I well remember 1980, because I began dealing in precious metals in November of 1977. I began with North American Coin and Currency in 1977, and quit March 1st of 1980 when I knew they were going kaput. In 1980, gold went to $850 and silver $54, or a ratio of about 16 to 1. The ratio between gold and silver, throughout known history, has always been about 16 to 1. Why did it go to 77 to 1 a couple of years ago? I don’t know, any more than I know why it is still 55 to 1. By third grade arithmetical calculations, you can see that in the last couple of years, silver has gone up 27% further than gold. With gold at $813.70 Friday morning, if the ratio was 16 to 1, silver would have been $50.86, not $14.68. If the ratio resumes, as I think it will eventually, silver will go up 3.44 times further than gold. The first coin in history was made of silver.
Fantasy? I don’t think so. When? Who knows? I have no crystal ball, but I really do believe it will indeed return to a 16 to 1 ratio. Why not buy all silver? Because silver’s so big and requires a lot of storage space for one reason. To buy a $300,000 home with silver, you’d need at least 20,000 ounces, and to buy the same house with gold, you’d only need 375 ounces. Another problem with silver, is that it does tarnish, and if you’re going to bury it, you’d better be sure the container is absolutely air and water tight. When you sell silver, you’ll take a 4% hit, because the ’spread’ of silver is a lot higher than gold, which is about 1.5%. Silver costs more to ship also, with lots of boxes needed. Does size, spread, and cost to ship, offset the advantage in potential price increases? I don’t think so. Silver is a superb buy, in my opinion, if you have time to watch the ratio go back to 16 to 1, and you have a nice dry place to store it.
What to buy? My philosophy is always to get the most silver and gold, with acceptable hallmarks, for the least number of dollars. Hallmark? The ’hallmark’ is basically the brand name. You wouldn’t want to put Joe Blow’s Motor Oil in your Mercedes, would you? Then you wouldn’t want to buy silver or gold from “Crazy Eddie’s” mine, with his hallmark on it. Would Crazy Eddie’s stuff be good? Maybe, but that’s not the point. What you buy and think of eventually re-selling, must be saleable. Who would want Crazy Eddie’s silver bars, no matter how pure or cheap they may be? The hallmark, or brand name, is important in everything we buy, because it gives us confidence. Want Sally Smithereen’s Soup or Campbell’s? Want Goodyear Tires, or Skid-a-lot? The good hallmarks, which are instantly recognizable and wanted (saleable) are Englehard, Johnson-Mathey, and A-Mark. Handy & Harmon is fine, but they have ceased making bars many years ago, so you may not find one.
As far as coins are concerned, all of which are in one ounce sizes, the hallmark is also important. American Silver Eagles are $1.50 over spot or $1.45 over, if the purchase is a thousand ounces or more. Expensive, but they have dates, are beautiful, American made, and when sold, an old date may possibly bring a bit more dollars, plus you always get the premium back over other hallmarks. You just get less silver for your dollars. Silver Eagles can be bought in mint-sealed “Mint Boxes,” which contain 500. A little metal tab on top of the box indicates the date, and they are more desirable when sold, if the mint box has not been un-sealed. One ounce A-Mark rounds are very pretty, not dated, American made, and 55 cents over spot, or 50 cents over in lots of 1,000 or more, as with Silver Eagles. They come in tubes of 20, just like the Silver Eagles, and my supplier won’t break tubes of 20, so you must order in multiples of 20.
Bars are either new Johnson-Mathey, made in Salt Lake City, or if they are available, old Englehards, which are cheaper and nicer, but not often available. Nicer, because they are flat, semi-extruded (semi shiny and smooth), but they haven’t been made in close to 20 years, so they aren’t around all the time. When they are, I’ll place them on the web site, and you’d be wise to take them. Ten ounce bars are made by A-Mark, and are very beautiful and individually sealed in plastic to keep them from tarnishing. A wonderful Christmas Gift for well under $200. Bars are 50 cents over spot, and 45 over if more than a thousand ounces are purchased at once. Since 100 and 10 ounce bars are equally priced, why not go for the ten ouncers? It’s up to you. Incidentally, A-Mark has been around for close to 50 years, and is well known and acceptable.
Thousand ounce bars are not at all desirable, because first of all none of them are a thousand ounces. They are either more or less than a thousand ounces, and as a result, are appropriated individually, rather than one being the same as all the others. Steer clear of them, in my opinion.
Silver, is an industrial as well as a precious metal, and is often called the “poor man’s gold.”I bought a home in 1982 with 55 – 100 ounce silver bars as a down payment, and the realtor was flabbergasted, but stored them in his safe till close a week or so later, when I got them back. Silver’s a fine metal, which has a brilliant future. Last week I mentioned that I had a couple of Mercedes for sale. One or the other. I sold the diesel for Gold Eagles. Here’s the point: I was delighted to take the gold for my diesel, and I don’t know whether this happened or not, but I hope it did. Let’s suppose a buyer of a car bought it with 10 Gold Eagles, or 500 Silver Eagles, instead of say $8500. The Gold Eagle, made by the U.S. Mint at West Point New York, has $50 stamped on it. The Silver Eagle has $1.00 stamped on it, and is also made at West Point, by the U.S. Mint. While the car may have been worth $8500, when you divide that by $50, or $17, it means that the buyer bought the car for an actual $170 in US government issued coinage, or $500 in the same. Know the sales tax difference between $170, or $500 and $8500? The buyer bought the car for U.S. issued coinage with a stamped value of $170 or $1. Sales tax collectors may not like it but as far as I can see, it is legal. (Notice that there would have been less sales tax with gold than silver.)
My son David is now on line with the same prices and service as I have been giving for many years. This may take some of the pressure off me. His 888 number is the first one on the web site. Yes, of course I am still here! The past four weeks have been record weeks, with lots of new customers and heavy buying by people who are deeply afraid of dollars. So busy have I been, that I honesty feel pressured with the volume, and I don’t think it will diminish…unless the buck presses stop, and Congress stops spending, neither of which is possible. Both of us are needed, that’s all. If it becomes too much for David and myself, we’ll bring in other kids! You ready Melissa? Josh? Seth? Morgen? Sara? Rachel? The last five are Bonnie, my wife’s kids, so it will stay in the family!