- Personal Finance
Buying silver coins - silver dollars, quarters, and dimes for investment and profit
The inherent value of silver.
Since ancient times, people have valued all sorts of precious metal. In modern times, silver has been often overlooked, though it is close to a historic all-time low, when viewed from its value in relation to gold. This is true even after silver tripled in price per ounce over the last three years. Still, buying silver bars is risky. That's because, silver might flatline, or even de-value from its place now over the next few years. The ratio of silver to gold, if that is an index, hasn't settled yet. If that ratio is not an index, then it's apparent that silver hasn't found its base price in today's market yet.
Buying the right silver coins lessens this risk considerably.
It's relatively easy to make an investment in silver coins that will either pay off quickly or over the long term. To do this, you will need to know a few things. The first is the current price of silver. Right now, July 13, 2011, silver is trading for $38.23 per ounce. Every day, this price changes. In fact, it is gone up by more than $10 per ounce this year alone. On the face of it, silver seems very volatile, and I would agree. Investing in silver is a risky decision. While it might go up and double or even triple from its current price, it might just as easily go back down to five dollars an ounce like it was in 2001 or even lower. So, a large profit or a large loss might be made with silver right now. I don't think it's too likely to flat line.
So anyway, the first thing you need to know is the price of silver today. You can find that information at this website. The next thing you need to know, is how many coins make up an ounce. For instance, a pre-1965 silver dollar typically weighs just less than 1 ounce (.9428 of an ounce). In silver dollars minted before 1965, that is Peace and Morgan dollars, the ratio of silver to copper is 90 to 10. Therefore, a silver dollar from this era contains .8486 of an ounce. It is important that you get the price per ounce for the day you are buying silver on. If I were to buy silver today, July 13, 2011, when the spot price of silver is $38.23 per ounce, then the silver value in a Peace or Morgan Dollar would be worth $29.57.
This is where the third thing you need to know comes into play. Your objective is to purchase Morgan or Peace dollars worth slightly more than that, so they are valued between $30 and $33. Since coin collectors value these coins for their numismatic worth it makes sense to buy silver dollars at just a little bit higher than the price of silver. That way, if silver goes up significantly, then you are able to sell off these coins at a profit in the short run for their silver value. If, on the other hand, silver prices stay steady, or decline significantly then the coin that you have purchased will not be affected by the decline in silver.
Redbook: A resource for coin collectors for over 60 years.
Determining the worth of silver dollars and other coins to collectors.
Every year a book is published called The Official Redbook, A Guidebook of United States Coins. Get a copy of this book from the library or wherever that is about ten years old. Ideally, I would have on hand a copy of The Redbook for a few non-consecutive years during the last 10 years. That way, when I looked at a specific coin, I would be able to see if its value had been going up, going down, or staying steady. For the most part, coin prices have a tendency to go up every year. If I was serious about protecting my investment, I would definitely have this information on hand.
The value of a coin, as far as coin collectors are concerned, actually fluctuates every week, or every month. Therefore, it is important to get up to date information on the particular coins that you are considering buying. You'll either need to get a magazine, or an online subscription that updates coin prices every week or every month. Here is one such online subscription. This guide will give you prices for any U.S. silver coins. It is important that you know how many of these coins make up an ounce. Just like the silver dollar, the weight of the coin is not the weight of the silver in the coin. In general though, two half dollars, six quarters or 15 dimes, will have about an ounce of silver in them, provided they were minted before 1965 and after 1874. Starting in 1965, there is less silver if any in all these coins.
To be clear, if you had 15 Mercury dimes, their silver value would be slightly more than an ounce. Since the going rate of silver to day is $38.23, the thing to do is divide that by 15, which equals $2.55. This means, that I would look for Mercury dimes which are listed in The Redbook, as having a price of about $2.60 to $2.85 for the most recent year (2011) and that have not been going down in previous years. I would also want to look at the prices for these coins for this month from a coin magazine or online subscription, so that I get dates and grades of coins that are in the range of about $2.60 to $2.85 currently.
Again, by buying coins in this price range it provides a sort of hedge against the fluctuations in the price of silver. The beauty of it is, if silver prices continue to rise, then you caught hold of significant revenue. If, on the other hand, they fall back to the levels that they were in 2001, approximately 5 dollars an ounce, then your coins will not have significantly decreased in value. That is, if the historical trends assigned these coins by coin collectors holds true. It is easy to see by looking at The Redbook prices from 2001, that there are many, many silver coins whose numismatic value has not changed very much at all, or has gone up. Many of these coins are in the price ranges that I am discussing.
Buying silver dollars, half dollars, quarters and dimes in today's market.
With the price of silver dramatically rising you may be contemplating buying some. If you're lucky, you might do very well in the short or long run; there's no way of knowing what the spot price of silver will be in a year. However, there are historical trends relating to the price of individual coins as far as collectors are concerned. If you know the date, condition, mint mark and other variables of a particular coin then you can find it's numismatic value. Find the current value of the coin according to The Redbook and other sources. Then determine it's silver value - how much silver is in it, and what the spot price of silver is that day. If the historical value of the coin according to The Redbook is slightly more than its value in silver, then it may provide a hedge against the potentially turbulent price of silver. Additionally, by buying coins in this way, you will gain a greater appreciation of each individual coin and its historical value. Have fun, and good luck with the silver market!
Silver as an investment.
Do you buy silver as an investment?
I've written a series of articles about Silver Dollars that might interest you.
The peace dollar emerges from the spirit of optimism.
To understand the origins of the peace dollar, we must learn a little history from the 1800s, and the early part of the 1900s. In the late 1850s through the 1880s and even later, huge quantities of silver were being mined in the United States, especially in western states, like Nevada.
The Morgan Dollar more than 500 million made!
Minted from 1878 until 1904, and again in 1921, the Morgan Silver Dollar was the result of the Comstock lode. In the late 1850s, there were still lots of people searching the hills of California for gold. A man by the name of Henry Comstock, happened across two other men, the Grosh brothers, as they were in the process of panning for gold.
The Trade Dollar made in the U. S. of A. . . . for import to China!
The silver dollar minted from 1873 to 1885, known as the trade dollar, was minted by the United States government expressly to facilitate trade with China and India. Meanwhile, from 1873 to 1878 there were no silver dollars created for general circulation in the United States.
The Seated Liberty Dollar, when the word "God" first appeared on a silver dollar.
In 1839 the United States government discontinued the Gobrecht silver dollar. It had been designed and circulated to see if the public was ready for new silver dollar: we were. So, in 1840 a new silver dollar was minted: the Seated Liberty dollar.
The Gobrecht Silver Dollar, only 1900 ever made!!
The Draped Bust Silver Dollar, made for general circulation until 1804.
This silver dollar was produced by the United States mint, located in Philadelphia, from 1795 to 1804. The front of the coin depicts a representation of the allegorical figure liberty. The reverse features an eagle very similar to the one designed by Robert Scot for the flowing hair silver dollar.
The Flowing Hair Silver Dollar, the first U.S. Dollar.
In 1794, two years after Congress had approved the production of silver and gold coins, the first official United States silver dollar was struck at the Philadelphia mint. The law stipulated that the coin containing 371 grains of silver and weigh a total of 416 grains (about an ounce), the difference being made out of copper.