A Guide To Selecting Reputable Silver Bullion Dealers

With the price of silver exploding in recent years, there seems to be no lack of silver bullion dealers advertising their services online. Trying to find a reputable dealer can be a bit confusing for the novice silver coins investor. After all, there are crooks in every business - the precious metal sector being no exception. However, the following tips will help you to select a quality, online silver bullion dealer.

Older Is Better

Reputable silver bullion dealers are well-established and have been in business for a long period of time. Many reputable dealers such as Kitco and Monex have been in business for thirty years or longer.

Think Physical

A reputable silver bullion dealer will have a physical office, in addition to an online presence. Check the dealer’s website for a traceable address and phone number.

Track Records Count

Reputable dealers have a long-list of satisfied customers. Be sure to check out a potential silver dealer’s customer service track record Find out if they provide personal service Try to get a recommendation from other silver investors, when searching for a respectable silver bullion dealer.

Buy Locally

A reputable silver bullion dealer doesn’t have to be a huge conglomerate. Your local coin shop can be a great place to buy silver coins. Just make sure you apply the same rules of analyzing the business as you would an online dealer.

If you buy locally, you take delivery of the silver when you purchase it. Therefore, there’s no risk of getting swindled by a non-delivery. Another advantage to purchasing locally is that no reporting requirements are required. You can walk into the store, pay with cash and remain anonymous if you wish to do so. With the larger online silver bullion dealers, such as those listed above, you are linked to the purchase with a paper check.

Diversification Is Important

With any investment, you want to diversify to lower your risk. The same principle applies to selecting a silver bullion dealer. You don’t have to deal exclusively with one business. Even if you’ve done your homework and investigated the dealer to the best of your ability, there’s still a possibility that you could end up buying fake silver bullion coins. If you purchase your silver from various places, you will significantly lower the risk of losing money from a bad deal.

Don’t Overlook eBay

You can also bypass the silver bullion dealers altogether and safely purchase your silver bullion coins on eBay. eBay can be a great source to find terrific deals on silver coins. But, for those not familiar with the online auction format, purchasing on eBay does carry some risks. Just be sure to:

1. Carefully read the item’s description
2. Check the seller’s feedback
3. Always email the seller your concerns or questions.

Whether you buy silver coins from a huge conglomerate, a local coin shop, or an online auction site, if you follow these simple tips I’ve outlined for choosing reputable silver bullion dealers, you’ll be a safe and happy silver bullion owner!

Tags: buying silver coins, silver bullion dealers

Are Silver Rounds Just as Good as Coins?

Silver bullion rounds are simply another name for silver coins. The term round came about because the silver was shaped into coins and thus was able to be stacked into rolls. This made it convenient for the coins to be handled and shipped. You’ll often see them referred to as silver art rounds because they can be purchased inscribed with a variety of designs ranging from commemorative, religious, military, cars, holidays, weapons, animals, presidents, and even Elvis!

Specifications:

1. You can buy silver rounds in sizes ranging from one ounce to over one hundred ounces. The one ounce variety is the most popular.
2. Each silver round coin contains one full ounce of pure silver.
3. It has a purity of .999 fine silver.
4. It is not government-backed and has no legal tender status.

Varieties:

Silver bullion rounds are available in both name-brand and generic. While name-brand silver rounds include the one-ounce private mint produced A-Mark Precious Metals, Wall Street Mint and Sunshine Minting. These silver rounds will display the name or hallmark of the mint that manufactured them.

Generic silver rounds are produced by a variety of small, little-known firms as well as those produced over the years by companies that may or may not still be in business. They typically have a smaller markup than the name-brand silver rounds.

Most Valuable:

Engelhard Silver Prospectors is the one ounce silver round that is most sought after by collectors. It was minted by Engelhard but has not been produced since 1988. This silver round is difficult to obtain and occasionally can be purchased on the secondary market.

You can always find great deals on pure silver bullion rounds at: http://bullionbargains.com, other shops such as NWT MinT offer the Pan American Silver Bullion rounds.

Reasons to Buy:

1. Silver rounds are readily available.
2. They typically sell for a lower premium than government-backed silver bullion coins.
3. The value of the rounds is directly correlated to the current price of silver.
4. Their small size makes them perfect coins for bartering.

Conclusion:

Silver bullion rounds are affordable, easy to store, count, buy and sell. They are an excellent way for the small investor or collector to invest directly in pure silver bullion.

Tags: silver rounds

Investing in Silver Using Stock Options: The Basics

Stock options are a form of leverage for advanced investors to boost returns of his or her stock portfolio. In the most basic definition, an option is a contract, the option to buy or sell a certain stock at a predetermined price.

Options are leverage; using leverage either increases investment returns or burns investor’s portfolios. Like options, guns are a form of leverage, if you’re hitting your target great–but you can also blow your foot off.

There are many reasons an investor may use stock options, hedging, lock-in gains, or as speculation. By hedging an investor reduces the risk of losing money during a price decline. Likewise, an investor would use stock options to reduce the risk of losing gains from selling options. And these advanced investors may wish to speculate on a stock price movement, therefore might use stock options to play the market.

Vocabulary of an Options Trader

We’ve already covered some of the vocabulary of options trading, but now we’ll dive in deeper to explain the difference between call and put options, then explain a few simple strategies option traders use to boost gains.

A call option is the right to buy shares at a certain price. Conversely, a put option is the right to sell shares at a certain price. Simply meaning, a call option means you expect the price of shares to rise. Whereas, buying a put option means you expect the price of shares to decline.

The strike price is know as the price which shares may be purchased or sold. This means, if you bought an option with a strike price of $50, you could buy or sell the shares of the option at $50.

But why would anyone want the option to buy or sell at $50? Well what if you had the option to buy the shares at $50, then the price rose to $51, you would’ve made $1 per share. Similarly, what if you had the option to sell the shares at $50 and the price fell to $49, then you could’ve sold the shares at $50 then bought the shares again at$49–a profit of $1 per share.

In both put and call options the purchaser has the option to exercise her purchase, while the option seller has the obligation to respond to the buyers request.

So, How Does This Help My Silver Portfolio?

Well, you know that the FOMC (Federal Open Market Committee) is getting to lower the target interest rate, thus causing a further decline of the U.S. Dollar and increases the rise of inflation. So, you buy a call option now, and when the FOMC lowers rates you get to profit from the price increase of silver mining companies.

Or the opposite situation where you think the FOMC is getting ready to increase the target rate, so you buy put options and profit from the fall in prices of silver mining companies.

Puts, Calls, and Conclusions

Carefully consider using options to invest because of the leveraged nature of options. Options may provide opportunities to increase your portfolio, but options can also burn through your portfolio at break-neck speed.

Also consulting your tax and investment advisers will prove to be a prudent move. Options have different tax effects your tax situation. Before investing in options, it is important to thoroughly understand the potential risks and benefits–options could either help or hurt your portfolio.

Tags: investing-in-silver, stock options

Pure Silver Coins: An Investor’s Delight

Be it a declining dollar, fears of inflation, collector’s ambition, or pure curiosity, pure silver coins offer an opportunity. To the investor it’s alternative to paper investments, and to the collector it’s ascetic and rare qualities. Either collector or investor pure silver coins are a selection for both. And, these coins are readily available from dealers, on the Internet, and at-or-in auctions.

As a pure silver coin, the coin needs to have 90-99% of silver. Indeed, many countries, such as U.S.A., United Kingdom, Mexico, China, and Australia produce an ounce of pure silver.

Examples of these silver coins are U.S. silver eagles, to the Canadian silver maple leaf, Chinese Panda, British sovereign and the variety issued by the Australian Mints.

More for the collector, but even coins featuring famous people are available from the late Princess Diana, Marylyn Monroe; even John Wane has a silver coin minted after him.

A quick search on the net will net you hundreds of varying types and styles and mintages but all with the same theme of purse silver but in different sizes from one troy ounce up to one-kilo coins.

If you do decide to seek out and buy pure silver coin sets, then be sure to buy from a reputable dealer–or the mint directly, if possible. Ensure the quality of the coin is near proof, proof or brilliant un-circulated. Also ensuring the coin is sealed in the original container and has a certificate to go with it will help maintain the value of the coin.

Indeed, it can be heaps of fun collecting a pure silver coin or set of coins or profitable for investors. Regardless of investor or collector these pure silver coins will shine into the future.

Tags: 90% silver bags, pure silver coins, silver investing

Silver Coin Value

Silver coin value depends on the investor or the collector. For the collector, the rarity, grade, and demand of the coin give its value. But for an investor, a silver coin value depends on supply, content, grade, and demand; or, simply put, an investor wants to know how many coins were minted and how many are left, the percentage of silver, the quality of the coin, and the popularity of the coin.

Obviously, the investor is looking at some of the same factors as the collector, but the collector usually doesn’t use the silver content as a measure of value. To the collector, grade and rarity are much more important than any other factor. The collector will be buying the coin for her collection, not necessarily for profit’s sake–like the investor will.

For the investor, the amount of substitutes increase the value of the coin. That’s why the investor cares about the silver content more than the rarity. The silver content means, if the investor wanted, the coin could be melted down and have the silver cast into a new form of silver. For this example, a 1,000 ounce silver bar could be created from the coins. The coins have a different use, a substitute, showing the investor a second measure of value.

However, regardless of investor or collector, valuing a silver coin can be simplified to four factors: rarity, grade, supply, demand, and content.

With rarity giving coins huge price tags, many investors can be confused by believing rarity automatically means value. And speaking as an investor, rarity does not mean value. However, highly sophisticated investors will find value within rare coins. So, unless your a highly skilled investor, rare coins should be viewed solely as a collector’s item. Not an investment.

But in-defense of the collector, rare coins do fetch the highest prices. Indeed, these high prices are due to the limited number of coins: limited from the original minting or limited in circulation. For example both are rare coins a Quarter originally minted only 100, and a Dime originally minted thousands yet only 100 remain. These coins are rare because of the supply; they’re rare because of a limited number on the market and will fetch higher prices.

Similar to rarity, grade also determines the value of silver coins because high quality coins are far fewer than plain junk silver coins. Unlike junk silver, higher graded coins represent coins with higher quality. As junk silver is for investors, high graded coins are for collectors. Basically, collectors are looking for rare coins, and highly graded coins are rare.

Think of graded coins a subcategory of rare coins. Or think about a rare coin, then think about the same rare coin but with a scratch. Each coin is rare, but the first coin is much more rare without the scratch. The scratch would grade the coin lower, thus less rare. As such, the closer the coin is to un-circulated the higher grade the coin will have. Higher grade means rare means collectors will bid up the price.

Switching gears to demand, even coins face popularity contests, (at least its not as pointless as class president). More for collectors, popularity contests for coins stem from a historical significance, or ascetic beauty. Certain coins are demanded because of a special place in history, or because a coin has a beautiful design.

Now that we’ve covered most of a collector’s valuation, we’ll dive into what else an investor uses to value a silver coin. An investor will use rarity, grading and demand to determine value, but far more important is the silver content of the coin. Certain coins will have a certain percentage of silver the coin is made of.

For example the American Silver Eagle is 99.9% silver, while the 1964 Washington Quarter is 40% silver. Obviously, the silver eagle is more valuable to the investor than the quarter.

Which brings us to the conclusion, investors and collectors have different goals. Profit and a collection. And these goals give each person different factors for determining the value of a coin.

Tags: pure silver coins, silver coin value, silver coins

The Investor Allure of Exchange Traded Funds (ETFs)

It’s no secret: ETFs are hot. And with Wall Street pushing ETFs as the newest investment vehicle for all, it’s hard not to ignore the idea of using an ETF. It’s the low costs, liquidity, lower taxes, transparency, and specialization offered by ETFs that is making investors switch to ETFs.

Basically these ETFs are a liquid, low cost mutual fund, holding a pool of stocks within a specialized sector of the economy. For an example of such a specialized fund, think about an ETF of silver mining companies. This fund would be a holding–based on a certain percentage–of each major metal mining company. However, when compared to a classic mutual fund, the cost advantages of ETFs are huge.

Unlike ETFs, the costs run in the billions for mutual funds to hire analysis, accountants, and marketing firms. And a few of those billions could be money in your account. So, an ETF is an alluring alternative to a mutual fund. It’s the strong point of an ETF: lower fees and costs mean more money flowing to investors.

Also unlike mutual funds, ETFs can be more liquid. Many investors see mutual funds as a place to park money for a period of time, thus theses mutual funds aren’t nearly traded as ETFs. Because ETFs are bought and sold just like stocks, ETFs create trading opportunities that mutual funds just don’t offer. It’s this liquidity that draws many investors to ETFs over the traditional mutual fund.

What investor doesn’t like lower taxes? Exactly. These lower taxes provided by ETFs are also a big attraction for investors. Because ETFs don’t have trigger-happy managers running the ETF, the investor doesn’t have additional taxes to worry about. So far, taxes for ETFs are capital gains tax if you sell and some funds–but not all–have dividends.

It’s also the transparency drawing many investors into these funds because at any time you can see exactly what the fund is comprised of. The fund will usually have a set percentage in each investment. This kind of transparency is hardly found in either mutual funds or on Wall Street—that’s why investors are running to ETFs: complete transparency.

ETFs provide investors specialized segment of an industry. In this case well stick to precious metals. The iShare Silver ETF (SLV) holds a certain amount of bullion and prices closely follow the price of silver. On the other hand, streetTRACKS Gold Shares (GLD) is a fund of gold mining companies. Still, both funds are investments into the precious metals market.

On a side note, investors interested in leveraging returns will be glad to know that ETFs can be bought on margin, and options are available on ETFs. As cliché as this saying is, it is important to remember leverage is a double-edge sword: cutting out huge returns, as well as, cutting out the ignorant investors.

While ETFs are pushed by Wall Street and as other investors brag about her double digit returns, prudent investors remember: some investments–just aren’t made for everyone. So the dive into ETFs will depend on your investing personality and investment goals. So be sure to follow some sound advice: Eight Rules for Exchange Traded Funds.

Some investors will want the ease of investing in a specialized sector without having to sit down and pick the companies within that specialized sector. While other investors will want to research for hours and pick the best company within that sector, it depends on the investor weather ETFs are the right investment.

Tags: etf, silver ETF, silver investing

Silver Mutual Funds Offer Another Option for Investors

There are numerous ways to invest in precious metals these days. Bullion and rare coins have always been investment options, and they’re still good ones. Gold and silver certificates and privately minted coins are some other choices. And there are also mutual funds that can offer you exposure to the precious-metals sector.

There are about thirty mutual funds which invest in both gold and silver. But as you will see, the investment styles and strategies of these funds vary greatly. Some invest primarily in mining stocks, while others hold bullion or coins. Still others offer a balanced approach. And finally, there are the exchange-traded index funds tied directly to the bullion price of gold and silver. One thing is for sure—it’s never been easier to invest in precious metals.

Two of the Best Precious-Metals Funds

Two of the best precious-metals mutual funds are Vanguard Precious Metals and Mining (ticker: VGPMX) and Permanent Portfolio (PRPFX). Both of these funds received five-star ratings from Morningstar, and yet they are quite different.

The Vanguard Fund is heavily stock-based mutual fund. As of July 31, 2007, 97% of its $4 billion in assets were invested in equities, with its largest holdings Lonmin (LMI), Impala Platinum (IMPUY), Anglo Platinum (AGPPY), and Aber Diamond Corporation (ABZ). All four of these stocks are foreign and can only be purchased by U.S. investors through ADRs—buying the fund is much easier.

As of July 31, 2007, Vanguard Precious Metals and Mining had a one-year annualized return of 22.29%. Its three-year return was even better, at 39.88%. And its five-year return was 34.01%. An investment of $10,000 five years ago would be worth $43,220 today.

Another amazing feature about the Vanguard Fund is its incredible Sharpe Ratio of 1.41 (five-year return over risk). In fact, based on the fund’s three-year, five-year, and ten-year data, Morningstar assigned it a return designation of “high,” and a risk designation of “low.”

Permanent Portfolio (PRPFX) didn’t fare quite as well. Its three-year, five-year, and ten-year returns are designated as “high,” but it’s risk is also “high” or “above average.” What’s more, its returns haven’t been as high as Vanguard’s—just 8.1%, 11.75%, and 13.06% for one, three, and five years, respectively.

But Permanent stands out when you look at its worst returns. In its history as a fund, the worst three-month period it has ever experienced is -5.58%. By comparison, Vanguard shareholders would have suffered a -29.8% three-month period if they held the fund long enough.

Remember, the Vanguard Fund is 97% stocks. Permanent Portfolio, by stark contrast, is much more well balanced. As of July 31, 2007, it was 23% in cash, 32% in stocks, 21% in bonds, and 24% in “other”—which, as you might guess, means mostly precious metals. In fact, its four largest holdings are U.S. Golden Eagles, Gold Canadian Maple Leafs, COMEX Gold, and COMEX Silver.

It’s easy enough to look at these two funds and say Vanguard is superior, but it really depends on what you want as an investor. Do you want a well-managed mining-company fund, or do you want a mutual fund that gives you real exposure to gold and silver? If the answer is the latter, than Permanent Portfolio is your best bet.

One Not-So-Good Fund

Of the thirty gold and silver funds, only two received a five-star rating. Three others received four stars, and all the rest but one were either given three stars or weren’t rated. There was just one two-star fund: RiverSource Precious Metals & Mining.

Like the Vanguard Fund, RiverSource is predominantly stock-based. As of July 31, it had 96% of its $120 million invested in equities, more than half of which were foreign securities. Unfortunately, its selections haven’t panned out as well as Vanguard’s, with only a 7.06% year-to-date return.

Another negative aspect of RiverSource is its ultra-high expense ratio of 2.15%. By comparison, Vanguard has an expense ratio of just 0.35% and Permanent Portfolio’s is just 1.11%. Both of the five-star funds are no-load, whereas RiverSource has a 1% back-end load. All of these fees and expenses can really take a bite out of your returns, especially when the fund’s performance isn’t all that hot to begin with!

Exchange-Traded Funds

Finally, there are exchange-traded funds (ETFs) that allow investors a more direct access-point to gold and silver. For gold, there is streetTRACKS Gold (ticker: GLD), and for silver, there is iShares Silver Trust (SLV). Both of these funds are tied directly to the price of their corresponding precious metal, and invest in nothing other than gold and silver, respectively.

For example, streetTRACKS Gold is priced so that one share of the fund is equal to 1/10 an ounce of gold. The iShares Silver Trust is priced so that one share equals ten ounces of silver. However, these ratios don’t always hold up—GLD recently traded for $66.57 a share while gold was $670 an ounce; and SLV traded at $127.65 while silver was priced at $12.79. Nevertheless, these ETFs do give investors an easy way to own gold or silver, at least on paper.

It’s As Easy as Point and Click

So what is the best way to invest in precious metals? It’s really up to you—your preferences and investment goals. The only thing you must be sure of is if your strategy matches your investment objectives. For example, if you want real exposure to gold and silver, it’s much better to purchase Permanent Portfolio than the Vanguard Fund—but even better yet to buy GLD and/or SLV.

But if maximum exposure isn’t your goal, the Vanguard Fund could be a great investment. The best news is there are dozens of options which simply didn’t exist ten or twenty years ago. Now, with nothing more than a few hundred dollars and Internet access, anyone can hedge with and profit from precious metals.

Tags: Permanent Portfolio, silver investing, silver mutual funds, Vanguard Precious Metals and Mining

1932 - 1964 Silver Quarter: 90% silver

1932 - 1964 Silver Quarter is 90% silver. Use the Silver Melt Value calculator to see the value of silver in this coin. This quarter is classified as “junk silver“, read more about junk silver as an investment.

Listed below are the mintage numbers for each year. The year column lists the year and mint mark on the coin where, D is for Denver, S is for San Francisco, and P is for Philadelphia. Also, a coin without a mint mark means the coin was minted in Philadelphia.

The Mintage column is the number of coins struck and released by the U.S. Mint.

The Numismatic Value Range column represents what people typically pay for that type of coin (usually a very wide price range depending on the condition and demand of the coin).

Tags: 90% silver bags, junk silver, silver investing, silver quarters

Junk Silver — U.S. Coins With 90% Silver

Junk silver is an informal term used in the United States and Canada for any silver coin which is in rough to fair condition. Junk silver usually, has no collectible value above the bullion value of the silver the coins contain.

Such coins are popular among investors seeking to invest in silver — particularly in small amounts. The word “junk” refers only to the value of the coins as a bullion investment and not to the actual condition of the coins; meaning, junk silver is not necessarily scrap silver.

The most commonly collected U.S. junk silver coins are the Mercury dimes and Roosevelt dimes, Washington quarters, and Franklin half dollars, and Kennedy half dollars, which are minted in or before 1964. These coins have a 90% silver composition (”coin silver”).

When minted some coins containe 0.7234 troy ounces of silver per dollar of face value. In practice, the silver content is usually assumed to be 0.715 ounces because circulation erodes the coins.

Less common junk silver is the Kennedy half dollars from 1965 to 1970, which contained 40% silver. The value of silver content is one reason investors buy junk silver coins. The percent of silver is less likely to come into question, than silver bullion bars, which require certification and authenticity tests.

A “bag” of junk silver, ($1000 face) contains approximately 715 ounces of silver. And, it will generally track the spot price of silver. If silver goes up ten cents, a bag of 90% silver coins will rise $70 or so; however, prices sometimes lag sharp spot price movements because of the liquidity of junk silver coins.

To gain the benefit of junk silver as an investment, investors must sell his or her coins through a coin dealer, on an on-line auction site, or classified advertising. Selling through any of those means usually takes a few weeks, therefore the liquidity of an investment is gradual.

When bags of circulated 90% silver coins can be bought — at about the same premium as 100-oz bars, or even at small premiums over 1-oz silver rounds — bags should be the first choice for many investors because of the reduction in price when an investor buys in bulk.

Buyers can expect to pay a little more for half-dollars than for dimes or quarters because of the higher silver content as well as half-dollars are much more popular. Yet another reason for the demand of half-dollars is fewer half-dollars were minted than dimes or quarters.

Although many investors buy junk silver coins as bullion investments, other investors buy junk 90% silver coins for “survival purposes.” These buyers fear the worst for the dollar. They fear the dollar will be printed until it becomes worthless. If this “worst-case scenario” were to become reality, then U.S. 90% silver coins would be used the purpose they were originally minted: as money.

The history of paper currencies have been to print until those currencies became worthless. Actually, today most dollars in circulation are not printed but are “electronic” or digital dollars, created by the Federal Reserve to increase the supply of money, which many argue increases inflation.

Choosing between junk silver coins or bullion bars is largely a matter of an investor’s goals and resources. Although before 1965, silver coins would be ideal for survival purposes. Junk silver coins sell at premium, or below premiums on 100-oz bars and, 1-oz silver rounds, junk silver coins hold greater upside price potential than .999 fine silver bullion products. At times, and especially during rising precious metals markets, circulated U.S. silver coins pick up premiums.

However, .999 fine bullion items (1,000-, 100-, and 10-oz bars and 1-oz rounds) can be produced at any time; as a result, there are limits to how high premiums on .999 fine silver bullion items can go.

To support this assertion — bags of 90% silver coins hold greater upside potential than .999 fine bullion items — a little background on junk silver coin prices and silver prices must be shown.

Over the last three decades, when precious metals enjoyed bull markets, 90% silver coins often achieved premiums of $1.20/oz to $1.50/oz over spot, sometimes as high at $2.50/oz. This is because many investors want silver in a form they know is silver, and pre-1965 U.S. 90% silver coins certainly fit the investors objective.

Following silver’s spike to $50/oz in the 1980’s, industrial silver users implemented efficiency moves which reduced industrial demand for silver. Furthermore, the rising prices of the 1970’s had spurred efforts to mine more silver and to increase the recovery of silver in the secondary market.

Today, reclaimed silver or recycled silver, is a major source of silver — the essential metal for many industrial consumptions.

Because of these efforts, silver went into “surplus” in the 1980’s. Meaning, newly refined silver exceeded industrial demand. This caused investors to avoid silver in the 1980’s, except for a shortly-lived strong market in 1987.

But, for most of the 1980’s, investors were net sellers of silver. Selling resulted in huge quantities of junk silver coins to be refined and converted into .999 fine silver.

Meanwhile, the Y2K scare in 2000, caused yet another huge melting of circulated 90% silver coins. Buying spurs junk 90% silver began when fears of the world’s computers would stop working on January 1, 2000.

Many people began preparing for the worst. And, fears were accelerated, as highly respected economists issued warnings and wrote books on the coming collapse.

Entire newsletters were dedicated to educating people: how to prepare. One recommendation was circulated instructed people, 90% silver coins should be stashed away so the coins could be used as money when banks closed and ATMs no longer dispensed $20 bills.

Consequently, people bought junk 90% silver coins at whatever prices, and bags picked up 50% premiums. The Y2K scare showed just how quickly 90% silver coins can pick up big premiums and that premiums on 90% silver coins can rise while the price of silver remains stagnant — during 1999, the price of silver was essentially unchanged.

And then, on January 3, 2000, as soon it became evident the world’s computers were not going to fail, investors began selling. And, sellers continued throughout the year, even into 2001. As the sell off continued — forcing down prices on 90% silver coins until they sold at discounts — some junk silver sold below the value of its silver content.

In addition to the sell off, untold quantities of bags were refined into .999 fine silver bullion. Therefore, bags of pre-1965 U.S. silver coins are in short supply.

After the Y2K crash became a nonevent, premiums on bags of 90% silver coins fell to record lows. Junk silver coins became less expensive than 100-oz silver bullion bars.

Indeed, the potential for 90% silver bags to pick up big premiums justifies the buying of bags circulated silver coins by investors who can manage the bags’ weight and bulk.

Tags: 90% silver bags, junk silver, silver coins, silver investing

Eight Rules for Exchange Traded Funds (ETF) Success

Carl Delfeld is head of the global advisory firm Chartwell Partners, and he has a list of eight rules to maximize success when investing through an Exchange Traded Fund (ETF).

Managing a global portfolio of exchange-traded funds (ETFs) is a great way to build a diversified portfolio with exposure to equities around the globe.

Fortunately, you need not be a rocket scientist to do this, but many investors fail to observe some basic guidelines. Investing in ETFs can get them into real trouble, so follow these eight steps and sleep easier.

1. Liquidity Comes First: Before you even think of building an investment portfolio, you should set aside about six months of income in a “rainy day” account.

This account could be put into a money market fund or U.S. Treasury securities. Having money set aside will ease your mind and allow you to be more open and creative with your global portfolios.

2. Separate Portfolios: You should separate your core conservative portfolio from your growth portfolios. With the core conservative portfolio, your top priority is capital preservation, and growth is a secondary consideration. While, your growth portfolios are more speculative, with capital growth as the primary goal.

3. Really Diversify Your Portfolios: You need positions in your portfolios that are likely to offset each other as unexpected events and market movements become a reality. This is not accomplished with different sectors of ETFs or a mix of small-cap, mid-cap and large-cap ETFs. Rather the goal is to have some investments that are on both sides of risks.

For example, if the U.S. dollar declines, have some investments in precious metals or denominated in other currencies, such as Switzerland or Australia or Singapore ETFs.

If inflation heats up, have some investments that hedge this risk such as timber, gold or Treasury inflation-protected bonds (TIPs).

If political events or policies in one country take a turn for the worst, it is helpful to have investments in other well-developed countries to offset any loss of value. You get the idea, spread your risk and avoid having one ETF account for more than 5%-10% of your core portfolio.

4. Be Careful Which Countries You Pick: You need some guidelines to help keep you from getting carried away and having too concentrated a position in a particular country or region. In particular, take a good look at the following: 1) the stability and overall political and corporate governance; 2) the legal environment, respect for contracts, low levels of corruption, due process and rule of law; 3) the macroeconomic environment including fiscal discipline and currency strength; and 4) political risks that could affect financial markets.

Keep in mind that the quality of the countries you choose to invest in is the primary but not the only factor. The price or valuation of a country’s stock market is also extremely important.

Often, the best time to buy into a country’s stock market is when it is beaten down, but when there are signs that its economic and political problems will sharply improve. If you have a long-term perspective, you might consider annuities specially structured for ETF portfolios.

5. Minimize Company Risk by using our “buy countries, not stocks” strategy. Instead of trying to pick the best three stocks on the Tokyo Stock Exchange, why not just minimize company risk by buying the iShares MSCI Japan Index, which tracks the Nikkei 225 and spreads this risk across 225 Japanese companies.

6. Monitor ETF Country And Company Exposure: Be careful to look under the hood of ETFs to see where your money is going. For example, let’s look at the iShares MSCI Emerging Markets ETF. It invests in 26 different countries, so it is natural to think that you will get broad exposure to all 26 countries.

However, 50% of an investment in this fund is going to four countries: South Korea, South Africa, Taiwan and China. In addition, incredibly, 7.5% is going to one company, Samsung Electronics of South Korea.

The same is true for the MSCI Europe, Asia and Far East index. It contains 21 developed countries, but 48% of the money you invest would go to just two: Japan and the United Kingdom. Meanwhile, less than 1% would go to Singapore and Ireland!

Country specific ETFs such as the new iShares FTSE/Xinhua China 25 Index can also have a fair amount of concentrated risk. Although the China ETF tracks a basket of 25 companies, the largest five companies account for nearly 50% of your exposure.

7. Cut Losses With A Trailing Stop-Loss Policy And ETF Put Options: We have all been there. You buy a stock or fund, and it appreciates in value rapidly. Then it stumbles and begins to decline. What do you do? Should you buy more, let it ride, or sell? Save yourself a lot of pain and agony by following a simple rule.

If a position ever falls more than 20% from its high, sell it immediately and reassess the situation.

If you invest in an ETF with a sizable downside risk, why not spend a few hundred dollars to purchase a put-option as an insurance policy?

8. Re-balance Your Portfolio: At least annually, you need to make some changes so that you are not overly exposed to countries that have higher risk factors and volatility. One way is by selling some shares of your winners and increasing exposure to under performers.

A re-balance accomplishes another goal, locking in gains and taking some money off the table. Remember, only a fool holds out for top dollar, especially in the more volatile emerging market countries.

Building your portfolios with low-cost, tax-efficient ETFs is a smart strategy, but don’t set it on auto pilot.

For more information call 877-221-1496

About the Author: Carl Delfeld is head of the global advisory firm Chartwell Partners and editor of the the “Asia-Pacific Growth” newsletter and is the author of “The New Global Investor.” For more information please visit http://www.chartwellasia.com

Tags: etf, exchage traded fund