Best of the Week
Most Popular
1.China Crash, Greece Collapse, Harbingers of Stock Market Apocalypse Forecast 2015? - Nadeem_Walayat
2.Gold Price Awaiting Outcome of Greece Crisis - Clive_Maund
3.Gold Price Peculiar 6 Month Cycles - Rambus_Chartology
4.Gold Price Just a Little Bit More - Bob_Loukas
5.8 Unprecedented Extremes Indicate a Stock Market Bubble in Trouble - EWI
6.Gold And Silver – Without Either, You Will Be Greeced - Michael_Noonan
7.Lies, Damned Lies and Statistics - James_Quinn
8.China Crash, Greece Crisis Harbingers of Stocks Bear Market? Video - Nadeem_Walayat
9.Gold and Silver Record Shorting - Zeal_LLC
10.Markets Big Deflationary Downwave Quick Reference Guide... - Clive_Maund
Last 5 days
Reasons Why the Greek Crisis Will Only Get Worse - 30th July 15
The War On Cash: Why Now? - 30th July 15
Greece - The IMF Experts Flunk, Again - 30th July 15
Threat Of Cyber Warfare the “Other Reason To Own Physical Gold” Warns Rickards - 30th July 15
The 5 Biggest Myths and Lies about the Middle East - 30th July 15
Greece, Diversion, and the New World Order - 30th July 15
Ibuprofen Warning - The Pain Killer that can Kill You! - 29th July 15
More Ritholtz on Gold, and Another Response - 29th July 15
Crude Oil Price Is Lower – and You’re Richer - 29th July 15
U.S. Home Sales Market Is Dead – This Chart Proves It - 29th July 15
Greece- What Happens When Economists Talk Politics - 29th July 15
The Gold - U.S. House Prices Ratio As A Valuation Indicator - 29th July 15
Will Crude Oil Price Decline Continue? -Video - 28th July 15
Gold & Silver Money Has Devolved Into Debt and Plastic - 28th July 15
Buy and "Own Gold Krugerrands" Says Money Expert Jim Grant, Very Bullish on Gold - 28th July 15
How to Protect Yourself from China's Crashing Stock Market - 28th July 15
Quantum Geopolitics - 28th July 15
Gold Mining Stocks to Weather the Storm - 28th July 15
Stock Market Bulls Beware! - 28th July 15
Will Chinese Stock Market Crash Affect the US? - 27th July 15
Crude Oil Price Under $48! - 27th July 15
Are We Seeing a Trend Reversal with U.S. Interest Rates? - 27th July 15
How to Know When the Gold Bear Market is Over - 27th July 15
Gold Bear Market Phase III - 27th July 15
Silver Bull Hammer Buy Signal - 27th July 15
Gold Cracks Support and Plunges to New Lows - How Low Will Price Go? - 27th July 15
Commodity Markets Breakdown Of 2015 Is Now A Fact - 26th July 15
Gold Price at a Five-Year Low: Here’s What to Do - 26th July 15
Stock Market Primary III Inflection Point - 26th July 15
Central Banks and Our Dysfunctional Gold Markets - 25th July 15
Gold And Silver - The US Dollar Does Not Exist, Part II - 25th July 15
How Wall Street Put Apple Stock in Animal House - 25th July 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stock Market Bubble in Trouble

Special Report: How to Buy Silver

Commodities / Gold and Silver 2012 May 15, 2012 - 08:08 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleLarry D. Spears writes: In late December, silver dipped to a 12-month low near $26 an ounce, and traders who responded to the barrage of "buy" recommendations were quickly rewarded as the metal soared to a high of $37.18 just two months later.

Today, silver has pulled back below $29 an ounce, giving investors another chance to establish a position before the metal makes its next move higher.


After all, the fundamental case for silver prices remains as strong as ever.

The U.S. dollar continues to weaken, inflation remains a concern, silver demand from industry and emerging markets remains strong even as supply shrinks - plus we're facing growing uncertainty over the outcome of the 2012 elections.

It's a perfect recipe for higher silver prices - most likely even higher than last year's peak at $50 per ounce.

But what's the best way to play the next upmove by the "poor man's precious metal"?

For the purist seeking to hold metals as a long-term store of value and a hedge against inflation and global turmoil, the first choice is always the physical silver itself.

How to Buy Silver
For the smaller investor, this typically means one-ounce silver bars or half-ounce or one-ounce silver bullion coins - examples of the latter being the American Silver Eagle, the Canadian Silver Maple Leaf, the Chinese Silver Panda and the Australian Silver Koala.

These are produced by private mints and governments around the globe. The prices typically track the spot price of silver, plus a premium of 8% to 10% for bullion bars and up to 16% for coins, which covers the cost of minting and fabrication. The actual mark-up varies from coin to coin depending on the purity of the silver used, with Canada's Silver Maple Leaf being highest at 99.99% pure.

Larger investors can reduce the premiums to as little as 4% or 5% by purchasing the five-ounce, 10-ounce or one-kilogram coins offered by some mints, or buying 10-ounce or 100-ounce silver bars.

Be aware, however, that the premiums for all sizes will be considerably higher if you buy in small quantities or want to pay by credit card rather than with a bank draft or funds transfer.

For example, late last week, one leading U.S. dealer quoted 10 one-ounce Morgan silver bars at $31.16 each if purchased with a credit card, but priced 100 bars bought with a wire transfer at just $30.08 each. The premium on the two purchases over the spot price at the time was thus 7.98% versus just 4.23%.

Choosing a Silver Dealer
However you choose to buy physical silver, gold or other precious metals, the most important rule is to deal only with reputable dealers who have proven experience in the business and clearly stated policies and warranties - especially if you're purchasing by phone or online.

Several long-standing firms in the United States with solid reputations include:

•American Precious Metals Exchange (apmex.com) - This Oklahoma City-based firm offers both bullion and collectible metals products, as well as storage facilities. Quotes are updated every 15 minutes during trading hours. Purchase online or call 1-800-375-9006.
•Asset Strategies International (ASI) (assetstrategies.com) - This Rockville, MD firm has a large inventory of silver bullion products, and also offers regular metals markets commentary and analysis on its website. Sales representatives are available at 1-800-831-0007.
•Gainesville Coins (gainesvillecoins.com) - Based in Lutz, FL, they provide an extensive selection of silver coins and bars that can be reviewed online or purchased via phone at 1-813-482-9300.
•Kitco (kitco.com) - One of the world's largest metals dealers with offices in New York, Montreal, Hong Kong and elsewhere, Kitco provides a wide range of products and services, including real-time quotes and news updates. Purchases can be made online or by calling 1-877-775-4826.
•SilverTowne (silvertowne.com) - Founded in 1949, this Indiana-based firm specializes in all types of investment silver, from collectible coins to silver bars in varied weights. Phone: 1-877-477-2646.
•The Tulving Co. (tulving.com) - Based in Newport Beach, CA, Tulving provides 24-hour sales and service, tracking trading and price quotes in markets around the globe. U.S. and Canadian investors can call 1-800-995-1708.

Physical silver provides a long-term store of value, but it does carry some added risks - one of them being the potential for confiscation.

That possibility, similar to what happened with gold in 1933, is quite real. As such, if you're seriously considering silver as a hedge against future U.S. problems, you might consider choosing Canada or elsewhere offshore as a storage site for your metal.

Also, while it's easy to both buy and sell bars and coins with any of the above dealers, they're still a bit cumbersome for trading purposes, what with price mark-ups, storage, shipping and insurance costs.

How to Trade Silver
The ultimate trading vehicle is the silver futures contract - the most popular are listed on the COMEX Division of the Chicago's CME Group.

However, that's a high-dollar/high-risk instrument. A silver contract represents 5,000 ounces of silver, meaning a single contract is worth $144,300 or more at current prices. It also means a move like the $2.221 drop we saw on April 4 could cost you $11,105 in a single day - and that wasn't even the biggest one-day decline this year. Plus, you have to put up a margin deposit of $18,900 just to buy (or sell) one in the first place.

There are smaller U.S.-traded silver futures, but at 2,500 and 1,000 ounces, they still carry a high risk, amplified by lower liquidity, and require proportionately high purchase margins. Costs and risks, though limited, are also quite high for options on silver futures.

As such, a better vehicle for smaller investors wishing to play silver's next rally - or merely to hold as a longer-term proxy for the metal itself - is one of the exchange-traded funds (ETFs) or notes (ETNs) with shares backed by actual bullion.

The largest and most popular of these funds is the iShares Silver Trust ETF (NYSEArca: SLV), recent price $28.08. Its share price closely tracks the price of a single ounce of silver, usually trading at just a slight discount. As of the end of March, SLV held roughly 312 million ounces of actual silver, and it has a market cap of around $9.1 billion. It's also highly liquid with a daily trading volume approaching 2 million shares.

SLV's only real problem at the moment is that it uses JPMorgan Chase & Co. (NYSE: JPM) as its London custodian. Its share price plunged more than 50 cents at the opening last Friday on the news of JPM's $2.3 billion "hedging" loss. However, it recovered the entire loss later in the day and closed at its normal level relative to silver's price.

As such, you might want to consider one of the other silver ETFs, such as the ETFS Silver Trust (NYSEArca: SIVR), recent price $28.67 - or, if you're really bullish, the ProShares Ultra Silver ETF (NYSEArca: AGQ), recent price $43.08, which seeks to provide returns double those of silver itself.

Whichever method you choose, silver's recent pullback has provided a whole new opportunity to grab some profits from the next move higher, so don't miss your chance.

[Editor's Note: If you or anyone you know is thinking about silver, please read this. We've just released a report that exposes a massive scheme behind the price of silver.

What we found after six months of research will raise the hairs on the back of your neck.

It stems from a massive effort that appears to involve traders... investment banks... and, as some suggest, even the federal government itself. Right now, these factors are converging to push silver to a historic high.

Please go here to access this free report.

And, if you know of anyone who has a strong interest in silver, please forward this to them. They'll want to know the details.]

Source :http://moneymorning.com/2012/05/15/special-report-how-to-buy-silver-3/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History