Skip to comments.Buying Silver At $100 And The Rebirth Of Counterfeiting
Posted on 01/20/2013 6:30:10 AM PST by blam
Buying Silver At $100 And The Rebirth Of Counterfeiting
Commodities / Gold and Silver 2013
By: Dr Jeff Lewis
The debate about buying silver rounds, junk silver or silver Eagles goes on and on.
Although better prices may be available on silver rounds, investors continue to worry about the China scare and rumors of counterfeit silver coins.
Also, the confiscation* of fiat money purchasing power via inflation will happen long before counterfeit makes an impact, so getting more metal for the money makes the most sense at this time.
*(Confiscation of actual metal is separate issue we cover elsewhere).
Silver Eagles Gain Popularity
As a result, more investors seem to leaning towards buying silver Eagles and old, pre 1965, circulated or junk silver coins.
While nothing is wrong with silver Eagles, it does take longer and longer to realize the intended return on investment. Furthermore, you do not necessarily get the premium back if and when you decided to trade or sell your coin(s).
Sadly, one of the more bullish reasons for increased investment demand is the growing lack of confidence in the U.S. Dollar, which could actually taint the image of U.S. Dollar denominated silver Eagles.
When it comes to money and wealth, people tend to figure it out, especially when scarcity becomes an issue.
The Recognition Factor
Fears of counterfeit coins are not completely unfounded, but fakes are not that common.
It is also very difficult and expensive to pull fakes off with 0.999 percent silver, and even harder with old circulated silver coins. Even with gold, it is very rare to discover good fake coins, and both of these metals are rare to begin with.
While it may not be that big a threat in the silver market now, when silver tops $100 per ounce, many investors are concerned that generic rounds may become less accepted due to the higher counterfeit risk.
The Counterfeit Trigger
So, what price could trigger a wave of counterfeit coins? The $100 level will probably not be enough of a tipping point to make sufficient money from counterfeiting to justify the expense and risk.
Although based on the way silver has moved in this bull market, the $100 level could be a test and the market could easily see a deep, 50 percent correction from that point before retesting it.
Maybe double or triple that price would prompt further silver coin counterfeiting, but even then, it is not an easy process. Besides, insufficient time to ramp up production would be a limiting factor, whether the silver is melt, mined or counterfeit.
This scenario is like a big earthquake that could hit at any minute. The situation where you have one commercial trader holding a massive percentage of the net short position in a commodity is so bizarre.
It will probably depend on who shows up on the short side as the market moves higher even beyond the $50 level. If the large silver shorts eventually cover in a panic, the price could easily overshoot considerably.
At least the debate is not about the silver ETF.
If Americans were permitted to print their own money it would be worth as much as that being regurgitated by edict of the FED.
"Jim Rogers, billionaire and cofounder of the Soros Quantum Fund, publicly stated two months ago that he plans to sell federal debt and purchase more gold and silver.
A point often missed.
The difference between you and me is that if we print counterfeit money we go to jail. When the Fed does it, nobody goes to jail. The economic consequences, however, are identical.
silver typically trades 40-60 : 1 on gold (currently 53:1)
if silver were to trade at $100/oz... that would put gold around $4000-6000/oz (let’s say $5,300/oz at today’s ratio)
this would be about a 215% jump in gold price... which would mean:
* gas would move from $3.40/gal to $10.71/gal
* bread would move from about $2.99/loaf to $9.42/loaf
* deli roast beef would go from $8.99/lb to $28.31/lb
pretty much exactly what 0bama and the commies on the left have been pushing for over the passed few decades.
“While nothing is wrong with silver Eagles, it does take longer and longer to realize the intended return on investment. Furthermore, you do not necessarily get the premium back if and when you decided to trade or sell your coin(s).”
I buy Morgans not as an investment but as a means of having something easily converted into dollars and as a means of a hedge against the inflated Fed notes.
Walter Williams said that if a person is arrested for printing money, he should claim he was merely engaging in monetary policy.
If counterfeiting of coins is a problem and if there is a premium that is not redeamable on selling, why not just buy silver?
Silver can be purchased fine .9999 or sterling .925 from lots of places. The Navajo silver smiths literally stand in line to purchase small quantities of various thickness, widths and lengths of silver sheet in the Gallop New Mexico supply houses. These suppliers also sell casting grain, BB size pellets that can be weighed out in very small quantities.
The same shops also purchase silver. The scrap left over after fabricating is saved and returned. It is graded depending on if it is pure or contains solder or other such impurities.
The trade in silver is very active in the southwest
I’m not buying silver as an “investment” to hopefully be converted back into more worthless paper dollars than I paid for it. I’m buying it as insurance so that when I need to buy a chicken at some point in the future I’ll have something of value to trade!
I like scrap silver coins because everyone recognizes them without suspicion, etc.
Insurance, insurance...not investing.
One, Treee-Lee-Ion Dollars, Mwahahahah!!!
The difference is the Fed doesn't print counterfeit money
$6.50 for one silver quarter? 26 times the value. The cost of a 15K house in 1964 should cost $ 390,000 today. No wonder economist say housing is cheap.
Or price of silver is a bubble. My guess would be silver is priced right.
Sigh: I still remember when silver was REAL MONEY! In Utah my dad got paid in REAL SILVER DOLLARS!
Even the paper money had the words...”Pay to the bearer on demand, in SILVER,.....”
Anyone remember when GOLD was real money?
Anyone remember when the SUPREME COURT OF THE UNITED STATES declared GOLD and SILVER the ONLY legal tender in the US?
Im buying it as insurance <<<<<
BINGO!...We have a winner!!!
FYI, silver coins are not pure silver. IIRC, a quarter has about .18oz, not .25, so that’s not $26 an oz, more like 33. Still, ot a bad deal though.
How did you arrrive at 6.50?
Shows about 5.75 as current price
Upon the side of the idle holders of idle capital, or upon the side of the struggling masses? That is the question that the party must answer first; and then it must be answered by each individual hereafter. The sympathies of the Democratic Party, as described by the platform, are on the side of the struggling masses, who have ever been the foundation of the Democratic Party.
13 % premium to silver spot. Ok I got it. a $1000 bag face value which is standard unit have become very scarce in the past month
90% Silver Coins $500 Face Value Bag
USD $ 11,829.68 ea.
I bought 50 dimes today at $2.30 each.
BTW, my friend bought all the silver coins that the guy in post #6 was selling today...About $2,800.00 worth.
If you buy bullion bars and coins at one troy ounce or less, the chances of counterfeit is rare because the cost even at 100 dollars is too low for the risk. The only one ounce coin or bar is the collectible ones based on historical and rarity value that usually sells several folds above its silver value. Example Morgan Silver dollars can sell depending on its condition and year/historical rarity/collector demand 200 thru 300 dollars. These coins usually come in a plastic slab with assayed documentation/bar code on it. The assay tells the buyer what the silver purity is and the condition grade. The higher the condition grade the more the coin/bar is worth. As the price of silver rises these collectible coin/bar values also escalate. Counterfeiter will jump in with real silver fakes in assay plastic slabs. The problem with the assay slabs is for the owner to detect fake they must break it to access the coin. Sellers will not allow that. If the coin turns out not to be a fake, the owner must spend money to have it assayed for its grade and resealed in a slab. This costs money.
To avoid this problem, buy coins and bars based on silver content (bullion) in one ounce or smaller sizes. Larger bars are valued sufficiently that counterfeiting can occur. Usually lead is used to fill inside of the bar, but that can be detected by a magnet. A magnet is usually one of the basic tools a buyer should have on hand to test any silver coin or bar. If the magnet sticks, the bar and coin has lead content.
Stay away from ETF except PSLV or CEF. Many ETF sells paper shares with claim to silver, but the paper shares outnumber the actual silver in the fund by ratios as high as 90 to 1. If everyone wanted to sell their shares for silver in lieu of dollars, the ETF will collapse. Many of these funds are owned by Wall Street banks and hedge funds who are involve with each other in swaps and interlocking loans, where the silver in their managed funds can be used as collateral for these deals.
PSLV and CEF is one of the few that the number of shares reflect the silver held by the ETF managers. No fractional banking model (more paper then actual metal). Like any ETF including the ones I referenced as good are still third party risks. Nothing beats physical ownership of the metals.
Do you have anything useful to add to the discussion?
Since when does a magnet attract lead?
Are there any gold ETFs that are of ethe same model as PSLV or CEF? thanks
There are Morgan copies readily available on the market apparently they were used in casino’s after the actual coin supply dried up they have a tiny “copy” on the reverse of the coin. I bought a few to leave around my house lightly concealed for the thief that knows I have silver around.
Pointing out that error wasn’t useful?
What the Benbernank is doing was at one time a capital offense in this country.
The Fed is authorized by Congress, no counterfeiting involved.
Play all the silly word games you want; the Fed is fabricating, by their own admission, a trillion dollars a year out of thin air.
As the supply of something rises towards infinity, the value of each individual one of that thing approaches zero.
The Fed balance sheet was less than $900 billion on 9/11/2008. A year later, 9/10/2009, a bit over $2 trillion.
On 9/8/2010, a bit less than $2.3 trillion. 9/7/2011, a bit over $2.8 trillion. 9/13/2012, $34 billion less than a year earlier.
The first year, in the midst of the crisis, they "fabricated" a bit less than $1.2 trillion.
The second year, less than $300 billion.
The third, about $550 billion.
The fourth, they reduced their balance sheet by $34 billion.
Less than $500 billion a year, on average.
As the supply of something rises towards infinity
33% a year for 4 years is hardly infinity.
the value of each individual one of that thing approaches zero.
Especially if you ignore increased demand for that thing.
I found this at your link...
Each Washington quarter contains 0.1808 troy ounces of silver and is valued at $5.78 when silver is at $31.94 / ounce.”
How about that, I recalled something correctly.
The mind is a beautiful thing.
By their own admission, they’re buying debt at the rate of $85 billion per month, for the indefinite future.
Where are they getting $85 billion per month.
I don’t believe their “balance sheet” any more than I believe BLS claims of “falling unemployment”.
“Lies, damned lies, and statistics” comes to mind.
They don't have to "get" it anywhere. Central banks can create money out of thin air.
I dont believe their balance sheet
Good for you.
Just because they "can" doesn't mean they "should".
Glad we cleared that up.
By your logic, the Zimbabwean government didn’t counterfeit, either.
I’m sure you know how that worked out.
The new SLW ....for gold. Same business model as SLW
1 : made in imitation of something else with intent to deceive : forged
Again - tell me now Zimbabwe’s adventure in non-counterfeiting worked out.
Who claimed it did?
Calling authorized creation of money counterfeiting is silly.
Like I said before, play all the silly word games you want.
Conjuring up “value” out of nothing didn’t end well for Zimbabwe, and it won’t end well for us.
The only word game I see here involves the word counterfeit.