We are constantly being told to buy silver and gold, but just exactly how do you do that? Through the bank, a pawn broker, jewelry store? I know this might win a nomination for the dumbest question of the year, but I honestly have no idea!

We weren't able to relocate, we live 30 miles from a major city, 4 miles from a town of about 20,000. We were late getting started but have food and other preparations to last at least 6 months and enough cash to last maybe 2 months, but no silver or gold. Can anyone help here?

-- Kimberly Hott (ckhott@urec.net), August 21, 1999

Answers

Kimberly,

Someone might be able to post an answer to help you, but I don't think this forum is the right place to get this kind of information. You might try posting your question on the "Time Bomb 2000" forum, located at http://www.greenspun.com/bboard/q-and-a.tcl?topic= TimeBomb%202000%20(Y2000)

and there are probably some preparedness forums that list various places for buying gold, silver, etc.

The short answer to your question is that there are several coin dealers, located in large cities and all over the country, from whom you can buy gold, silver, or various other coins in person or over the phone. Some of them are more discreet than others, and some have a better reputation for safety and good prices than others. Most will allow you to send them a check, and when it clears, they'll send the coins to whatever address you specify; some may insist on a certified check. Some are pretty good about shipping right away; some of them take a couple weeks to acquire the coins from wholesalers or other sources.

Ed

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), August 21, 1999.

Thank you Ed for your answer and for being so polite about pointing out that I should post that question on another forum. Very sorry about that.

-- Kimberly Hott (ckhott@urec.net), August 21, 1999.

Start with the yellow pages. Try websites like Kitco.com. Various newspapers' financial sections give the daily quotes on the buy-sell spread for various gold coins and for "junk silver".

Junk silver is the name given to US coins minted in 1964 and earlier, whose intrinsic value is 0.712 oz. of silver per dollar of face value. Thus, if silver is at $5.00 per oz., junk silver is worth, in the parlance of the trade, "about three-and-a-half times face". That is, four silver quarters are worth, intrinsically, $3.56.

Silver dollars contain, as memory has it, either .82 or .86 oz. per coin. As bullion, they're generally not a good buy; unless very worn, the premium over bullion is too high. Same for US gold coins. The premium is way above the bullion value, particularly for any coins of smaller denomination than the $20 "Double Eagle".

As a generality, you should be able to buy one-ounce bullion gold coins for maybe 5% to 7% premium over spot price, plus sales tax if you don't have a state sales tax license. Junk silver has a premium, right now, due to Y2K buying. Last week, a price on a $1,000 bag was reported at around $4,265, with silver around $5.30/oz.

Best luck, Desertrat

-- Desertrat (arthur@surfsouth.com), August 21, 1999.

Kimberly and Ed,

While Ed is right that there would be a lot more response from a forum such TB2000, I think this is a good question (not a dumb one) for this forum too. Personally, I envision a possible societal situation sometime after January 2000 that could reward you for having gold and silver coins to use. I think it could be 2001 or 2002 before this happens, but it is possible. Barter is of course an expected way of doing things if paper currency fails, along with the trust in bank checking accounts. In such a scenario, some goods and services would be more available to those who have some hard money, ie, gold and silver coins. It has always been that way in ancient history and history could certainly repeat itself on this score.

So, to answer your question, I personally recommend the following. Purchase only American Eagle Gold and Silver coins. These are produced by the US Mint and sold through coin dealers. The are called bullion coins, because they sell for about the price of gold bullion plus a small markup for minting and profit. You do not want any "collector" or nusmismatic coins, just plain old 1999 Eagles. The gold ones come in 4 sizes, 1 oz, 1/2 oz, 1/4 oz, 1/10 oz. The 1 oz have a markup of about 10% above the price of gold bullion and the 1/10 oz are about 30% higher (per oz) since there are 10 coins for the smaller unit. You should have some of each, I think, because it will be easier to use the 1/10 oz for smaller purchases, and not have to worry so much about getting "change" back.

As far as where to start looking, go to any store with a large magazine selection and buy a couple of coin collector magazines. These will be 99% designed to appeal to the true collector, which is not what you want, but there will be full page adds, with toll free numbers, for the largest dealers. The ads will usually mention in some small area that they have American Eagle "bullion" coins as well. Ignore the prices in the ad, since that was only correct when the ad went to the publisher, perhaps 2 months ago. Call the number, and get the price right now, it changes daily, but not by much. The best dealers will take credit card orders (recommended) or personal checks or money orders. Check orders take 3 weeks +/- to fulfill. Credit card orders will get delivery in 7-10 days. They usually ship to you by US Postal Service, registered mail, which you must sign for. Of course you can also go directly into a store and make the purchase that way, but the mail order works just fine.

I can vouch for one company (no personal interest in it) that I know will do a good job for you. The are an old coin dealership, with very friendly and helpful people. Call them and ask questions. They are located in Maryland. Coast to Coast Coins. 1-800-638-8869. Go ahead and at least educate yourself about this matter. Incidentally, they also buy back the coins if you wish, and will give you a spot price for that as well. Of course, the buy back price is less, but not by very much. The American Eagle coins are considered to be like money, not like collectors coins, as I said, and there is very little swing in the prices paid. It is always tied directly to the current market price of gold, what is called the "spot" price, which only means what the metal is trading for on the world market at this point in time.

Gold is selling at near an all time low right now of approx. $260 +/- per oz, so you would be buying near the bottom of the price market. Gold can easily soar beyond $600 oz, and has, within the last 25 years. Of course if it goes up in the next few months, which I think it will, then your coins will cost much more, or the coins you already have will be worth much more. I would plan on just keeping them for the year 2001-2002 situation I mentioned. They will be "worth their weight in gold" in such a situation, if the paper money goes into hyperinflation and loss of trust. Gold converts to any other currency and always has. It is a universal medium of exchange and always has been until the last 60-70 years here when the government decided to de-link its attachment to gold. This allowed them to play some breathtaking monetary games, which could not have been done had the dollar been required to be backed by gold. Oh, and the same priciples apply to Eagle silver coins, but of course the costs are much lower, in the range of $5 oz +/-. So, you might want to consider that option, but realize that oz. for oz. you can store far more value in the gold coins. Hope this helps.

Gordon

-- Gordon (gpconnolly@aol.com), August 21, 1999.

Kimberly .... There is another option, I believe to be still open. Sunshine Mining, (was on the NY Stock exchange) had a toll free number in Texas, where they took orders for "silver rounds" ; A Sunshine Mining coin that was about the size of the old half dollars, and sold for spot plus a minting mark up of about 3%, if I remember correctly. Why buy this instead of US mints ? BECAUSE, the silver content was .999% ; Not the .76 % of U.S. mint coins. You get 24% more for your money, and at less mark up. Try your 800 operator for the number. Eagle

-- Hal Walker (e999eagle@freewwweb.com), August 22, 1999.

Hal,

There is one point to keep in mind. Acceptability. Now, lets say you and I show up a gas station that will sell us gas for cash, hard money that is. I have an American Eagle coin and you have a Sunshine Mining coin. Who gets accepted? Wanna bet? You'll be sitting there trying to convince some Pakistani that your coin is not only good, but even better than my American Eagle. Good luck.

-- Gordon (gpconnolly@aol.com), August 22, 1999.

Gordon ... Didn't intend to buy gas 0R food with same. There are smarter people that gas station attendants, and these "traders" will show up when things settle down in a year or so. THEN, assuming the dollar is glorified TP, you will get the premium net worth for the silver content. BTW, when gold makes the leap to, say $2000-$3000 an ounce, and the common man can ill afford to own it, or hold it, silver will revert to it's historic 5000 year old ratio to gold; i.e. 10 ounces silver = one ounce of gold. As the various governments and their agreements to "fix/nix" the price of both since 1890s , silver had fallen to an all time low ratio of 80 to 1 with gold. As you can tell from recent spot prices, a reversal has begun, and at about $5 per ounce to golds $260, we now are at a 52 to 1 ratio. I rest my case, as the lawyers would say. Hope Ed doesn't throw me out for profaning the site. Eagle

-- Hal Walker (e999eagle@freewwweb.com), August 22, 1999.

Hal,

I don't think Ed will throw you out. This is a part of the coming scenario if we get into the higher level breakdowns. You make some good points and I can see that you are planning on precious metals being a store of value. I was going for the simple or practical use idea, not the trader area. Trading will require some extra knowledge of the metals market at that time. But, to just use the coins for purchase of "critical essentials" it would be easier, in my opinion, to have American Eagle coins to use, since they will be understood and acceptable to the largest amount of people. With something like Sunshine Mines coins, the other party may want to confirm the content thru weighing, etc, if they are not sure about the coin. That's all.

-- Gordon (gpconnolly@aol.com), August 23, 1999.

Hal, don't forget that money and psychology are intertwined in this issue. Given how long it has been since our money had intrinsic value, folks are used to the validity of fiat money. Just as with gold bars in lieu of double eagles, these non-monetary silver one- ounce coins will be doubted by some--and possibly one of those "some" might be very important to your immediate concern.

Not many of these private mintages of silver "Onzas" of one sort or another sell for very low premiums, either. Most are offered at ripoff prices as though they were of some sort of collector value.

Yeah, right now, there is a premium for junk silver, due to Y2K buying. But, "normally" they are as good a buy for the money as any other silver, and better than most. You are still buying by the ounce, not by the dollar. That is, you're buying .712 oz of silver per dollar of face value, as a function of the spot price.

Getting a little farther in to this, one-oz. gold coins present the problem of making change. Just finding fractional gold has been somewhat difficult for a long time--long before Y2K became a problem. Ergo, the reason for junk silver. It is already legal tender, and fractional.

Should a high-end Y2K scenario develop, barter will co-exist along with intrinsic-value money. It seems intelligent to me to think in terms of .22 and 9mm cartridges, cigarettes and booze. The latter, I would think, would be most effective in the smaller-sized bottles.

Should there be a real case of the horribles, well, I had some cousins in Santo Tomas prison, Manila, PI, courtesy of the Japs. Two of the most important items were needles and Ronson flints. :-)

Regards, Desertrat

-- Desertrat (arthur@surfsouth.com), August 23, 1999.

Here's another option al-be-it probably not well suited for Kimberly. Open interest in Dec COMEX gold futures contracts is huge. Why. Its a great way to control alot of gold (100 oz) or silver (5,000 oz) with a little money (less than $3,000 / contract) Smart money is using the leverage of futures markets to REALLY take a position. They won't need to take delivery. Go out and buy the physical metal AFTER you've taken advantage of - or been burnt by leverage. WARNING: 95% of small investors lose their rumps in these futures markets. Not for rookies or the feight of heart. Here's a better question: Why aren't these precious metals markets reacting to Y2k risks??????? Pounded again today....Leverage would have hurt u bad. I'm still waiting on the sidelines, perplexed....

-- Downstreamer (downstream@bigfoot.com), August 23, 1999.

While I appreciate the discussion on gold and silver, I do think that leaving out Platinum is remiss. I'm no gold bug... nor am I a silver bug or platinum bug for that matter, but platinum may be something to consider. It seemed to me that the mark up on the Platinum American Eagle was significantly less than the mark up on Gold and Silver American Eagles. Perhaps, this is due in part to the focus of Y2Kers on Gold and Silver. Maybe, I'm totally wrong. I have been waiting to see if I can afford to make these kinds of investments or if more preps are necessitated and, therefore, gambling may not be an option.

From what I have read, Platinum production seems to be more technology intensive than Gold or Silver and the mines are mostly in high Y2K risk regions (Africa and Russia). I have also read that 50% of the platinum that is produced every year is destroyed in industrial use. As long as we don't go to a 10, Platinum may dramtically increase in value if production and transportation is incapacitated (weeks to months), yet industrial demand for it remains high. I'm not sure, however, if platinum jewlry and coin is easily convertible into a product that can used for industrial purposes. Nor do I know the exact relationship of Platinum and Gold prices. I have heard that Platinum prices rises higher and falls faster with Gold prices. Anyone know?

As for the best prices on Gold, Silver, and Platinum American Eagles, it's really hard to say exactly where you can find good prices if you are buying less than a quantity of 500 coins from a fair dealer. Coin dealers seem to have high mark up, but some offer a decent price on a quantity of 20 coins. In terms of quantities of 20 or less, there seem to be some decent prices on Ebay (every now and then). You need to find out what the prices are in general and just keep on checking for that cool auction. I've missed out on quite a few real good deals.

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), August 23, 1999.

When I was just a kid growing up in the 40s it seemed that not only was life simpler, there were a lot of good sayings passed on that were born of good practical experience. One of them was: "A bird in the hand is worth two in the bush."

-- Gordon (gpconnolly@aol.com), August 23, 1999.

Like I said on another thread here...... In my very humble opinion (being surrounded by those who love gold) gold will be useless. And no one should kid themselves, gold is way far from an all time low.

-- Norm (Prez22@aol.com), September 03, 1999.

Gold is useful because it has high value for small weight but, beware, it also raised the evil nature of mankind when it is coveted.

Silver is useful because it is known both as money and precious metal. Most post y2k flea/barter markets will probably have a trader or two who will take a silver bar and give you currency of some kind...or give you silver coins.

Before you put your life savings in gold consider the following ladder:

A safe location with good neighbors protects all your physical assets better.

A house you can heat, with manual drinking water options lets you stay in your neighborhood.

Food reserves, stored appropriately for whatever period you choose, can help you stay out of public chaos (let you think calmly) and will prevent you from spending any cash you have.

Reserves of other useful items prevent you from using cash.

Reserves of cash prevent you from needing to line up at the bank (unless you want to) and prevent you from spending silver and gold (unless you want to).

Reserves of silver allow you to buy more cash, or other goods, and prevent you from spending gold.

Reserves of gold allow you to reinvest in your future when society has stabilized.

Cover the top of the list first and only buy gold if you are well set on the other ones.

One very possible scenario: Massive digital traffic jams cause rush to currency and transient deflation. Gold markets quote in digital values. Local coin dealers may be so strapped for cash that they are only willing to pay $50/ounce cash for gold coins. Also, ownership of gold is very thin, mostly held by governments. Do you know where you can sell in a crisis?

Maybe instead of one gold eagle you should buy $260 worth of toilet paper...which you would use in the next 5 years anyway. You should be able to figure out where to sell or trade toilet paper.

-- Thom Gilligan (thomgill@eznet.net), September 15, 1999.