August 2015 Archives

Investing In Silver – Is This Profitable Investment Field Right For You?

Is investing in silver a profitable endeavor? Metals have been the attraction since ancient of times to this day. Investing in gold, silver, copper, zinc and oil is considered as good investment now.

There are also indexes that reports and records silver and gold price movements. Investing in silver is a bright idea, as the silver index looks promising. In the month of July 2015 silver has hit a high of $15.68 per ounce and since it is under $20 it is still at the reach of an ordinary investor.

Canadian Silver DollarsThe demand of silver is increasing in countries around the world and that is the major reason why investing in silver remains good.

Gold and silver almost move in the same way on an index. Therefore, when gold prices do well, it heavily affects silver prices.

It was exciting to experience the last silver boom which took place in 2011 and 12 when prices hit $48.70 per ounce.  Another silver boom is likely to occur soon, and contributing to this factor is demand of silver articles in USA, China, India, Russia and other parts of Europe. Silver jewelry is highly in demand… it looks chic, is affordable and has a resale value. Silver consumption is increasing day by day. Industries silver demand is increasing every year.  Silver is a good conductor of electricity and that makes it popular as well.

Investing in silver is rising as a powerful business with lots of money to play around with. It wouldn’t be inaccurate to say that investing in silver will bring you a gold mine. One can invest in Silver coins or silver bullion. Your broker can be the guide to your investing in silver.

The bottom line is this: in order to really profit from investing in silver, you need to focus all your efforts on this endeavor. Don’t become a jack of all trades but master of none. Follow these important tips and you’ll make a good profit with your silver investing exploits.

Gold and Silver Maple Leaf Packaging

Gold Maple Leaf
Photo credit: tombothetominator / Foter / CC BY-NC-SA

Gold Maple Leafs debuted in 1979, Silver Maple Leafs in 1988. Since inception, 1-oz Gold Maple Leafs have been packaged ten to a tube. Because Maple Leafs are 24-karat, pure gold, they are “soft,” relative to alloyed gold coins, such as American Gold Eagles and Krugerrands. Further, because of the design of the coins and the tight-fitting tubes, it was difficult to remove, inspect, and reinsert 1-oz Gold Maple Leafs in their tubes without scratching the coins.

Actually, reinserting Gold Maple Leafs without at least some scratching is nearly impossible. Further, if the persons inspecting the coins do not know how easily the Gold Maple Leafs are damaged, needless damage often occurs while the coins are out their tubes.

Gold Maple Leafs carry the image of Queen Elizabeth II on the front, with a flat, clear field alongside the image. The backs have the outline of a maple leaf, hence the coins’ names. The problem arises from the coins’ really sharp milled (reeded) edges. When the coins are reinserted in their tubes, the milled edges often scratch the fields.

Then there is the problem with investors who like to “heft” their coins “to get a feel of them.” If they put four or five Gold Maple Leafs in the palms of their hands and “clang” them, the damage can be quite severe. Should a Gold Maple Leaf be dropped, rim damage is almost guaranteed.

As Gold Maple Leafs have been sold into the secondary market, damaged coins have become such a problem that Gold Maple Leafs have lost popularity with investors. The problem has become so widespread that many wholesalers bid only “melt” for Gold Maple Leafs, regardless of their condition. By paying only “melt,” wholesalers can profitably resell the coins for industrial or jewelry purposes if no buyers are found for the coins.

Gold Maple Leafs, like the Gold Eagles and the Krugerrands, are bullion coins, which trade for the value of their gold content, plus small premiums. Damaged Gold Maple Leafs do not mean a loss of gold; they contain an ounce of gold regardless of the scratching or rim nicks. Still, buyers do not like to receive damaged coins. This means that Gold Maple Leafs sold into the secondary market have to be evaluated for the degree of damage.

Some wholesalers refuse to take the time to individually inspect Gold Maple Leafs and separate them according to their condition. These are the wholesalers who generally will pay only “melt” for 1-oz Gold Maple Leafs, regardless of condition. Fortunately, the free market being what it is, there are still some wholesalers who will buy according to condition.

Yet the handwriting is on the wall: 1-oz Gold Maple Leafs in tubes will continue to lose popularity and probably will join Krugerrands, Mexican 50 Pesos, and Austrian 100 Coronas as basic bullion coins, which carry the smallest premiums in the bullion coin market.

With the new packaging, each 1-oz Gold Maple Leaf will be encapsulated in plastic and suspended in the middle of a plastic card, somewhat as 1-oz gold bars are packaged. However, the plastic protecting the Gold Maple Leafs will be heavier and more durable than the plastic used with 1-oz gold bars. The new packaging should keep the coins from being easily damaged.

With the new packaging, the Royal Canadian Mint made another big change: 1-oz Gold Maple Leafs will now come 25 to a box, whereas the old packaging is ten to a tube. This change could further increase sales as 20 coins are common ordering units for gold bullion coins, because the world’s most popular gold bullion coins—American Gold Eagles—come 20 to a tube. As a result of the change, investors wanting “complete original packaging” will move up to 25 ounces.

However, orders for small quantities mean the coins will have to be removed from their mint boxes—but still individually encapsulated—and put in other containers. The new packaging also will require more storage space for Gold Maple Leafs than for 1-oz gold coins that come in tubes.

Although 1-oz Gold Maple Leafs will be a little more cumbersome to handle, a large segment of the gold coin bullion market prefers pure gold coins. Gold Maple Leafs have long been the most popular 1-oz pure (.9999 fine or 24-karat) gold bullion coins on the market, and the new packaging should keep Gold Maple Leafs as the preferred 24-karat gold bullion coins. (The market for pure gold bullion coins is estimated to be $2.4 billion annually.)

New packaging for 1-oz Silver Maple Leafs has also been introduced. However, Silver Maple Leafs in their old packaging are still available. Since Silver Maple Leafs were introduced in 1988, they have been packaged twenty coins to a sheet, 200 coins in a box. Each coin was individually enclosed in plastic. The new packaging will be similar to the U.S. Mint’s Silver Eagles packaging.

Silver Maple Leafs will now come 20 to a tube, 25 tubes to a container, and 500 coins to a “mint box.” The new box will be made of durable heavy plastic, whereas the boxes of 200 are cardboard. The new packaging should make Silver Maple Leafs more competitive with American Silver Eagles, presently the most popular 1-oz modern silver bullion coins being sold.

The Top Five Morgan Silver Dollars

Why waste everyone’s time? Let’s skip the appetizers and get to the meaty stuff right now: The Morgan silver dollars poised to increase the most in value in the years ahead are the 1895, 1892-CC, 1894, 1878-CC, and the 1883-CC. Pretty bold prediction, eh? At this point, the reader now has three options: (1) Stop reading and act upon this information, (2) Stop reading and get on with life, or (3) Continue on, evaluate the analytical approach to identify the “Top Five” Morgan dollars, and then implement a variation of (1) or (2) above. If you’ve gotten this far, we encourage you to continue on with option (3).

First, a little background info on the Morgan silver dollar…

Morgan Silver Dollar
Photo credit: celticpixl / Foter / CC BY-SA

The Morgan silver dollar is today one of the most popular of all collector coins. First minted in 1878 following the passage of the Bland-Alison Act, the new dollar was named after its designer, George T. Morgan. Political pressure by powerful silver mining companies, in a gambit to stabilize the price of their commodity at artificially high levels, created the impetus driving the legislative action. Bland-Alison led to the overproduction of silver dollars, resulting in millions of these unused “cartwheels” languishing in bank and Treasury vaults. Indeed, few coins have ever been released under more dubious circumstances than Morgan silver dollars. Minting continued until 1904, and then again for one more year in 1921, when the series finally came to a close.

For decades thereafter, Morgan dollars were largely snubbed by hobbyists. Many dates, including those in mint state condition, could be obtained for as little as $1.00. This situation shifted dramatically in 1962, when the US government began selling original 1000-piece silver dollar Treasury bags to the public at face value. Stories of rare dollar finds circulated widely, touching off a veritable Morgan mania. Within a matter of months, all but a small fraction of the federally owned coins were transferred from government vaults to private hands, consequently expanding the Morgan dollar collector base far beyond anything seen previously.

Since then, Morgan silver dollars have proudly perched themselves atop the catbird seat of the numismatic world. Their physical size, availability, beauty, and historical significance have consistently attracted herds of new buyers. Numerous boom-turned-bust cycles have come and gone, sometimes driven by pure speculative motives, but from a long-term perspective, most Morgan dollar prices have trended somewhat positive.

Unlike some controversial promoters in the past, I do not propose purchasing Morgan silver dollars simply as investment vehicles. However, for collectors hoping to satisfy their numismatic yearnings AND acquire coins destined to be worth substantially more in the future, Morgan dollars do present a few opportunities. As noted above, as a whole, Morgans have gained moderately in value over the years. The crucial challenge, then, is to identify which members of this series have enjoyed the best growth patterns in the past. The underlying logic is clear: coins that have demonstrated the strongest gains over a long period of time are the coins best positioned to show similar price advancements with the continued passage of time.

In order to measure past performance and thus visualize Morgans most likely headed toward a bullish future, I developed a systematic approach. First, I researched individual Morgan dollar retail prices as they existed in 1950, for a broad range of conditions, and entered this data on a computer spreadsheet. Moving forward in time, values from the years 1980, 1995, and 2000 were likewise recorded. Finally, estimated selling prices in 2005 were juxtaposed with counterpart data from those earlier years. Because grading terminology has evolved over the 55 year period, certain assumptions were made to progressively track price movements throughout the time spectrum (e.g. an “Uncirculated” value in 1950 is equivalent to the “MS-60” of today).

For each date and condition, compounded annual return rates were computed from 1950 to 2005. [Editorial note: compounded annual return rate is the accepted yardstick for comparing investment performance. Of course, coins do not grow at a guaranteed uniform rate, such as bonds do, but if a coin is purchased at a certain price, and that price is compared with the value of the coin at some later date, the compounded annual return rate can be calculated for the time period in between]. Return rate computations were made from 1980 to 2005, 1995 to 2005, and 2000 to 2005. For each Morgan dollar, the data was placed in tabular format. Next, I calculated a “composite” score for each date by averaging all the compounded return rates computed for that date. I then ranked all the “composite” scores. The Morgan silver dollars with the highest scores are as follows:

Date: Score:
1895 11.37
1892-CC 10.54
1894 10.43
1878-CC 10.28
1883-CC 10.25

So, it would appear, based on past performance over a period of 55 years, the 1895 is the Morgan silver dollar with the best hope of appreciating significantly in the years ahead, followed by the 1892-CC, 1894, 1878-CC, and 1883-CC. Not surprisingly, dollars of the Carson City Mint occupy 13 of the top 16 positions, thanks to persistent collectors scrambling for bona fide artifacts of the romantic American West. On the opposite end of the rankings, Morgan silver dollars having the bleakest long term prospects include the 1898, 1899-O, 1884, and the 1888-O, followed by the 1897 coming in dead last with a score of 2.66.

Anyone whose dual objective is to acquire Morgan silver dollars with a bullish future ought to begin looking at the “Top Five” above. Purchase coins in the best condition you can afford, but be sure the coins are clean, problem-free, and CERTIFIED by a reputable grading service. Be prepared to hold for at least five years. Morgan dollars have skyrocketed in value in the last three years, so some cooling off may be in order before the next upward cycle.

If a polling firm were to survey the population of US coin collectors, it is very possible that Morgan silver dollars would win the vote as the most appealing coin in American coinage history. These beautiful coins have been the heartbeat of the hobby for many years, with no retreat in sight. Ironically, these same coins spent the better part of a century hidden away in government vaults, unseen, unwanted, and unloved. My, how times have changed!