Which is better for investing in Silver, Gold, or other metals, Specie (silver or gold rounds/coin/bar), stocks, or a mix of both?

I personally like having specie on hand as it is readily available to trade or use... lead on hand can be made into fishing weights and bullets or traded.

Dave

There are a lot better investments than precious metals if you're looking to make money (that's what an investment is).

If you're looking at having it for other reasons, I imagine gold would be the best in terms of weight vs value.

Imo, and also that of many, physical metal. Perhaps miners such as First Majestic (AG). I might be looking at Silver Elephant (SILEF) down the road. not really recommended is silver ETFs such as SLV which is not actually silver but paper contracts which you will not see the actual metal from it.

Getting physical is getting hard now and comes with a high premium. I just have a small stack but we will obviously need many commodities in the coming years so I will look to miners to add to my position.

edit: Just a recent video of many after 2 weeks of "silversqueeze"

This message has been edited. Last edited by: SigSentry,

Why are you wanting gold or silver? Because physical gold/silver vs. gold/silver stock depends on why you're wanting it, what you're planning to do with it, and the time frames you have in mind.

For example, if you're wanting it as a shorter-term investment, where you're planning to buy on the lows and sell on the highs for a profit, that's more easily done with stock.

If you're wanting it more as a longer-term asset, where you want to buy gold/silver in lieu of sticking the money in a low yield savings account or stuffing cash in the mattress, that's where physical comes into play. Mostly as a hedge against inflation, since gold/silver values tend to rise with inflation, whereas having basic cash laying around or sitting in very low interest-bearing accounts can't can keep up with inflation so that money's value is constantly dwindling. Plus, with physical you have the actual asset in-hand, and physical gold/silver is pretty liquid. More like a physical form of savings that's more inflation-proof than just a stack of cash.

(And if you're stocking up because you think there's going to be a zombie uprising, society is going to collapse, paper money is going to be worthless, and you're going to be forced into bartering with silver and gold, then obviously physical is what you want. If you straggle into Bartertown trying to trade a stack of paper SLV stock certificates for a gallon of clean water and some MREs, Tina Turner's going to laugh you back out into the postapocalyptic wasteland.)


One of the big things preventing physical gold/silver from being a short term investment option is that buying physical gold/silver comes with the added cost of a premium over spot price, but you're probably only going to get around the current spot price when it comes to selling/trading it (or even a little less than spot if it's in some less recognizable form like a generic ingot or non-sovereign bullion). Currently, supply of gold/silver on the retail market is very low due to high demand over the past several months from customers for physical metals, and therefore premiums are sky-high. You're looking at 10% to 30+% over spot price for physical gold/silver currently. Therefore, it makes it tough to quickly "flip" for a profit in the short term, because you're having to wait for the value to increase enough to exceed the premium you paid, which typically takes a long time. (In more normal times, premium on physical gold/silver is more like 2% to 5%, which doesn't take quite as long to recoup, but still doesn't usually make for a smart short term play. If you're really lucky, you might be able to occasionally come across some gold/silver on the secondary market for little to no premium from private sellers, but don't bet on it.)

Whereas you can buy/sell "paper gold/silver" through the stock market with just some mouse clicks, without much additional cost. It's much more liquid than physical. So as silver/gold goes up and down in its spikes you can easily buy low/sell high for a profit in the shorter term, without having to wait into the longer term to first recover the premium you'd have had to pay on physical metal.

So physical gold/silver is really only the smart move if you're going to be in it for the long haul. And even then, it should only be a part of your overall financial plan. It's a nice, stable, safe foundation that will keep up with inflation, plus provide some insurance against drops in other investments. (Precious metals tend to go up when the stock market falls.) But returns are low compared to other investment options. Gold/silver are low risk, but low reward. More of an insurance, inflation-proof savings account, or a safe haven compared to most other "real" investments.

This message has been edited. Last edited by: RogueJSK,

Rogue's analysis is spot on.

A couple of other things to consider.

In my state, you have to pay sales tax on your physical metal purchases, further increasing your cost.

The gold (GLV) and silver (SLV) ETFs don't actually own any gold or silver. Instead they buy futures contracts, and roll them over as they expire. This results in another whole set of risks related to the futures markets, just like what happened to the oil ETF (USO) in early 2020, when oil futures actually had a negative value.

There is an ETF (SGOL) that owns physical gold that is kept in the vault of a Swiss Bank. Or so they say.

I learned in 2010 that buying gold and silver miners does not correlate to the value of gold or silver. The miners were the worst managed companies I have ever seen. See the Pascua Lama mine project in South America.

https://en.wikipedia.org/wiki/Pascua_Lama


With the huge budget deficits and the new green deal, there will be a lot of inflation in the next four years.

In the best SigForum tradition, the answer to your question is Buy Both!

Another thing to consider with physical vs. stock is the need for physical storage.

How are you going to safely store your physical metals? And what's your insurance coverage limit for precious metals, in case of fire/theft/etc.? For example, on my homeowner's insurance, the default coverage for gold/silver bullion is a mere $200. You can add an additional rider to cover $2500 for a minimal fee, but that's it. This particular insurance company won't insure more than that in gold/silver against theft specifically, even with a separate schedule. If you want more coverage, you have to seek out a separate collectibles or bullion insurance company, which is noticeably pricier than the coverage under the homeowners insurance policy.

(In my opinion, that particular company's gold/silver limit is grossly outdated. Back a couple decades ago when gold was $300 per ounce, $2700 in gold was a decent amount of gold bullion. But now that it's $1800ish per ounce currently, that's only 1.5 ounces of gold. Less than 2 standard gold coins.)

A safe deposit box at the bank is another option, but then you're looking at the cost for renting the box, plus additional insurance coverage since banks typically don't insure the contents of their safe deposit boxes. And it's not as readily accessible as being stored at home.

So things like this can add even further to the cost of holding physical precious metals.

My intent is long term as I know that while trying to make a quick buck on the stock market can be done, it isn't what happens for those of us who don't play with the stocks often.

We don't have sales tax here in Oregon (yet).

So I was looking for a way to diversify some paper money into a medium that will have a more constant value.

Take a $20.00 Double Eagle as an example: when it was introduced as currency this coin would purchase a fine suit, boots, hat, and overcoat. Today even though the street value on that coin is thousands of dollars it will still buy the same quality suit, boots, hat, and overcoat.


I did purchase four of the Sigforum silver rounds when they were available, and I did buy out all the Eisenhower silver dollars I could find about 10 years ago as these will have some value as bullion, and might even have greater than face value if sold to the right person.

My ex-wife sold most of my silver coins (bullion grade) that my Grandfather had passed on to me, but I still have a few of the Morgan dollars.

I am not looking to squeeze a short as I would probably get in at the wrong time and lose my shirt.

I am looking for long term investment, but don't have much in the stock market itself (a few Smith and Wesson shares, some OLNN (Winchester), and some shares of a local bank.

I know silver will have value as it can be turned into other items such as jewelry to get the value back out of the metal.

quote:

Originally posted by RogueJSK:
Another thing to consider with physical vs. stock is the need for physical storage.

How are you going to safely store your physical metals? And what's your insurance coverage limit for precious metals, in case of fire/theft/etc.? For example, on my homeowner's insurance, the default coverage for gold/silver bullion is a mere $200. You can add an additional rider to cover $2500 for a minimal fee, but that's it. This particular insurance company won't insure more than that in gold/silver against theft specifically, even with a separate schedule. If you want more coverage, you have to seek out a separate collectibles or bullion insurance company, which is noticeably pricier than the coverage under the homeowners insurance policy.

(In my opinion, that particular company's gold/silver limit is grossly outdated. Back a couple decades ago when gold was $300 per ounce, $2700 in gold was a decent amount of gold bullion. But now that it's $1800ish per ounce currently, that's only 1.5 ounces of gold. Less than 2 standard gold coins.)

A safe deposit box at the bank is another option, but then you're looking at the cost for renting the box, plus additional insurance coverage since banks typically don't insure the contents of their safe deposit boxes. And it's not as readily accessible as being stored at home.

So things like this can add even further to the cost of holding physical precious metals.

Thank you, I hadn't thought of the insurance issues... my specie would be stored in a safe with a 75 minute fire rating, and we are six blocks from the local fire hall in a town of 3300 people.

quote:

Originally posted by lizardman_u:
and I did buy out all the Eisenhower silver dollars I could find about 10 years ago as these will have some value as bullion, and might even have greater than face value if sold to the right person.

They only have value as bullion if they're made of actual silver. Silver-colored US coins issued for circulation after 1964 don't have any actual silver in them. (Prior to 1965, they would contain 90% silver.)

Even though they're still commonly referred to as "silver dollars", the Eisenhower dollar coin was issued from 1971-1978, well after the silver content was discontinued. Therefore, Eisenhower dollar coins don't contain any silver, unless you happened to purchase something like the specially-issued collectible silver proof coins, which are clad in ~40% silver and contain about 1/3rd of an ounce of total silver in each proof coin. But those silver proofs aren't the standard Ike dollar coins that were produced in the millions for circulation, which were just made of copper and nickel, like all normal post-1964 silver-colored US coins. (Same with the Susan B. Anthony so-called "silver dollars" with 0% actual silver content.)

And even though they were only made for ~8 years, there were still so many produced for circulation during that period (over half a billion) that basic used Ike dollars are unlikely to gain significant value as collectible coins in the next several generations. If the ones you stocked up on 10 years ago were just a stack of used circulated coins from a bank or similar, they're worth around $1. But if they're uncirculated condition, protected, and preferably professionally graded, they're worth ~$4-$6 to the right coin collector, with a couple less common variants worth ~$10-$11 in that condition, and one specific rare 1972 variant type worth a lot more in uncirculated and graded condition.

quote:

Originally posted by lizardman_u:
but I still have a few of the Morgan dollars.

The good news is that these 1871-1921 Morgan silver dollars contain 90% actual silver, since they were issued decades before the US moved away from silver content in coins.

Each Morgan dollar coin contains 0.77345 ounces of silver, or roughly $21.34 worth of silver at today's spot prices. And they hold some additional value as collectible coins to boot.

I have accumulated a few Morgan's throughout the last 15 years or so. Mostly for numismatic value. You won't usually find, much less key dates or VAMs, anywhere near melt. My 2005 Morgan Red Book is severely out of date but is useful for mintage and varieties. The 1921 was rather lightly struck with new dies since 1904. I tend to look for Peace Dollars at that point.

~$35 a piece. That's where we are today unfortunately.

https://portsmouthcoinshop.com...me-might-be-cleaned/

I know the Eisenhower dollars have no silver; and some are only worth face value or very little over face value, but $100.00 in Eisenhowers feels way different than a $100.00 bill

I still keep the Kennedy half dollars and the Eisenhowers I run across... if nothing else they have a cool factor, and can be melted for other uses.

I remember in 1988 when silver was $6.00 per ounce which was price prohibitive for an 18 year old at the time (I was buying bullion to cast into jewelry for a high school art class).

I figure some of the silver rounds have a cool factor like the Sigforum coins or some of the other rounds made, and I was looking at the Star Wars $2.00 coins that are one ounce silver rounds for gifts for my 10 year old son.

I don't keep the new US dollar coins, but do keep every Susan B. Anthony dollar I get; again for the cool factor and the history as I remember people hating them due to mistaking them for quarters.

I also have some foreign coins for the memories as they are change I received in my travels while in the Navy and Navy Reserve.

quote:

Originally posted by lizardman_u:
but $100.00 in Eisenhowers feels way different than a $100.00 bill

Agreed, but carrying around 100 of those large coins is a pain in the butt, compared to that $100 bill.

I used to use stuff like $1 coins and $2 bills as part of birthday gifts, especially for little kids. It's real money, but somehow more fun than the usual denominations. But getting a few bucks as a gift nowadays doesn't let them buy much these days.

quote:

Originally posted by lizardman_u:
\I still keep the Kennedy half dollars and the Eisenhowers I run across... if nothing else they have a cool factor, and can be melted for other uses.

What kind of other uses?

A Kennedy half dollar coin is made from about 0.4 ounces of a copper/nickel alloy. That's way less than 50 cents worth of metal. An Ike dollar contains about 0.8 ounces of the same alloy, again being less than $1 worth.

If you're keeping them around because you could melt them and use them for something, you'd be better off spending some of the coins to buy that many dollars worth of cupronickel ingots or scrap. You'd end up with a greater amount of cupronickel on hand that way.

Ah. Cutting down parts of the coins to turn it into jewelry. I've seen that before.

It was your mention of specifically melting them down that threw me off, since that doesn't seem to be anywhere near cost-effective, considering the mere cents worth of metal they contain.

The problem with phyiscal metals is they are taxed as collectibles and stocks are capital gains, I'd go more into that but basically stocks get taxed less.

Now on the other hand if someone gifts you collectibles(guns, precious metals, etc), there is no tax on sold gifts as the cost basis is considered to be 0.

quote:

Originally posted by Austin228:
The problem with phyiscal metals is they are taxed as collectibles and stocks are capital gains, I'd go more into that but basically stocks get taxed less.

It's more complicated than that.

Precious metal ETFs are also taxed as collectibles. If you're wanting to invest in gold/silver but not hold any physical bullion yourself, you're generally going to be doing it with a gold/silver ETF. So the tax implications would be the same between gold/silver owned "in hand" or "on paper", with either one being taxed as collectibles.

Whereas something "precious metal adjacent" such as stock in a gold/silver mining company, or a gold/silver mining ETF, could be taxed at the lower rate as securities. But as mentioned above by Hay2bale, mining stock doesn't always track with the precious metal values.

And there are some other precious metals related investing options, like futures and CEFs, that come with their own pitfalls but that can offer some tax breaks compared to the collectibles tax rate.

Bottom line: It's not as straightforward as "physical precious metals bad/stock market precious metals good... because taxes". Talk to your tax guy or financial planner before investing in precious metals.

quote:

Originally posted by Austin228:
Now on the other hand if someone gifts you collectibles(guns, precious metals, etc), there is no tax on sold gifts as the cost basis is considered to be 0.

I'm not sure about this. I'd expect that if you received a gift and immediately sold it, there might be no tax as your basis would be assumed to be the fair market value (FMV) on the date you received (and sold) it. If you received the gift, held it for a year during which it appreciated, then sold it, I'd expect you would be taxed on the appreciation during that year. The basis is not considered to be zero, the basis is typically considered to be either the fair market value at the time of the gift, or the giver's original basis. If the gift is a bequest, it is the FMV at time of death.

Every state has different filing laws and requirements regarding the sale of physical precious metals. For example, in NH there is no 1099B or SAR federal filing requirement for cash transactions under $10,000. (your local pawn shop/coin dealer)

Check your state laws.

I would never entertain miner stocks or ETF's since there is very little correlation to the actual physical value of the associated precious metal.

quote:

Originally posted by Graniteguy:
Every state has different filing laws and requirements regarding the sale of physical precious metals. For example, in NH there is no 1099B or SAR federal filing requirement for cash transactions under $10,000. (your local pawn shop/coin dealer)

Check your state laws.

That 1099-B filing requirement for dealers is federal tax law, not state-by-state. The triggers for a 1099-B are transactions involving:

-1 kilo or more in gold or silver generic bullion bars or rounds, or
-More than 25x 1 ounce gold Canadian Maple Leaf, South African Krugerand, or Mexican Onza coins, or
-$1k+ in face value of pre-1965 US 90% silver coins

Any transaction under those limits, or involving sovereign coins not specifically mentioned by the IRS (like any fractional gold coins, or any amount of American Eagles, Australian Kangaroos, UK Britannias, Austrian Philharmonics, etc.), are not required to be reported by the dealer on a 1099-B.

But even if a 1099-B isn't generated by the dealer, the taxpayer is expected to report profit from all precious metal asset sales on their Schedule D when filing their tax return.


And as a separate matter, a federal Form 8300 has to be filed by the dealer if any transaction or series of related transactions involves cash of $10,000 or more. That's distinct from the 1099-B requirements above, and that requirement applies to all businesses dealing with cash transactions, not just precious metals.

This message has been edited. Last edited by: RogueJSK,

I wouldn't use the term "invest" in the equation.
This sounds more like storing a commodity, like toilet paper, clean water or ammunition, for a rainy day in case the world goes to hell.
Precious metals is just a financial version of those items of necessity, a substitute for paper money. That eliminates all but the metals themselves.
With that in mind, the amount and method changes somewhat.
Top of the list, it has to be secure, accessible and fully under your control. That means at your home. After that, how much and how long would you estimate and how much can you afford to buy and keep (securely) around on speculation?