or another you will need to decide how to store it. When you buy bullion bars, they mostly come sealed in plastic from the dealer. So, if you are going to keep them in the wrap from the dealer (manufacturer) your problem is solved. If you purchase from a different source, it may be different. Plus, you may not like the plastic and want to do something else.

Coins sometimes arrive in "Airtight" plastic containers or in those little cardboard flips or maybe in small plastic bags. Again, this may solve your problem and leave you with no further action needed.

On the other hand, you may buy some junk silver which often arrives in small Manila envelopes or nothing at all. If this is so you will want to improve your collection by purchasing storage items for your bullion and/or coins.

The American Eagle $1.00 and Canadian Maple Leaf $5.00 coins store well in the mint tubes. Twenty for the Eagles and twenty-five fit in the Canadian tube. When you buy one at a time you wont have those tubes and need to buy them aftermarket, which is easy and not very costly.

 Bullion stores well in several ways. There are shipping tubes which hold twenty coins and keep them separated (see blog page one). Bullion rounds can be stored the same way in shipping tubes made for them. Junk silver dollars are nearly the same size as silver rounds and fit nicely in those shippers. You can buy Airtight plastic holders to hold each coin separately as well.

Slabbed, certified coins are already sealed in special plastic containers to protect them and to preserve the certification authentication. However, after you acquire some of these you may want to store those slabs in a box. PCGS and NGC (and the others) make boxes which store twenty slabs in slots separating the slabs from touching. Remember a scratch on the plastic is almost as bad as a scratch on that coin! It still looks bad and unless you pay to have it re-certified, it will reduce the eye appeal and value at resale.

 Here are a few photos to help clarify all this for you:

Flea Market coins are often in these.

Airtight makes most of these in clear plastic.

 Each coin or slab fits in the slots.

Coin "slab". NOT certified.
NOTE: Coin holders often have little hand written notes, like the quarter above, claiming the coin is "AU". Whatever it says is the OPINION of the seller and not the "Gospel" as they say!

Chapter eleven. Trusted dealers

OK. Let's get back on track.


One Hundred Trillion Dollars.

IF you decide you want to buy silver (or gold), From whom should you buy?

I already mentioned eBay in a previous entry. They, along with other online auctions, sell almost any type of silver you could ever want. Then there are dealers, both locally as well as online.

Most people probably live near one of these dealers. Here in the Palm Beaches there are several within easy driving distance. I find a better selection and often better prices online. Plus, there is usually a guarantee protecting you. For me, the local dealers have been limited in what they have to offer, and for some reason not always easy to deal with. But, that's just me.

Many "local dealers" also sell online! In which case they may be a really good place to deal. You can avoid shipping charges and simply drive over and pick up what you bought online. The shipping savings may give you an extra edge against others who may be bidding. For example, a coin selling for $80.00 plus $6.00 shipping gives you a six-dollar edge when bidding! Be sure to confirm with the dealer BEFOREHAND that you wish to pick up instead of having it shipped !

I will name a few online sellers for you to check out. This is but a very few of the many out there. Some sell coins and bullion and others either/or. Remember to shop around. You will find that from time to time one has the better price, then a week later the other is better. Don't marry any one of them. It is your hard earned currency you are spending.

Here is a short list with a comment or two as appropriate.

Good selection. Every sale is always FREE delivery. Sells "grouped" items at a discount. Has adequate stock without "sold out" on a lot, like some have. Fast delivery. Accurate sales. Discrete packaging. Very limited number of coins available. Coins priced a little higher than eBay coins.

Good selection. Offers FREE delivery on certain items and occasionally on everything they sell. Sells own brand items minted at Silvertowne. A few "sold out" items in a few sections like Canadian Maple Leaf coins and some other. Very limited number of numismatic coins available and prices on eBay sometimes better. Produces investor information pod casts.

Good selection. Usually requires minimum purchases. Sells own brand rounds. Good prices on larger quantity purchases. Producers of a great many videos regarding currencies and precious metals. Does not sell numismatic coins.

 jmbullion
Good selection. No minimum required. Priced competitively. Fast discrete shipping. Sells numismatics as well as bullion.

 apmex
Good selection. No minimum required. Priced competitively. Fast discrete shipping. No numismatics.

Supplies, JP'S Corner
Carries extensive inventory of coin and bullion related supplies like holders, tubes, albums etc.

 Onfireguy
Good selection. FREE shipping in lower 48.

Do a search or two to find dozens more.

Chapter ten. A piece of American History in your hand!

While US coins represent just a part of a typical silver collection, they are no doubt THE more interesting and enjoyable part!

Anna Williams posed for the Morgan Dollar.
Called a "Morgan" dollar. Named for the designer.
The pictured coin was struck at the US Mint in San Francisco in 1881. It is 136 years old (in 2017). The obverse (front) design is considered one of the most beautiful ever designed, and the Morgan dollar is the most sought after US coin by collectors. This pictured coin has been certified by the Professional Coin Grading Service (PCGS) Holding one of these in your hand is like holding a piece of history for our American republic!

My personal collecting involves part numismatist and part silver/gold "bug". Many, if not most, collectors will collect "type" sets. Most experts advise you to do this. A type set would entail having "all" of a particular series of coins. For example, you may wish to collect all the years of the Morgan dollars. Maybe even all the years and mint marks plus even the variations involved with errors etc. While I find that attractive - it simply is not what I am doing. 

I collect US (mostly) coins which are sometimes graded and are selling for an amount not much more than a raw version of the same kind of coin. This plus some raw (junk) coins which will perform the same. I believe these will increase in value along with the spot prices of precious metals and always hold their value in that vicinity. I believe this removes the risk associated with coins which are rare or mint errors etc. Yes, perhaps a penny selling for $3,000 dollars today will increase in value when the dollar crashes - but the number of customers (buyers) will be quite small and I can't imagine that buying food or clothing with a rare penny will ever happen. This is just my opinion and in no way advise.

Coin collecting gets in your blood!

 PS: It can be profitable, if you can ever bring yourself to sell one of these magnificent coins.

Chapter nine. Junk silver or silver bullion?


The term "junk silver" means basically a US silver coin which has no value other than the silver content. Bullion on the other hand is usually pure (99.9%) silver in various forms like bars, rounds or other. Silver bars are either pressed or poured.

When the dollar crashes and the world's economy fails some people who are today mostly ignorant about silver and gold will become your first "customers"! Be nice to them!

Although they are basically ignorant, they may have enough knowledge to make a purchase or sell something to you. That little knowledge will probably be the fact they can actually recognize a US "silver" coin.

Some will know what this is and accept it.
Junk (I really hate the term!) silver is available all over at this time. Silver US coins are always dated 1964 or before - remember. The exceptions aren't important now. Remember the date - Nineteen sixty-four 1964. Don't be ignorant. It will cost you sometime later. 1964 - got it!

Even worn out coins may be a rare date and be quite valuable. Make sure to check.
One silver dollar today sells for about the same as a one ounce silver bullion bar or round - maybe a tad less. Junk is sold by the pound, by the dollar value or sometimes as individual coins. Break out the calculator and shop wisely. Scan the sales online and compare. The prices sometimes vary a lot.

If using ebay prices to compare, make sure to see what the offering is. Selling price or bid price? You can also click to view sold items to see what amount things are actually being sold for.

After a period of time more people will learn about values and what to look for, so after a time your bullion will come into play. If all you own is bullion that's fine. You will just have to be a better salesperson at first!
As I said elsewhere - NOBODY knows for sure what is coming down! So my thoughts here could be all wrong! As the Terminators were so fond of saying: "We'll see . . ."

Chapter eight. All "silver" is not "pure" silver.


Silver bullion is generally made of 99.9% silver. It will have that printed on it someplace in all cases I know of. As long as you purchase from a reputable dealer you are pretty safe with bullion. This includes new coins produced by a few governments, which also state 99.9% or even 99.99% in the case of Canada.

US silver coins were made of 90% silver and 10% copper until 1964. After that they were made of a copper center clad with a silver colored surface (see  CLAD below). They no longer had any silver content. EXCEPT for the Kennedy half dollar, which went to 40% silver until 1970, then zero from 1971 forward. There are exceptions with some proof coins, made especially for collectors, which are 90% silver. It gets confusing and my suggestion is to simply avoid coins made after 1964.

Sterling silver is an alloy of silver containing 92.5% by mass of silver and 7.5% by mass of other metals, usually copper.

Nickel silver, German silver, Argentan, new silver, nickel brass, albata alpacca or electrum is a copper alloy with nickel and often zinc. The usual formulation is 60% copper, 20% nickel and 20% zinc. Nickel silver is named for its silvery appearance, but it contains no elemental silver unless plated. The name "German silver" refers to its development by 19th-century German metalworkers in imitation of the Chinese alloy known as paktong.
CLAD. This means coated. A very thin outer layer covers copper (usually) . Not enough silver to be worth much of anything.

Read the words carefully

 Did you catch it? The words seem to say "In God We Trust. But they don't. Look again.

Chapter seven. When the dollar crashes, then what?



I haven't a clue. Nothing like the crash of our dollar has ever happened in the history of mankind. There have been several nations whose currency crashed. Greece comes to mind. But, the world reserve currency isn't the Greek euro. Most of the world doesn't use euros for petroleum purchases.

The world reserve currency is the US dollar. Petroleum is traded in US dollars (mostly). The crash of the dollar will be felt world-wide, and probably overnight.

When that happens, and it will, what becomes of what we possess? Does our paper money revert to its intrinsic value - paper? Things we have financed will still be contracted and no doubt payable with dollars, even when they are otherwise worthless. I don't know that, it just seems right. Paper dollars may go out of existence in fact. Replaced with computer zeros and ones only.

Food, water and shelter will still be required. Our financed homes will be still there. We will still be able to stay out of the rain. Payment for them should still be in dollars somehow, since that is what the contract calls for. The food shelves may become empty overnight. Make sure you have enough to get by for at least some period of time until the system takes hold again.

Guns and ammo. A necessity. However, contrary to what a lot of websites tell you, a gun isn’t going to help you in "martial law". Nor will having a lot of guns. I actually can’t think of one situation where a gun helps someone survive martial law.   Do you really think your guns are going to overpower the tanks rolling down the street, or the guns of the entire military fleet outside your door? If you use your gun, it is just going to draw attention to you and get you locked up. So, be wise.

So, what becomes of silver then? Will stores start accepting it? If dollars cease to exist and they somehow require payment - how does that work? Will silver skyrocket in value? Should you accept currency for your silver toward the end? If so, exactly when? Should you wait until it reaches a hundred-dollars an ounce? More unknowns than knowns that's for sure.

People tell me "You can't eat silver." That's is true. But, when you can't buy shoes with dollars, what will be available to use then?

I do know that silver and gold have had value since the start of civilization and have never become worthless. Paper, on the other hand has never lasted as a fiat currency anytime anywhere it has been used. 100% of the time - fiat currencies have gone under and reduced in value to zero.

Chapter six. Physical or buy an IRA?

Some folks invest in silver or gold and get just a document claiming they own some silver. These "ownership" accounts may even become a part of an IRA if you wish. Pretty good idea... except for the FACT you bought paper with your paper! Go ahead and do this, if you trust them to actually hold onto some silver someplace with a little "sold" tag with your name on it. I am not claiming they are crooks but just to beware!


My guess is that, as the banks do with fractional reserve, these companies can keep a fraction of what holdings they are supposed to retain. When the dollar crashes we shall find out how much they have held, and if it is even available to the buyer at that time.

 Also remember that if you invest this way, it is on record that you 'possess' the item(s). So if you don't want a paper trail of your holdings for some reason, you may not want to invest this way.

 However, there are some benefits to buying this way. If you direct the silver/gold to go into an IRA it becomes a tax advantage or write-off to you for now. And if everything goes well, one day you may want to withdraw your savings and pay taxes at that time based upon your retirement income, which will probably be much smaller and give you an advantage at that time. Of course, if the tax rates increase between now and then it may not be an advantage. We simply cannot know for sure.

 I don't know if a Roth IRA is available to use for precious metals. If you are interested consult a financial expert. 

As for me, I follow the words in the meme above.


USA = just 5% of the world's silver production.

Chapter five. Buy from ebay?


Sure, why not? Just like any other source from which you buy, you may do well, or maybe not! There are lots of factors to consider. Make sure you "connect" with a few silver companies first so you can compare what is on ebay with a retailer. I see people bidding up over the retail selling price for items all the time. Especially for silver bars.

There are a few ways to buy on ebay. Auctions, Buy and Best Offer. I have used all three at one time or another. Let's start with Auctions. Here are a few tips:

The way ebay works is if you bid an amount on an item, they will place that bid amount for you automatically and just offer from it the least amount required to make you the high bidder. So, for example, if you bid $100.00 on a coin or silver bar which starts at $50.00 (or has already been bid up to that amount) ebay will place you in at $51.00. Unless the other bidder has bid higher already, then it will seek an amount which is a dollar more than the highest existing bid. Your $100.00 will lurk out of sight until the auction time is over. All the while any other bidder that jumps in will increase the amount - with you still ahead at a dollar more than them, unless or until someone exceeds your $100.00 bid. Then at that point they win. But, if they exceed your bid of $100.00, and there is time left, you may increase your bid and possibly still win the auction.

Be careful in this. You are obligated to buy whatever you bid on. It is a contractual obligation and near impossible to get out of. So bid wisely.

 Also - know what your are buying! Read the description carefully. Look closely at the photograph(s). Today (9-1-2014) I found this advertised in print:
"1881-S MORGAN DOLLAR PCGS CERTIFIED UNCIRCULATED BU MS64+ OLD GREEN HOLDER".
With this photograph:



As you see, it is NOT a plus (+) coin. The label is NOT green and (I know) it is NOT an old holder. The coin shown is currently worth about $15.00 less than what the print describes. So, be careful.


Here is a way to get past all that bidding. Don't place that bid. Just make up your mind about how much the item is worth to you and sit tight - put it on the watch list on ebay. When ebay notifies you the auction is close to ending (I use five minute warning) then see if the current bid is less than what you "want" to pay. If it is, you could end up as the winner. Remember, ebay wont necessarily spend all of whatever you bid - just what is needed to beat the other guys.

 Don't bid yet. Now, sit and watch the item as the clock ticks down. Begin to click in with your bid but don't make that final click yet. (You will need to do a little practice on this to see what I mean - but once you get it right you will be buying stuff!) So, watching and waiting as the onscreen clock ticks down toward the end of the auction. When it reaches a few seconds before the end ZAP it in! If you timed it right (I use six-seconds before ending) you will get your bid in and anyone watching wont have time to counter your offer! You win.
Screen shot. This is it. If you click "confirm" it bids automatically for you.
In the shot above, you will see there is 5 minutes and 58 seconds left. WAY to soon to bid! That screen is active and the timer is counting down. Wait, wait - wait. When it reaches under ten seconds (I use 6) click on it! In the case above, I got the coin for $91.00, which, of course, pissed off that guy sitting on his/her $85.05 bid. But, I got the coin.

How can you know how much to use as my maximum bid? I'm not telling! I have to retain some edge!

This is actually simpler than it appears at first. After a few times you will be able to buy like crazy and be broke all the time, like me!

Chapter four. COINS or BULLION collector?

Diversity!
Definitions.

Bullion - Silver "bug": 
Someone who buys silver in whatever form, junk coins, bars, rounds etc. without regard to any collector's value. Staying as close to spot prices as possible. Dealers usually sell a little over spot price and buy at or a little under it. That is how they stay in business. Never expect to buy from a dealer at spot price. They are in business and must pay employees, electric etc.

 Coins - Numismatist:

Loosely defined as a coin collector or at least someone seriously interested in coins. Coins can be considered a bullion if they are of no value beyond their silver content.

 Is it silver? US dimes, quarters, half-dollars and dollars minted before 1965 were all 90% silver. Nickels had 35% silver ONLY for 1942 through 1945 inclusive. Circulation Kennedy halves were 90% silver in 1964 ONLY. Then begins the confusion for Kennedy halves!
  • Silver proofs 1992–present: 90% silver.
  • 1965–1970 and some dated "1776–1976" special issues: outer layer of 80% silver surrounding a core of 21% silver, totaling 40% silver.
Sooooo. While I do have a couple newer proof Kennedy halves which are 90% silver, this isn't something I would suggest.

Stick to the basics. If it is 1965 or newer it is not 90% silver. Either that, or be prepared to educate others when trying to sell later.

Exception: The US American Silver Eagles are a bullion coin and they are all 99% silver. The newer gold eagles are 91.67% gold 3% silver and 5.33% copper. All older gold coins made for circulation until 1933 are 90% gold.

Confused yet? Me too. Just keep the date 1964 in mind. They were silver then. After that, it gets weird!

I know I am repeating 1964 over and over. It is probably the single most important thing to know about US coins. Other countries are different.

Here is a complete listing of US coins and silver content IF you must go there: http://cointrackers.com/blog/1/silver-content-us-coins/

1964.

Chapter three. Get exactly what you ordered.

Silver dollar on my 40" monitor - standard size CD lower left.
If you decide to buy coins be sure you look closely! This is an actual image from eBay on my 40" monitor. Remember, if you buy a 'certified' coin, you wont need to worry much about the authenticity nor the grading - that's why it is called certified.

Eye appeal vs. condition. Why you need the above large view (or similar) is to make sure what they sold you is what gets delivered. Unless graded as a perfect 70, all coins will have some minor defects from shipping and handling by the mint. The more defects, the lower the rating. Even with certified coins no two are exactly alike in any grade. When you decide to purchase one because you like how it looks online, you need to check to make sure what you paid for is what you get. 

Once delivered, look closely with a magnifying glass or jeweler's loop at the coin, and closely compare any minor defects, bag nicks or marks, with the picture of the coin in the advertisement. Like a finger print, no two will be the same. Make sure the picture and the coin are identical.

This advice is doubly important when buying un-certified "raw" coins. While these coins are not usually numismatic investment quality, the difference in looks matters - especially if you ever consider sending a coin in to one of those services to have it certified.

 As for eBay sellers, they covet their 'good' ratings from purchasers and will go out of their way to make you happy. At least that has been my experience.

 Read all the advertisement. Often they have several coins for sale and should print a disclaimer stating that the coin pictured is a stock photo etc. So always read all they have to say about your potential purchase.
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