Wednesday, May 22, 2013

Investing...A Few Coins At A Time

I wrote a post last week on investing in gold and silver for my 'other' boss (Joe at Retire By 40).

Are you interested in increasing your investment portfolio, a little at a time?

Try buying coins. 

The cheapest, of course, is silver. And part of that is the 'melt' price, something you can find at . Precious metals are valued by the ounce...and gold is a heck of a lot higher. Currently, it's running about $1400 an ounce, versus silver, at a much more reasonable $25 or so. 
     Why the big contrast in pricing? Thank Grover Cleveland for that - he put the gold standard into law back in the 19th century. The U.S.'s money was backed by gold, instead of silver -- which meant that silver prices dropped like a rock. The move bankrupted many people, especially out West, who had staked their fortunes on silver, instead of gold. (If you'd like to learn more about this, try my book Quilts of the Golden West. It's got a lot of history about the Gold and Silver Rushes, financial panics and other tidbits about pioneer life. Oh yes, and several quilt patterns. Go here for more. (Mention this blog, and we'll even give you a $5 discount on the price. More bucks to buy coins!)

If you want to invest in gold coins -- the easiest way to do it, since ingots are very heavy -- there are several out there to choose from, including South Africa Krugerrands, Canadian Maple Leafs and U.S. Golden Eagles. These coins weigh an ounce each, and are currently selling for $1400-1700 each. More gold options are here.

The easier way, though, is to consider silver coins -- their price lets you buy a little at a time and balance out any changes in the market. Junk silver  is what you want — half dollars, quarters and dimes minted in or before 1964, when coins were still 90% silver. (The term “junk,” by the way, refers to the coins’ value as a source of bullion. They’re generally not collectible for other reasons.) These cover Kennedy half dollars, Washington quarters and  Mercury and Roosevelt dimes — and, if you’re ok with less silver content (40%, vs 90%), Kennedy half dollars from 1965-70.
     Not only are they more affordable for the average person -- they can also be used as legal tender, if it comes to that. (Gold pieces, on the other hand, will be much more difficult to exchange.) You'll find these coins in rolls and bags on Ebay and elsewhere; prices will vary, especially if you're looking for coins in mint condition. (More silver options here, as well as here.)

     Buying a few coins, even if you only do it every now and then, expands your portfolio and gives you added options. And in the long run, it helps. In the past 30 years, gold and silver prices have gone up and down somewhat, but they've generally gone up -- and stayed there.
      I bought a handful of Morgan silver dollars some years ago for $8 each. They're now in the neighborhood of $37-49 each. Oh, that my other investments were showing a 400% or higher profit!

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