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How to properly invest in Gold/Silver?

Hello. This is my first post on DailyPaul and it's a pleasure to be here! I'm a huge fan of Dr.Paul but have a serious question on investments.

Investing in Gold/Silver is something I hear very often. So when I ask what exactly should I do, I never get a straight answer!

How does 1 properly invest in gold/silver? Where do you buy it? Do you physically buy it/order it online and store coins in a safe place?

I'm a complete newbie when it comes to this, but with the threat of a collapsing dollar growing ever more realistic, I want to protect myself and family financially.

Can anyone explain what the best way to invest in these metals is? And if you can please explain it in layman's terms, since I know little/nothing on the subject itself.

Thank you!



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Hi Lazy Yank and welcome

I get my daily prices via email from dailyprices@cmigs.com
I love the articles. They are in support of Ron Paul's platform.

I buy my silver eagles because they are beautiful, legal tender, and worth their weight in silver! I get mine at:

http://www.bulliondirect.com/catalog/lp/American_Eagle_Silver_Coin_Delayed_(1.00_oz).html

It depends on how much you want to spend of course. I have been buying in batches of 20 or 40 coins. My goal is to reach 100, but thats me.

I have them sent to me and put them into secure system. I try to buy some when prices drop to average down my cost. So far Bullion Direct are the lowest cost compared to what I paid earlier in the year. Does anyone know of anybody cheaper than bullion direct?

I purchase these for barter in case of crisis. If nothing happens they go to my children.

I trust this will assist you.

Hi lazyyank.

One of the things you need to look at is how much you have to invest. That might be one reason why nobody has given you the straight answer you've been looking for.

I recommend getting acquainted with the dealers in your area and building a rapport with the person you feel comfortable with.

Buying metal isn't rocket science and much like shopping for anything else.

There is what I call "investment" silver and "survival" silver with the latter being "junk" silver (Google to learn more).

I am running out the door but I'm sure others can pick up where I leave off.

If you can give us a dollar amount, you might get better advice.

___________

Lisa C.

**This space is available.**

Ron Paul "Sign Wave Across the USA" -- November 5th!

Ode to Buying Silver

Buy physical silver and hold it,
Stop wishing that you had just sold it.
It's good for all time,
So save each silver dime,
The Constitution is right, let's uphold it.

i buy coins only, and i'll tell you why...

bars and rounds ARE TAXABLE on the profit you make when you sell them. it is required that you declare it for capitol gains taxes...(another makes no sense moment that by law you have to self-incriminate yourself to the IRS...). now that you know the scoop...coins...are EXEMPT from taxation. if you by an american eagle silver coin at $5 and sell it at $20 it is not considered a capitol gain...for it is trading by US tender. plus...it would be Very hard for the government to outlaw it's own minted money.

2Chronicles 7:14 If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land.

A note about bullion: it's

A note about bullion: it's more easily confiscatable than old U.S. currency. I wouldn't load up on bullion.

can you explain this in a

can you explain this in a little more detail christopher?

All paper money eventually returns to its real intrinsic value, zero. - Voltaire

You need to keep track of

You need to keep track of that with receipts just like anything else.

they're all gifts..

its all I've ever asked for....

Get receipts if you can or

Get receipts if you can or make a note of the spot price on the day you receive the gift.

If the government finds out that you have sold PMs and have made a profit and you have no documentation they will charge you the highest possible rate.

thanks man

this is news. does it start at a particular weight or just any?

If you make a profit of any

If you make a profit of any kind it will be taxable.

Save the receipts and let an accountant figure out the rest.

I could be wrong, but I

I could be wrong, but I believe that silver and gold are taxable at the 27% "Collectibles" rate.

Look it up.

in md

if I buy over $1000 in precious metals, no tax at all.

The 28% Collectibles rate is

The 28% Collectibles rate is a Federal tax you pay if you make a profit selling silver and gold. It is not a sales tax.

I don't know about 27%, but

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---

I think you are right about "Collectibles" rate. Wasn't it one of the reasons why Ron Paul was trying to do something about this?

government of the people, by the people, for the people
---

is a dollar bill collectble?

they ate made by the U.S. mint...they are legal tender...now, why it is that a with a paper dollar things traded for are worth more and with a silver dollars things traded for are worth less...that i JUST CANNOT EXPLAIN...it's magic.

2Chronicles 7:14 If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land.

Dollar bills are not made at the

Dollar bills are not made at the US Mint, they are produced at the Bureau of Engraving and Printing.

Do you think IRS will buy that argument?

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---

government of the people, by the people, for the people
---

Ron Knows His Stuff

Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent.

http://www.house.gov/paul/congrec/congrec2008/cr021308h.htm

Yes, this is what I was thinking.

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---

government of the people, by the people, for the people
---

Are you sure about that? I tend to disagree with what

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---

you said about "EXEMPT from taxation."

government of the people, by the people, for the people
---

heh...for capitol gains on the coins themselves...

yes.

2Chronicles 7:14 If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land.

What do you mean "yes"?

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---

government of the people, by the people, for the people
---

Simple

You buy gold and silver coins and bars. There are lots of dealers on the internet. I like California Numismatic Investments but there are plenty of other reputable dealers. Gold coins include U.S. Gold Eagles, U.S. Gold Buffaloes, Canada Gold Maple Leaves, and Austrian Philharmonics. Silver coins include U.S. Silver Eagles and Canada Silver Maples. You can also buy old regular U.S. silver coins from back when they were pure silver. Where do you keep your horde? Well it's best if you figure that out for yourself and don't tell anyone else. For that matter, don't tell your friends and associates you have gold. You never know when that information is going to reach someone who isn't your friend after all.

You can also buy gold and silver exchange traded funds through a brokerage account. These are just like buying stocks. The main silver ETF has ticker symbol SLV and the biggest Gold ETF has ticker symbol GLD. I consider these to be best for short term trading, they charge a small annual fee so if the price of gold or silver stays flat they will gradually decline in value over time.

Mining stocks are for speculators. Don't buy them with any money you mind losing. The safest gold stocks are the big producers with low production costs. Keep in mind that while gold may go up, so will the cost of energy, labor, and giant truck tires. Not to mention that as gold goes up governments get sticky fingers and demand higher royalties. So the leverage of a mining stock might not be all you expect it to be. The riskiest plays are the junior explorers who don't mine but go looking for new gold reserves. Anybody who bought junior stocks a year ago is deep, deep, deep underwater right now. They have been totally hammered as investors have been treating any kind of risky stock like poison. Of course if you're a contrarian you might see that as a signal that this is a good time to buy juniors. Well, maybe. Again, don't invest money you can't afford to lose.

Then there are gold and silver futures and futures options. But these are purely for speculators and if you're a newbie you had best stay away from these. Professional futures traders make their living off of people like you.

Jason Hommel silver email update. 9/10

What's the Price of Silver?
(Would you like paper or metal?)
Silver Stock Report
by Jason Hommel, September 10, 2008
When it comes time to talk about silver, most people first ask, "What's the price?" I can no longer say.

My programmer summarizes the situation:
"I just got off the phone with Jason.

1. Industrial users are seeing longer lead times, and higher prepayments
2. Retail bullion is tightening and always 1 week of inventory away from default
3. Huge paper silver defaults imminent (Kitco, Perth, Barclays, etc all reporting major problems)
4. If prices go up, investment demand will skyrocket
5. If prices stay low, defaults are imminent
6. If prices shoot up and down, businesses will break from volatility
7. The system has no where to run, it is at it's final cliff (after 37 years, from 1971.)."

The Mints are swamped, and operating at maximum capacity, or not at all, so the shortages will not end anytime soon.

A: Sunshine mint, who make blanks for U.S. Mint's Silver Eagles, says all new orders have an estimated lead time of 5 months, out to February.
B: NWT Mint, has lead times of 4-6 months.
C: Johnson Matthey refinery stopped taking orders for 100 oz. bars, as we know.
D: Perth Mint remains a joke, claiming to have $880 million in gold and silver in "working inventory"; but more than half is leased out to their 40% owned AGR Matthey, which is closing offices during a time of record demand from the public. I mentioned that to the mint master of the Sunshine, and he laughed, and was flabbergasted, knowing what he could do with that.

Even if the mints are at maximum capacity, the market is demanding far more than they can produce. So, product shortages will continue for months, even if there is no 1000 oz. bar shortage (but I think there is a shortage of 1000 oz. bars.) Further, they are not raising prices, nor will they allocate product to higher bidders.

The Paper silver price is going down faster than the physical silver price.

So, people who own paper silver are losing more money than people who own real silver.

Premiums for physical are growing, and will likely continue to go up for the next 6 months, or perhaps indefinitely.

Dealers who have hedged in paper, are falling behind, and do not want to bid higher for real metal. They are hoping that premiums, the price paid over spot for physical silver, will come down. It probably will not.

That's the biggest reason why many dealers "can't find silver"; because they are unwilling to pay the growing premiums.

If they don't pay it, they won't have any silver for their business, and they will be out of business. So, at some point, they will "get it" and pay for it.

If you don't pay it, you won't have any silver to preserve your capital, and you will be out of capital.

Most people don't want to watch their paper go all the way to zero, so at some point, most people who own paper money or paper silver will "get it" and pay for it.

Examples of real silver selling for more than paper silver:

Example 1

My programmer, Shelby Moore, notes:

I bought Maples from apmex for $14.40 ($1.49 over spot) on that first big drop from $15 to below $13.

Today in same quantities (500+) Maples at apmex are $14.31 ($2.79 over spot).

Yet paper silver owners have lost -11% of their value since then. My net worth in Maples has not declined at all in the same time.

Example 2

I've repeatedly warned my readers about the Perth Mint, because they have had far too many complaints about not being able to deliver allocated silver in a timely manner over the years. This means they are either scraping the bottom of the barrel, or are technically bankrupt, but insolvency to silver investors is rarely something that causes a foreclosure or bankruptcy. It just causes physical prices to rise more than paper.

One of my readers reports that premiums for physical silver from the Perth Mint are out of control. It can cost 30-40% more for physical, and that's the "penalty" or "premium" for exchanging a Perth Mint silver certificate for real silver. It was reported this week to me by one of my readers that Perth was charging over $200 Australian for a 10 oz. silver bar, which is $20/oz.

Has anyone been able to cash in their Perth Mint certificates for cash? Or are you trapped?

Example 3

As late as 1964, a US silver certificate paper dollar and a silver dollar were the same price.

Today, as everyone knows, a silver dollar is worth about ten times more than a paper dollar.

So, in the past bull market for silver, real silver became more valuable than paper silver.

The same thing is happening today, and just like then, most holders of paper silver are in denial and don't understand.

What is paper silver? Anything where the metal is not in your hot little hands. If the metal is held by someone else's cold clammy hands, held for you, then it's paper silver, because it's their liability to you.

Example 4

Ebay.com Silver Eagles in rolls of 20 have sold for over $400, which is $20/oz.

Example 5

My auction where 25 bars were bid for $4.01 over spot.

Some people just do not understand markets. Some of my readers have suggested that I was price gouging. But I did not set the price, it was set by the highest bidder in the auction market.

Some of my readers suggest that I simply "tell" people to not sell silver below $50/oz, so that will become the price. But I do tell. I can't command, obviously, I can only suggest that people not sell. And for the most part, people are not selling, or if they do, many more are buying. Also, remember, much silver is still coming to market by the miners, far more than ever came from investors selling. Most silver coming to market now is from the miners.

Example 6

90% junk is now $0.50 to $.70 over spot and 40% is sold out.

Junk was below spot before the paper price drop. So this is another example of
paper silver holders falling behind physical holders.

Example 7

What if "THEY" told you that your silver was worth $2 per ounce? Would you believe them? No? Then why believe them today?

The purpose of manipulation has several goals:

1. To make the dollar look good by comparison.
2. To discourage silver investment. This time, the lower price is failing to do that.
3. To encourage silver investors to sell. This time, the lower price is failing to do that.

So, the manipulations are obviously failing, except it is making the dollar look good. They had to hammer silver by over 40%, and only got about a 10% increase in the dollar in overseas markets. Not bad for "wasting" $2 billion on the silver market, so at least they got some bang for their bucks. In fact, they probably made far more than $2 billion, just on the Forex markets, even though they have not, and cannot cover their silver trade.

And the manipulations are now a blatant joke.

People wonder, "how long can this go on?" Be patient, it will probably be over rather quickly now. The futures contracts that are not backed by any silver may come due in perhaps in 3-6 months, or maybe within 2 years the COMEX will be gone. That will be bigger than the FNM and FRE "conservatorship/bankruptcies".

What will happen next? It's anyone's guess. I have one. Maybe the paper sellers will never cover. Maybe they plan to default, while maintaining a low price. After all, if you have to give out a "cash settlement" because there is no silver, then it's far better to default at $10 than at $100, right?

Some people assume there will be short covering. Not necessarily. Debts that cannot be paid will not be paid. That's what bankruptcy is all about. You cannot squeeze blood from a stone, and you cannot conjure up silver from a short seller of silver who has no silver and who cannot find any silver and who is bankrupt.

The silver debt might take down the entire Exchange. No, scratch that, there is the 'paper payment' clause. They will continue to sell paper silver in all forms (including the dollar) until there are no more buyers.

It's a very profitable business selling paper. My dad sold "Da Vinci" paper airplane packages for $1.50 that cost 80 cents to print up. He used very high quality paper. He stopped when people stopped buying.

Something to think about: In Zimbabwe last year, when there was runaway inflation, there was an official price of gold. The officials needed gold, because their currency could not be used to buy anything outside of the country. So, the price of gold rose, officially, by 10 times in one day. Something like that could happen here.

What if tomorrow, or next week, the price of silver was $50 or $100/oz. That would not let any new speculators "get on board" a new price rise. I expect something like that to happen one day. Recent history shows that's how it can go.

If it does go that way, very few holders of "paper silver" will benefit; most, if not all, will lose.

If paper silver bag holders start selling to save their skins, their sunburn will start to sizzle, as their selling of paper will cause paper prices to go down further, and premiums for physical silver to rise even more.

Something to think about:

If the silver investment market is $1 billion at around $13, then it's about $7 billion at $100.

Question: How much is $7 billion in the grand scheme of things financial? Peanuts, right?

People sometimes ask me, "Jason why not try to convince a billionaire to buy silver?" Oh, but I am. It's you. 80,000 readers. Average net worth is about $100,000. That's an asset base of $8 billion. Yes, I know many of you are broke. But if there is one guy with $10 million for every 100 broke people reading, that's how it averages out.

It is already far too late for someone with $8 billion net worth, you (collectively), to protect yourself with physical silver; especially if that silver cannot be found.

Therefore, I stand by my call to buy silver at $21/oz. The shortages started then, and have only gotten worse. Clearly, many of you did listen, and it was good that you did! But the majority reading me have still not acted.

Fortunately, for those who can really listen and accept it, you (individually), it might not be too late. Most of the people on my list, over half, have been reading me for less than a year. It takes the average person about a year of reading me before they start to act. I know. I get the emails from appreciative readers. Some take even longer, like 3 years, and then "buy their first silver". You might want to decide to act sooner, especially since they are giving away silver nearly for free right now, if you can find it.

Many are still reporting to me their shock that the coin shops are totally sold out, and cannot find any silver. Even though I've been reporting this for 5 months now. What? Do you think I'm lying? No, for most people, it just sounds preposterous and against everything they think they know. But it's completely fitting with everything I've ever studied about silver.

You might want to speed up your "conversion" or understanding by browsing my archive:
http://silverstockreport.com/ssrarchive.htm

My favorite dealer right now is www.apmex.com. They recently sold out of over 800 bars of 100 oz. of silver in less than a week. Amazing volume. Just in bars, that's 4 million oz./year, or nearly 10% of the net investment market in silver, just in bars alone. Minimum order? $50.

My second favorite dealer (and sometimes favorite) now is www.tulving.com. He has nearly 200,000 oz. of silver; mostly in Silver Eagles and Olympic Maples. Premiums keep rising to $3-4 over spot. Minimum order is 500 rounds. He could sell out again in about 2 weeks or less.

Both of their premiums for real silver keep rising. Maybe that's why they still have some to sell. Maybe they know something.

Something to think about:

It's reported, or theorized by at least two sources now, that JP Morgan is one of the major banks who sold about 130 million ounces of silver in a month, about $2 billion. JP Morgan is also the custodian for the Silver ETF, SLV.

The SLV is "paper silver" of the worst kind, as it puts the rat in charge of the cheese. Also, holders of the SLV are losing out, as premiums for real silver rise. Investors in the SLV who bought an equivalent of 100 ounces of silver cannot buy 100 ounces of real silver for the same price anymore. Paper silver holders are falling behind because they did not buy the real thing.

So, what's the price of silver? Is it $11? $14? $15? $20? Or more like "heading to $100?"

It could be worse. What if you owned Lehman Brothers stock? Stock went from $16-18 to $7.79 in two days. Or, you could have owned FRE and FNM stocks and lost even more. Funny thing. LEH lost over $7 billion in market cap in two days. There's not even $7 billion in silver in the world to buy! Not below $100/oz.!

Sincerely,

Jason Hommel
www.find-your-local-coin-shop.com
www.silverstockreport.com
www.miningpedia.com
www.bibleprophesy.org

My offer:
For the price of just a few ounces of silver per month, you can look at my silver stock portfolio. Once a month, at the end/beginning of the month, around the 31st or 1st, for paying subscribers, I update the stocks I own and the percent of each stock or position in my portfolio. It's very simple. Very revealing. Very useful. It's not trading advice. It's not a model portfolio. It's my portfolio. Sign up here:
http://silverstockreport.com/customerservice.htm
Paying subscribers also get access to the member's forum where some very, very smart people discuss silver, stocks, economic issues, growth rates, why peak oil & global warming are frauds, and many other things.

"Committed To The Eradication Of Poverty Among Patriots"

"Those Who Strive For Excellence Refuse To Fear Mediocrity; They Eradicate It."

Great informative post. Have

Great informative post. Have you also figured out how the price of gold and silver drops while gas goes up like a rocket? 'Cause I can't...

here ya go rennaisance

here ya go rennaisance precious metals.. www.stevequayle.com
buy silver.. buy pre 1964 90% US silver coins! pay cash and take delivery! good luck tho there is not much of it around! DO NOT BUY THE ETF! BUY PHYSICAL! also all you need is about 20k of the stuff! if you have a lot of money and want to retire in 2 years then buy 100k,, but again trying to buy this amount at 10.60 spot is impossible you will pay 18.00 an ounce or more!

as for me and my home, we shall worship the LORD

What Mike L. said below is

What Mike L. said below is correct. This is about preservation, not profit. It's worth noting bullion coins are more easily subject to confiscation than old gold and silver currency. I encourage people to buy those instead just for that reason.