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October 26, 2010


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What is your opinion of 90% coins vs. full silver coins?

Nice questions FMF. I'm enjoying the insights into this process.

Master, what are you referring to when you say "full silver coins?" My guess is you mean the American Eagle coins. These coins can have a premium of a few dollars plus each over spot, but the buyback is higher right now. The 90% silver would be just 11 cents or so over spot.

I prefer the lowest cost to spot for my clients, but some people still prefer the American Eagles.

What on the coin indicates a 90% coin is in fact a 90% silver coin?

IOW, a pure silver coin like an Eagle or Maple Leaf says it's pure silver. When someone shows you such a coin there's no question what it is (presuming no trickery). But with a 90% coin how does one know it is truly a 90% coin? Just by the know the dates of such coins?

Can you reference the USC that forbids a dealer from selling at a lower price then the mint?

I agree with APMEX and Tulving, although for most small-timers, APMEX is the preferred choice.

"The whole physical gold and silver buying process seems fraught with fees and costs that make the cost of investing quite high IMO."

FMF - yes, there are fees and costs with buying PMs just like there is with buying stocks, bonds, munis, etc. TANSTAAFL. And, just like a broker who charges 9 different small fees while adverstising 'low, low fees', you can get taken to the cleaners if you don't do your research. So - do your research :)

"And they seem highly illiquid as well (more on that tomorrow.)"

I'll wait for that article to comment in full, but I do want to say three words - local coin shop. I have yet to have any trouble whatsoever selling physical PMs.

"Then again, if you're buying only to hold and use in case of a total meltdown, there's no need to consider selling.

Not necessarily. For the small time purchaser (or the dollar cost averager), the most likey purchases will be in 1 and 5 ounce sizes (both silver and gold). Once they accumulate a few hundred ounces in the smaller amounts, converting a portion to 10 and 100 ounce bars saves on storage space; the same holds true for conversion to 1000 ounce bars once a few thousand ounces are accumulated. Conversion means selling the smaller sizes and purchasing the larger.


MasterPo, yes, by the dates. The 90% coins are the quarters and dimes that were in circulation here in the U.S. before 1964.


Perhaps I should not have said "legally" in that statement, but what I meant was the U.S. Mint will not allow the gold dealers to sell below what they sell the coins for. They told me they would come after them. See #8 in the following document.

If a gold dealer receives a discount for buying in bulk, they cannot sell the coins lower than the U.S. Mint. So if a coin is priced at $1,000 on the U.S. Mint site, but is bought for $960 by the dealer through a bulk purchase program, the dealer cannot sell that coin for less than $1,000.

However, I wasn't happy that this form was vague and didn't include this information in my book. When I was interviewed by FMF, I probably shouldn't have even brought it up. Upon further conversation with the U.S. Mint, I have learned this applies to Proof coins, and not the American Eagle one ounce coins.

Obviously, if the price of gold falls, the seller of the gold coin can sell it to the public for a lower price than what they bought it from the U.S. Mint for at the higher price.

I hope that clears things up for you, and good question. Also note, I don't recommend proof coins because of the extra premium to acquire and the fact that this premium would be irrelevant to the the gold content should we get to that state in the economy (same with rare or European coins).

I just prefer people to buy as low to spot as possible, and at the lowest cost (commission) to the gold dealer.

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