Silver Bells Are Ringing
December 10, 2009 by Dr. Michael Cutler
Silver bells are ringing, and it’s not just because of the season, but because of the buying opportunity afforded by investing in silver. Yes silver, the "poor man’s gold," has not gotten the attention it deserves.
In the past year the traditional press finally accepted the wisdom of owning some gold in an investment portfolio. We, of course, have been preaching this for the past 30 years.
While gold has been hitting record highs almost every day, silver barely gets a mention. Don’t make this same mistake in your portfolio! If you’re looking for protection from a falling U.S. dollar, silver offers several advantages over gold.
As I’ve noted before in this column, gold has been on a tear. Its price has climbed more than 50 percent since mid-November 2008. The reasons for this dramatic increase are central-bank buying, investor and investment-fund buying, paper-currency depreciation and inflation worries.
But while gold has risen 50 percent, silver has soared even higher. It is up more than 90 percent in the past year. And many analysts think silver will outshine gold in the coming year.
The silver rally went unnoticed by the traditional media and by most investors, too. One of the reasons is that unlike gold, silver is an industrial metal. Thanks to a recession in the U.S. and other countries in the West, the demand for silver declined. Now, as economies improve, the demand for silver is increasing.
Consider, too, that silver is nowhere near its all-time high of $50 per ounce, which it hit back in 1980. Gold meanwhile has risen far beyond its 1980 high of $850 an ounce. Many experts believe that silver has some catching up to do.
How much silver should you own? And how should you own it? My firm, Asset Strategies International, likes a precious-metals portfolio that is 40 percent gold, 40 percent silver, and 20 percent platinum. We suggest dividing your precious-metals holdings into metal you hold personally and metal that is stored offshore.
How To Buy and Store Silver
There are three “best ways” to buy and store physical silver. They are silver coins, silver bars and certificates. Following is some important information about each one.
U.S. silver coins can be bought in two ways—as recently minted, 1-ounce Eagles, produced by the U.S. Mint; and U.S. 90 percent silver pre-1965 "junk silver" coins in dimes, quarters and halves.
For small purchases, contact two or three precious-metals dealers and ask for a quote. Shop around, as premiums can vary. Today, all dealers have toll-free telephone numbers. Choose someone who has been in business for several years. And ask if they belong to the Industry Council for Tangible Assets, the precious-metals professional association. If you haven’t dealt with the dealer before then check with the Better Business Bureau to see if any complaints have been filed against them.
You can lock in a price over the phone. The price will include a small shipping and handling fee. Once the dealer receives “good funds” (after your check clears or a wire is received), your coins will be sent to you.
For larger purchases, consider buying a $1,000 face-value bag of 90 percent junk silver. This purchase equates to buying 715 ounces of silver. A big advantage here is divisibility. For example, $1,000 face value in dimes would be 10,000 dimes. In the 1970s, I recall some individuals paying for a gallon of gas with one silver dime.
This purchase of more than $10,000 would require a wire to the dealer covering the cost of the silver and shipping. In both instances the silver is shipped to you via the U.S.P.S.’s (U.S.P.S.) registered insured mail.
Likewise, when you wish to sell you can send your silver back to the dealer the same way. Typically, storage is in a bank safe deposit box, in a home safe, or, if you’re a “midnight gardener,” buried in the back yard.
Bars of silver ranging from one ounce to 1,000 ounces can be purchased from a precious-metals dealer. My recommendation is to purchase the 100-ounce bars. Premiums on 1-ounce bars are too high to be cost-effective. The 1,000-ounce bars cannot be shipped through the U.S. post office, however. (Registered insured mail limits one package to a value of $25,000 or a weight of 70 pounds.)
The 100-ounce bars are considered investment-size. To avoid the need for assaying when you go to sell, bars should have four important features: a recognized hallmark (Engelhard, Johnson Matthey, no unknown producers), a standard weight (100 troy ounces), agreed-upon fineness (pure silver is .999), and a serial number (indicating that it is registered with the maker).
Up to nine 100-ounce bars can be shipped in one package through the U.S.P.S. Storage would be similar to that of silver coins.
Should you wish NOT to take delivery of your metals, the best way to purchase and store silver is with the Perth Mint of Western Australia. The Perth Mint Certificate Program is also the safest way to own metals, since it avoids possible confiscation (stored outside the U.S.), is fully insured (Lloyds of London), and is fully guaranteed (by the AAA-rated Western Australian government). There are no shipping charges and the unallocated silver can be stored without charge.
You can buy and sell Perth Mint Certificates through their network of Approved Dealers. My company, Asset Strategies International, has been an Approved Dealer since the program was started a dozen years ago. In fact, we helped the Perth Mint design it.
For a free report on the Perth Mint Certificate Program, send an email to firstname.lastname@example.org. Or call us at 1-800-831-007 or 301-881-8600. We’ll be delighted to answer any questions you may have about adding the protection of silver to your own portfolio.
Yes, the outlook for silver is very bright. Many precious-metals experts expect it to outperform gold in the coming year. Considering that it would have to rise more than 250 percent to equal its old highs (gold has already done that), they have a good point.
Silver is easy to buy, whether the newly minted Eagles from the U.S. Mint, bags of older junk silver coins or bars. For larger quantities, offshore storage at the Perth Mint in Western Australia is safe, secure and guaranteed.
May the silver bells you hear this Christmas represent the joy of the season and the safety of your investment.