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Silver Coin Mints

Don't Get Ripped Off Buying Silver Coins

Written by Luke Burgess
Posted August 10, 2009 at 4:56PM

During precious metal bull markets, gold usually gets all the media attention. . . but the biggest gains go to silver.

In fact, silver prices have consistently outperformed gold during bull markets — doubling, tripling, even quadrupling the price of the precious yellow metal. So it should go without saying that a well-diversified precious metal portfolio includes silver.

One of the most popular ways to invest in silver are bullion coins, the cheapest and most direct way to own silver.

The retail market offers a variety of silver coins that will maximize profit. But investors are urged to exercise caution when considering some bullion coins. Here's why. . .

All bullion coins — gold and silver — have a premium included in their price. This premium is an additional cost over spot prices that covers manufacturing, distribution, and administration costs incurred by the mint or refiner in making the coin.

The result is paying over silver's spot price.

For those coins classified as "legal tender," or those with collectible or numismatic value, the premium is higher still.

A 1-ounce American Silver Eagle, which has a face value of $1, has a much higher premium than a 1-ounce privately-minted, non-legal tender silver bullion coin in part because of its legal tender status.

As a silver investors, however, we aren't concerned with a coin's legal tender status because— let's face it, what kind of investor would care if their 1-ounce, 99.9% pure silver coin, whose silver value stands at around $14 today, will be accepted at the local store in exchange for a dollar soda?

The same goes for numismatic coins, whose value is not solely dependent on the metal from which they're minted, but rather from their rarity and collectability.

How to Buy the Cheapest Silver Coins

Silver investors care about two things: the value of the metal today, and its prospects for tomorrow.

And with the U.S. dollar losing more might every day, the value of raw silver has never been in greater demand.

For investors like us, it has never been more important to understand how to avoid costly premiums that add nothing to the value of the commodity you're trying to acquire when you buy silver coins.

Take a look at the following premium rates for these popular bullion coins, which have "legal tender" status.

The percentages listed below represent the average premium you'd pay right now above the value of the raw metal alone:

  • American Silver Eagle — 21%
  • Canadian Silver Maple Leaf — 15%
  • Austrian Silver Vienna Philharmonic — 16%

For investors seeking only to benefit from owning the metal, paying this 'cost to play' is counterproductive, to say the least.

The cheapest silver bullion coins are privately minted.

Lacking the status of legal tender, and with little to no collector's value to speak of, these bullion coins maximize the purchasing power of your dollars.

Here are a few to consider and their average premiums right now:

  • Pan-American Silver — 8%
  • NWT Mint Silver Bullion — 8%
  • Sunshine Silver Rounds — 6%

Whether you decide to go with these or with another brand of privately-minted bullion coin, remember to shop around for the lowest premium. Armed with this information, you'll guarantee yourself the most silver for your buck.

Good Investing,

Alex Koyfman
Contributing Editor, Gold World

P.S. Even though silver is expected to outperform most precious metals, you can still haul in hefty gains with gold. In fact, there's a new investment vehicle that gives its holders 200% the daily return of gold. That means when gold goes up 1%, you get 2%. Or when gold goes up 10%, you get 20. Just like clockwork — every day, every hour. To learn more about this remarkable yet little-known investment, just click here.

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From Gold World's Gold and Guns blog. . .

Geithner Urges Congress to Raise Federal Debt Limit
U.S. Treasury Seeks 7.4% Increase to Debt Ceiling

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U.S. Treasury Secretary Timothy Geithner wants to take the country even deeper into debt.

In a letter to U.S. lawmakers on Friday, Geithner urged Congress to raise the legal limit on the nation's credit card.

The amount the government may borrow is currently limited by law to $12.1 trillion, a cap that has been raised several times since the nation slipped into recession in December 2007. But Geithner says that it is "critically important" that Congress raise the country's credit limit in the next two months, as the current debt limit could be reached as early mid-October.

Geithner didn't request a specific increase in the letter. But according to a report in the Washington Post, Treasury officials are expected to ask Congress to raise the debt cap to $13 trillion.

"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Geithner said.

According to brillig.com, the U.S. national public debt is already $11.675 trillion, and increases by $3.91 billion per day.

Meanwhile, the U.S. deficit is on track to exceed $1.8 trillion, a post-war record, compared with the size of the overall economy. The Congressional Budget Office has projected the policies laid out in Obama's first budget would require an additional $9 trillion in borrowing over the next decade.

The massive size of this debt spells disaster for the long-term value of the U.S. dollar. As a result, we continue to be extremely bullish on gold and silver.

Luke Burgess
Managing Editor, Wealth Daily

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