Top 10 Worst Managed Gold and Silver Companies

In a previous article, I looked at the top ten best managed gold and silver companies—well, here are the bottom ten. Once again, the list was limited to gold and silver stocks that trade on major exchanges (no OTCBBs or Pink Sheets), and each company was graded on the basis of stewardship, financial management, and stock-market performance.

Without further ado, here is the list:

10. Northgate Minerals Corporation (Ticker: NXG)

Canada-based Northgate is a gold and copper miner. With operations in Canada as well as Australia, Northgate is projected to produce upwards of 400,000 ounces of gold in 2009. The stock has a $917.8 million market cap and trades on the American Stock Exchange.

Northgate’s management has been praised over the years by many analysts for making the best of a bad situation. The company’s primary mine is a low-grade property, and the fact that the firm has been able to turn profits for so long says something. However, the numbers don’t lie, and on a quantitative basis, Northgate’s management just isn’t getting the job done.

For instance, Northgate’s sales growth has compounded at an annual rate of just 10% over the past three years, versus a gold and silver company average of 21%. Last year’s earnings came in at $10.7 million, down from $39.4 million in 2007, and $106.7 million in 2006—things are headed in the wrong direction, and someone has to be held accountable.

NXG’s Management Grades
Stewardship: C-, Financial Management: C-, Performance: C

9. Goldcorp, Inc. (Ticker: GG)

Goldcorp has operations in Central and South America, the United States, Mexico, and its native Canada. In 2008, it produced 3.5 million ounces of gold and reported around forty-six million ounces of gold reserves. Goldcorp has a $31.1 billion market cap and trades on the New York Stock Exchange.

Goldcorp got a new CEO in 2009: Charles Jeannes. During his tenure, shares of Goldcorp have gone up by over 73%, which may sound good, but considering gold’s rise in the same time period, it’s actually very mediocre. The average gold and silver company, for instance, has seen its value increase by more than 167%.

It’s also a bit troubling that insiders own less than 1% of Goldcorp’s shares. The interests of management are not clearly aligned with those of shareholders, even if the company does have mostly independent directors and a separate CEO and chairman. Goldcorp’s financial management has been decent, but its stewardship and performance leave a lot to be desired.

GG’s Management Grades
Stewardship: D+, Financial Management: C+, Performance: C-

8. Golden Star Resources, Ltd. (Ticker: GSS)

Golden Star Resources is incorporated in Canada, headquartered in Colorado, and does most of its mining in Ghana, along the Ashanti Gold Belt. The company also has stakes in exploration properties in other African nations, such as French Guiana, Mali, and Suriname. Golden Star’s sub-$5 share price and sub-$1 billion market cap make it attractive to “penny stock” investors, but it trades on the American Stock Exchange (not over-the-counter or the Pink Sheets).

The big strike against Golden Star is its heavy use of debt. While a debt-to-equity ratio of 26% would be far from alarming in most industries, it is quite high for the precious-metals sector. The average gold and silver company has a debt-to-equity ratio of just 9.87%, and most of the best firms use no debt at all. It’s as if gold and silver—which backed our currency before the dollar became a debt instrument—are just incompatible with debt in every way.

It’s also troubling how insiders at Golden Star own less than 1% of their firm’s shares. Although the stock is up 327% over the past year, and management has been able to produce 49% compound annual sales growth for the past three years, the firm has been unprofitable three of the past four years and is projected to post a $90.6 million loss in 2009.

GSS’s Management Grades
Stewardship: D+, Financial Management: D-, Performance: B

7. Barrick Gold Corporation (Ticker: ABX)

Barrick Gold is the world’s largest gold producer. In 2008, it produced more than eight million ounces of gold and reported reserves of fifty million ounces. The company has a market cap of $41.8 billion and trades on the New York Stock Exchange.

Barrick’s hallmark throughout the extended bear market in gold was its hedging against gold. During this time, shares of ABX tended to go up when gold went down, and vice versa. Of course, this worked out well during the early 2000s when gold was in the $200 range. But as gold began its meteoric rise, Barrick’s management was caught unprepared, and thus, the stock has underperformed its peers. Now management has officially begun to “un-hedge,” but that’s more easily said than done, and analysts predict it will be years before Barrick is ever a pure play on gold.

Even though Barrick has begun to un-hedge, its stock performance over the past year has still continued to suffer from residual hedging. Thus, while the average gold and silver company has posted gains of 167%, Barrick is up just 56%. Insiders are basically unaffected by this, though, since they own just 0.25% of the firm’s shares. It’s also important to note that several key managers were poached by rival Gammon Gold (#6 on the best-managed companies list).

ABX’s Management Grades
Stewardship: D, Financial Management: C, Performance: C-

6. MAG Silver Corporation (Ticker: MVG)

MAG Silver is a silver exploration company focused on the Mexican Silver Belt. MAG has mining properties at seven locations and has conducted drilling and testing at each. As of yet, though, MAG has failed to turn a profit. In 2008, MAG posted a net loss of $5.5 million and is projected to lose another $10.6 million in 2009. In total, the firm has lost $18.7 million since 2002 and has yet to take in a single dollar in revenue!

In terms of cash flow, MAG burned through $15.2 million in 2008 and is projected to use another $20.4 million in 2009. As of the last quarter, the firm only has $28.4 million in cash left—down from a high of $61 million at the end of 2007. The majority of MAG’s assets are wrapped up in “other” long-term assets and “intangibles”—it only has $100,000 worth of property, plant, and equipment. The only good news is that MAG only has $1.1 million in short-term liabilities and no long-term debt.

Shares of MVG are up 22.32% over the past year, which is only slightly better than the S&P 500’s average, and far worse than the average gold and silver stock. Insiders own just 1.25% of the firm’s shares. MAG has a $286.5 million market cap and trades on the American Stock Exchange.

MVG’s Management Grades
Stewardship: C-, Financial Management: C, Performance: D-

5. Harmony Gold Mining Company Limited (Ticker: HMY)

Harmony Gold is the fifth-largest gold producer in the world. It has operations in Australia, Papua New Guinea, and South Africa. Last year Harmony produced 2.7 million ounces of gold. The firm’s ore resources are among the world’s largest, too, totaling more than 530 million ounces of mineral resources. Harmony is an un-hedged play on gold. It has a $4.64 billion market cap and trades on the New York Stock Exchange.

Harmony’s board of directors consists of nine members, two of whom are executives. Of the seven non-executive board members, though, only five are independent. Harmony practices voluntary affirmative action in appointing board members, considering race and gender in order to achieve an “acceptable balance.” It is certainly debatable if this has been effective.

Harmony’s management statistics are sub-par across the board. Its three-year sales growth rate is just 5% (versus an average of 21%). Return on equity is an anemic 0.6% (versus an average of 8.69%). Insiders own just 2.54% of the firm’s shares, and Harmony Gold’s stock is up only 33.21% over the past year, versus an average of 167.74%. Harmony also has considerable debt compared to other gold miners.

HMY’s Management Grades
Stewardship: C-, Financial Management: C-, Performance: D-

4. Hecla Mining Company (Ticker: HL)

Hecla Mining produces silver, gold, lead, and zinc. In 2008, Hecla acquired 100% of the Greens Creek from Rio Tinto, effectively doubling its silver production and making it a “silver stock” that also mines gold and other minerals. Hecla has a $1.5 billion market cap and trades on the New York Stock Exchange.

Hecla shares are up more than 170% over the past year, making it easily the best-performing silver stock on this list, but that’s still just slightly above average for gold and silver companies. Hecla’s 6% compound sales growth over the past three years is far below average. Insiders own only 0.44% of Hecla’s shares, and the firm uses nearly twice as much debt as the average among its peers.

From 2007 to 2008, Hecla swung from a $52.2 million profit to an $80.2 million loss. For 2009, Hecla is projected to post a $15.2 million loss. That’s an “improvement,” but hardly one to get excited about.

HL’s Management Grades
Stewardship: D, Financial Management: D, Performance: C-

3. Silver Standard Resources Inc. (Ticker: SSRI)

Silver Standard Resources searches for silver in Australia and North and South America. It holds stakes in many properties, but none of them are currently operating—Silver Standard is waiting for the price of silver to go up first. Silver Standard Resources has never generated a dime of revenue and has racked up losses totaling $43.9 million dating back to 1999.

In addition to generating no sales and no profits, Silver Standard also uses much more debt than the average gold or silver stock, with a debt-to-equity ratio of 27%. The firm has total liabilities of $183 billion and assets of just $145 billion, excluding property, plant, and equipment. Management has burned through $227.9 million in cash over the past two completed years and is projected to go through another $153.7 million in 2009. The firm only has $42.9 million cash on hand as of its most recent quarter, down from a high of $197.3 million at the end of 2006.

Silver Standard has a market cap of $1.54 billion and trades on the Nasdaq General Market.

SSRI’s Management Grades
Stewardship: D+, Financial Management: D-, Performance: D+

2. Agnico-Eagle Mines (Ticker: AEM)

Agnico-Eagle Mines explores for and produces gold in North America and Finland. The firm operates two mines in Quebec and the Finnish Kitilla mine. Other projects are in the works, and Agnico-Eagle has the capacity to produce slightly over one million ounces of gold each year. Agnico-Eagle Mines has a $9.77 billion market cap and trades on the NYSE.

Shares of AEM are up 65% over the past fifty-two weeks. While that would be great during a bearish or even modestly bullish gold market, the fact of the matter is that Agnico’s performance grossly lags that of its competitors. Worse yet, management has led the firm to a -10% three-year compound sales growth rate; undoubtedly one of the main reasons for the stock’s poor performance.

Insider ownership at Agnico-Eagle Mines is 0%. While the difference between a 0.5% ownership rate and a 0% ownership rate might seem insignificant—both are outrageously low—a 0.5% rate shows that at least some of the firm’s insiders have confidence in their own ability to generate a return. A 0% rate means that not even AEM’s own executives and directors—not one of them!—are willing to own shares. Even if they think the stock is headed lower, this is bad management: Part of management’s job is to instill confidence in investors, and at this task, AEM’s leadership has failed miserably.

AEM’s Management Grades
Stewardship: F, Financial Management: D+, Performance: D

1. DRDGold Limited (Ticker: DROOY)

DRDGold is a midsized South African gold mining and exploration company. In addition to three mines in South Africa, DRD also owns the Tolukuma mine in Papua New Guinea. The firm is un-hedged, has a market cap of $198 million, and trades on the Nasdaq Capital Market.

About the only positive thing to say about DRD’s management is that they’re suffering along with their shareholders: Insiders own 10.76% of the firm’s shares, which are up only 8.96% over the past fifty-two weeks. Not only is this a tiny fraction of the gold and silver group’s average, it’s significantly worse than the S&P 500’s average of 21.31%!

Over the past three years, DRD’s management has been able to “grow” sales at a compound rate of -1%. New CEO John Sayers will have to do better in order for the firm to survive. The previous CEO, Mark Wellesley-Wood, was at the helm as DRD’s market cap evaporated—even as gold soared to new highs! The board saw fit to pay Wellesley-Wood $1.5 million for the great service he did destroying shareholder value.

DROOY’s Management Grades
Stewardship: D, Financial Management: F, Performance: F

Tags: silver stocks, top ten, worst managed

The 10 Worst Silver Coins for Investment

People can choose to buy silver coins for a variety of reasons: Maybe they like a particular coin’s design, or its history, or they just like holding on to it. Maybe they derive happiness from having all of the coins of a particular set. Or maybe they enjoy owning a particular coin simply because it is so coveted—its numismatic value is high.

All of these reasons for buying silver coins are perfectly valid. But if you’re interested in silver coins from a purely investment perspective, then there are three criteria you should be concerned with:

1. Mark-up over spot
2. Recognition/trust factor
3. Size (smaller the better)

There are trade-offs with items #1 and the others, though: Coins with the smallest mark-ups over spot tend to come from unknown (non-government) mints; multi-ounce rounds and medallions also have lower premiums than one-ounce or fractional coins. The key is finding balance, and two entire classes of coins can be eliminated altogether based on these criteria: Collectible numismatics and “large coins.” After discussing why, we’ll look at the eight worst values among coins that are currently being produced and sold new.

10. Collectible Numismatic Silver Coins

Collectible numismatic coins are those that have market values that are wildly out of line with the value of their silver content. They are prized for their rarity more than anything else. The problem with these coins as investments is that their numismatic premiums are unlikely to keep up with the rise in the price of silver. For example, if silver goes up 177% from $18 to $50, then a one-ounce numismatic collectible coin valued at $100 is likely to go up by only 32% to $132. The collectible coin will go up based on the silver it contains, but there’s no reason to think the numismatic premium will increase too.

Perhaps the numismatic premium will go up with inflation, but assuming silver beats inflation, numismatic coins are still a bad bet. There’s another possibility, too—that numismatic values will actually go down as silver goes up. Why? Because in a scenario wherein the demand for silver goes through the roof, people are going to want as much silver content as they can get. This could divert demand from numismatics and into coins like Silver Eagles, Silver Maple Leafs, and generic silver rounds that have very low mark-ups over spot.

In summary: If you want to buy a few numismatic coins because you enjoy them, by all means do so. But as an investment strategy, buying numismatics is not wise. If you believe, as I do, that silver is set to skyrocket, then the name of the game is getting as much silver in your hands as possible… With one caveat: It has to be liquid.

9. Large Coins

Two-, five-, and ten-ounce coins are produced by a lot of mints, and some even make kilo or one-hundred-ounce “medallions” that are made to look like coins. The per-ounce mark-up over spot on these items is low, but your savings come at a price: liquidity.

Imagine you want to sell your one-hundred-ounce medallion—the market for one hundred ounces of silver is much smaller than the market for one ounce of silver. Only a fraction of the people who can afford to buy one ounce or ten or twenty ounces of silver can afford to buy one hundred ounces at any given time.

Now take things even further: Imagine the dollar has collapsed or is collapsing, and you want to barter in silver. Here, the smaller increment the coin, the greater the relative value. Even ten-ounce coins will trade at a steep discount here, as to be useful, someone will have to melt down and recast them. That comes with an expense, and thus it is wiser to buy coins that are already cast in one-ounce or even smaller increments.

8. Silver Australian Koala

The Silver Koala is produced by the Perth Mint and is legal tender in Australia. The coins are also very cute, and who wouldn’t want one? But as an investment, they’re not so hot. The new 2010 issues are selling for $6 over spot and the 2009 issues are selling for an identical price.

A coin like the Silver Koala is a fun one to own, and makes a great gift. There are certainly worse coins to buy as investments, but with its high mark-up and limited appreciation potential, the Koala comes in at #8 on our worst-investments list.

7. Silver Australian Kookaburra

Like the Silver Koala, the Australian Kookaburra is produced by the Perth Mint and is legal tender in Australia. The Kookaburra has one unique distinction: it’s the only legal-tender coin to change its design annually. Kookaburras have been minted since 1965; ironically the year that U.S. coins were debased of their historic silver.

New Kookaburras sell for about $6 over spot, just like Koalas. They are attractive coins, too, and make a welcome addition to anyone’s collection. So why are they ranked below the Koalas? Because market demand for cute Koala coins is significantly higher than demand for Kookaburras. What is a Kookaburra anyway? The 2007 coin is already selling at a $3 discount to the new issues. Thus, Kookaburras, despite their rarity and legal-tender status, most certainly can lose non-silver value in a short time.

6. Silver Chinese Pandas

Now if Silver Koalas are adorable, what of these Silver Chinese Pandas? Even the most cold-hearted silver bug would be willing to pay a fairly hefty premium for one of these—one being the operative word. Pandas, regardless of how cute, are not good investments to be bought in bulk.

The 2009 Chinese Pandas are currently selling for about $18 above spot—that’s almost double the value of the coin’s silver content. Pandas minted 2004 through 2008 range anywhere from a dollar more valuable than the 2009s to several dollars less valuable. Some particular years, like 2003, have appreciated greatly, but it’s a matter of speculation as to which issues will become more valuable down the road. As investments, Silver Chinese Pandas rank among the worst new coins available to buy.

5. Silver Australian Lunars

Silver Lunars are yet another set of Perth-minted coins that are legal tender in Australia. What’s unique about Lunars is that their designs coincide with China’s ancient lunar calendar. The 2008 issue, for example, is “The Year of the Mouse.”

Lunars are yet another group of coins that sound fun to own. The problem is that their mark-up precludes them from being viable investment coins. Currently, Year of the Mouse coins are selling for almost twice the value of their silver content, while 2007 “Year of the Pig” coins have depreciated to just 1.6 times spot. If you buy Silver Lunars, you must be prepared for the fact that they could lose non-silver value fairly rapidly.

4. Silver Britannias

Silver Britannias are produced by the U.K.’s Royal Mint and have a 2-GBP face value. They are one-ounce coins, though they’re just .958 silver, compared to the standard .999 fine silver. These coins are beautifully minted, but their mark-up—at about $17 over the value of their silver content—is too rich to make them viable investments.

What’s more, older Britannias haven’t appreciated by much, as the 2008 and 2009 coins are selling for the same price as the 2010s, and 2007s are only trading at a buck or two higher than the latest issues.

3. Australian Silver Kangaroos

Oh boy, another cutesy animal coin! Everyone loves kangaroos, but there are many problems with these coins. Most importantly, they aren’t even very cute—the design is very basic and features only the outline of a kangaroo. Secondly, they trade at a huge mark-up to the spot price of silver—currently they’re selling for more than double the value of their silver content.

Kangaroos do come in limited mintages, usually not exceeding 20,000. This cap on supply stimulates demand and increases the non-silver value of the coins. But, of course, that value can be ephemeral. Rather than buying around eight Kangaroos, you could buy an entire roll of twenty generic rounds. When silver skyrockets, the disparity between the two holdings will be enormous.

2. Perth Mint Items

In addition to minting several Australian legal-tender coins, the Perth Mint also makes a variety of “specialty” rounds. These items feature images such as the Battle of Gettysburg, the First Man on the Moon, Barbie, and the Transformers.

Such novelty coins might be fun to own, but the wisdom of doing so—even as collectibles—is questionable, given the Perth Mint’s huge mark-up over spot price. For instance, Battle of Gettysburg coins are currently selling at a mark-up of more than $110 over spot. While these could very well appreciate in value in the years to come, it’s far smarter to take that $110 and buy another five or six one-ounce rounds.

1. Liberty Dollars (and Other “Alternative Currencies”)

Most silver investors and collectors are opponents of America’s Federal Reserve and the central-banking institutions all over the world. We’re attracted to the idea of alternative currencies, and subverting the various government monopolies on money. This is what Liberty Dollars were all about, and for challenging the Fed’s illegal monopoly, Liberty Dollar’s founders were thrown in jail. And this is the Land of the Free?

Silver bugs are almost unanimously sympathetic to the Liberty Dollar, but this doesn’t make the coins a good investment. The Liberty Dollar strategy was to get silver (and gold) coinage into circulation by thwarting Gresham’s Law. Gresham’s Law states that “bad money drives out good.” Silver could not circulate side-by-side with paper fiat money, then, because silver coins would always end up in the hands of hoarders who realized their value was greater than that of the paper money. Liberty Dollar’s strange response to this was to make their silver into “bad money” by overstating the face value of the coins to an absurd degree.

Well, the plan didn’t work. But there are still thousands of people who paid face value for one-ounce silver coins marked $50 “MSRP” (manufacturer’s suggested retail price). I’m one such individual. I bought one coin to have as a collector’s item and because it was a beautiful coin, but I have friends who invested hundreds of thousands of dollars into Liberty Dollar. How much better off would they be now had they bought generic silver rounds?

Liberty Dollar is currently on hiatus, pending court cases, but this advice applies to all would-be alternative currencies: If a currency can viably compete with the dollar, it will have to do so on its own merit, when people no longer want to accept dollars. Anything else will either fail thanks to Gresham’s Law, or defeat itself in its attempts to subvert Gresham’s Law. Either way, it’s not wise to jump on the revolutionary bandwagon too soon. Wait until you have sufficient stockpiles of silver first!

Tags: silver coins, top ten

The 10 Best Silver Coins for Investment

In the cult comedy classic UHF, the antagonist R.J. Fletcher unknowingly gives a rare collectible penny to a panhandling bum. “Don’t spend it all in one place,” says evil-businessman Fletcher, thinking the coin is only worth one cent. The bum, however, knows the coin’s worth and thanks Fletcher profusely. Later, the bum foils Fletcher’s plot to destroy Channel 62 by using the proceeds from selling the coin to save the station.

Most people fantasize about finding a “diamond in the rough”—a rare collectible coin handed out as change from Wal-Mart—but as an investment strategy, numismatics are less attractive that silver bullion.

Why? Because the price of silver is set to skyrocket. Currently trading at around $18.50, many analysts see silver at $50 or higher within the next year or two. Having too much money tied up in numismatics means you could miss out on the coming silver explosion.

With that in mind, here is a list of the top ten best silver coins for investment.

1. Silver American Eagles

The Silver Eagle is the only silver bullion coin the world with its weight, content, and purity guaranteed by the U.S. government. This alone makes the coins preferable to privately minted “rounds,” and is clearly worth the minimal premium associated with Silver Eagles. New, uncirculated Eagles typically sell for between $1.80 and $2.50 over the spot price of silver, while “used” Eagles may trade for as little as $1 above spot.

What makes the Eagle so special is that it is instantly recognizable. In a future barter situation, Eagles will almost definitely receive a premium over the coins issued by foreign governments and rounds struck by private minters. The coins’ limited quantity also grants them some numismatic value that tends to appreciate with age. For instance, 1986 Silver Eagles currently fetch a $7-above-spot premium, and even Eagles from as late as 2001 can trade for as much as $5 or $6 over spot.

2. Silver Canadian Maple Leafs

Much like the Silver American Eagle, the Silver Canadian Maple Leaf is a government-issued, legal-tender coin. Although it lacks the caché of the Eagle in the U.S. or abroad (anywhere but Canada, of course), the Silver Maple Leaf remains one of the world’s most recognizable silver coins, and is also one of the most aesthetically appealing. Maple Leafs are magnificently designed, and a truly beautiful sight to behold. They’re also the purest of government-issued silver coins, at .9999 fine silver (most others are just .999).

New, uncirculated Maple Leafs tend to sell for around $1.80 and $2.50 over spot, just like American Eagles, but Maple Leafs tend to gain numismatic value more quickly. For instance, 2008 Silver Maple Leafs are already selling for around $3 over spot. Some issues have very low mintage numbers, too. The 1988 Silver Maple Leaf—the first year the coin was produced—had a mintage of more than 1.1 million units, while the 1992 issue had a mintage of just 343,800.

3. APMEX 1oz Fine Silver Rounds

While Silver Eagles command a premium due to their easy recognition, and Maple Leafs are valued for their stunning beauty and low mintage quantities, when it comes to getting the most silver for your buck, APMEX Fine Silver Rounds are your best bet—at least in terms of “coin” form. Technically, non-legal tender issues by private minters are not considered “coins” at all and must be referred to as “rounds” for legal purposes. But silver is still silver, no matter if it’s issued by the U.S. government or a for-profit corporation like APMEX, and the latter’s “rounds” are among the most widely recognized and accepted of private issues.

APMEX rounds are .999 fine silver and sell for $0.79 over spot at APMEX’s Web site, http://www.apmex.com. APMEX stands for American Precious Metals Exchange, and the firm also sells Eagles, Maple Leafs, and other government and private silver coins and rounds, as well as gold, palladium, and platinum. APMEX rounds aren’t as visually striking as the higher-premium government issues, but at some level, silver is silver, and APMEX rounds are easy to store and trade without costing much over spot beyond the coinage costs.

4. Morgan Silver Dollars

Morgan Silver Dollars are U.S. government, legal-tender coins that were minted from 1878 to 1904, and then again for one year in 1921. They’re 0.86-ounce coins made up of 90% silver and 10% copper, giving them a silver weight of 0.77344 troy ounces—almost exactly the silver content of the original Spanish dollars on which the U.S. currency was originally based.

Although many Morgan Silver Dollars have huge numismatic premiums, lower-quality coins from years in which many were minted can be purchased at just a little over the spot price of silver. Normally, coins of .999 silver purity are preferable to those mixed with other metals, but the Morgan Silver Dollar is so highly recognizable, it is a rare exception to this rule.

5. Austrian Silver Philharmonics

The Austrian Silver Philharmonic is a rare coin that even outdoes the Canadian Silver Maple Leaf in terms of beauty. It is also the only silver coin that is denominated in euros, with a legal tender value of €1.5. One side of this coin features selected instruments from Austrian Philharmonic Orchestra—a national treasure of Austria—while the other side depicts the Golden Hall in Vienna, which is the site of the orchestra’s annual New Year’s Day concert. Fans of Austrian economics also seem to have a soft spot for these coins.

Austrian Philharmonics trade for $2-3 over spot, new, but the 2008 issues are already commanding a premium of at least $2.30—and that’s for orders of five hundred or more! A single 2008 Austrian Philharmonic coin can be purchased from APMEX for around $3.50 over spot, with price breaks at the purchase levels of twenty, one hundred, and five hundred. Two-thousand-nine Philharmonics start out at $2.30 over spot and can be had for as little as $1.79 over spot for very large orders.

6. APMEX ½oz Fine Silver Rounds

Although one-ounce has become the standard weight of silver coins and rounds, there are advantages to ½-ounce issues. For one, they are more liquid. If using silver in the course of barter, what do you do when you need to make change? You can’t cut a one-ounce coin in half, and if you go to the trouble of melting it down and recasting it, there’s a lot of effort and expense involved. For this reason, two ½-ounce silver rounds are always more valuable than one full-ounce silver round—all other things being equal. This is a hard concept for a lot of silver investors and traders to grasp, since we’re so used to using “token” currency.

There is a disadvantage to ½-ounce and lighter issues, though: they fetch a higher premium. Half-ounce issues from APMEX sell for more than $2 over spot—or $4 over the per-ounce spot price. Still, if you’re going to have diverse silver holdings and you believe in the possibility of future-barter scenarios, then you’d be well advised to have some half-ouncers on hand. Half-ounce silver rounds also make a great gift and can be used at restaurants as tips to help spread the silver bug.

7. “Junk” Silver Dimes

From 1837 to 1964, United States ten-cent pieces were made of 90% silver and 10% copper—just like the Morgan Silver Dollar. Dimes, of course, were smaller, and thus contained less silver; roughly 0.0715 troy ounces.

Although many of these older dimes have become numismatic collectibles, so-called “junk” silver dimes can be purchased at a mark-up of as little as $0.20 per coin. On a per-ounce basis, this is a little steep at about $2.79 above spot, but given the increased liquidity of the smaller coins, this premium may be justified.

8. “Junk” Silver Quarters

Similar to junk-silver dimes, United States quarter-dollar pieces were also made of 90% silver and 10% copper from 1932 to 1964, and were exactly 2.5 times as heavy as silver dimes.

Thus, a silver quarter contained approximately 0.17875 troy ounces of silver, and a dollar’s worth of silver dimes contained an equal amount of silver as a dollar’s worth of silver quarters. “Junk” silver quarters can be purchased at a mark-up of around $0.40 per coin.

9. Mexican Silver Libertads

It’s not just the U.S. and Canada that issue one-ounce silver-bullion coins; our neighbors to the south do as well. Mexican Silver Libertads are beautiful coins, but they command a pricier premium upwards of $2, and are somewhat less marketable than the issues of “trustier” governments like the U.S. and Canada.

10. Monarch Precious Metals 1/10oz Silver Rounds

To reiterate, the smaller the coin, the more liquid—within reason. In addition to ¼oz and 1/10oz rounds, Monarch also produces 1-gram rounds, and with coins that tiny, the cost of production outdoes the value of the metal by several times. One-tenth ounce, however, is a great weight for trade; and yes, ten 1/10-ounce coins are always going to be worth more than one one-ounce coin, all other things being equal. This can be verified by a quick eBay search, and it makes sense, too: As stated earlier, going to the trouble of breaking down existing coins into smaller increments would be costly, and these coins have already been broken down. They cost quite a bit more—about double the price of their silver content at current rates—so they should definitely not be your only coins, but they are a welcome addition to any diversified silver portfolio.

Tags: silver coins, top ten

Top Ten Stock Picks for Metal Investors in 2008

With the declining dollar bouncing the price of gold and silver to historic heights, the year 2008 will most likely see the same trend continue. Many analysts see gold at $1,000 an ounce.

So, for the investors looking for some hot stock picks, follow a general rule for mining stocks, “for the most part, senior gold producer stocks have been the beneficiaries of gold’s move. Usually, majors begin to move then mid-tier, juniors and then finally explorer gold stocks rise,” notes Toby Hansen, who writes for SeekingAlpha.

1. Lihir Gold Ltd. (LIHR)
2. Barrick Gold (ABX)
3. Gold Corp (GG)
4. Newmont Mining (NEM)
5. Anglo Gold (AU)
6. Silver Wheaton (SLW)
7. Pan American Silver (PAAS)
8. Silver Standard Resources (SSRI)
9. Hecla Mining (HL)
10. Coeur d’Alene Mines (CDE)

Tags: silver stocks, stock-picks, top ten