Consider Silver Bags As An Investment

June 13, 2010 | By | Reply More

At one time “silver” coins actually contained a considerable amount of silver, 50%-90% depending upon the issuing country.

Up to 1965 US dimes and quarters were minted with 90% silver and half dollars contained 40%.

In the UK coins minted between 1920 and 1946 had 50 % silver. Coins minted prior to 1920 also contained quantities of silver but these have become somewhat rarer and many have a collector’s value that does not relate to the value of the silver they contain.

As an investment vehicle “silver bags” can be purchased for the value of the silver they contain plus a low premium over the ´spot´ silver price.

In effect you are buying silver bullion with an in built hedge against the price of silver, as the face value of the coins is a constant.

For example you may buy a ´silver bag¨ with coins to a face value of US$ 1000.00 for US$3500.00, the price being the value of the actual silver contained in the bag of coins at the time of purchase.

Assuming the price of silver goes down dramatically it could be that the silver value contained in the coins is then only US$500.00 however you would still be able to cash in your coins for their face value as legal tender for US$1000.00 thus minimizing the loss that you would have sustained if your investment had been in silver bullion or an ETF.

Over the last 20 years the fluctuation in the price of silver has been extreme so discount this scenario at your peril!

If on the other hand silver remains in demand and production continues to be unable to keep up with demand then you could still be able to realise a handsome profit for cash with possibly no tax implications.

Note that in the UK silver and other precious metal bullion purchases are subject to VAT with the exception of gold for investment purchases so silver bags might be an answer for the British investor who has a bias towards collecting and wants to enjoy his investments, such as a postage stamp collection, by keeping them at home where he can keep an eye on them.

Whilst we prefer US$ denominated silver bags the problem for those who are non-US domiciles is delivery and/or storage cost expenses.

Who knows you may get lucky and find your silver bag of mixed coins contains a rare collectors item like a ¨Morgan¨or other collectible coin.

Go to Google search and type in ´silver bags´.

Check out the websites that come up to compare the deals that are offered and be sure to check out the tax implications for your location before making a commitment.

Also keep in mind the old dictum of  ‘caveat emptor’, the buyer should beware of any dealers outside the jurisdictions that he is familiar with.

Consumer safeguards should be watertight when parting with money for a package that depends upon its value on the trustworthiness of the seller.

Don’t let this warning put you off, as in all things to do with your money, just practise due diligence.

Finally this is a relatively inexpensive way to gain exposure to a specific market within the commodity sector that we think has a decent chance of a long term bull run along with other precious metals over the medium term.

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