Buying Silver on a Weekly Basis

[William]

Here's my offer:

<blah blah blah>

Can I get $200 FRN worth sometime in the next few days?

I'll place an order in the next few days and include you on it if you'd like.  Obviously you won't be able to take possession of the rounds until they arrive from the dealer.  But your $200 combined with my order will be enough to get us a really nice price on generic rounds: about $1.50 over spot.  At today's prices you could get 18 brand new 1 oz rounds for about $200.

Forget my "offer" that I mentioned earlier.  Just join me on a bulk purchase and we'll both reap the savings.  Anyone who wants to jump in, just let me know.  I'll probably be going with NWT Mint this time, so there will be no shipping/handling charges.  FYI: from what I've seen of other dealers lately, it will probably be a few weeks from when the order is placed until the shipment arrives.

Where can I get the money to you and when is the deal "done"?

[margomaps]

Where can I get the money to you and when is the deal "done"?

Are you interested in joining the order?

Honestly I hadn't given a whole lot of thought to the logistics, but it's really not that complicated I suppose.  The guy organizing the purchase (me) collects money from the participants, places the order, and when the silver arrives he contacts the people who ordered and makes arrangements for delivery.  So I suppose you could mail me the money, drop it off at my house, or give it to me in person at a neutral location (Murphy's, La Festa in Dover -- it depends on what's doable for us both).  The deal is "done" for each person when he takes delivery of the silver he ordered. 

If you're concerned about sending a stranger your money (can't really blame you here  ), I can provide references of people whom you may know who can vouch for my character.  I'd also be happy to sign a contract stipulating the terms of the arrangement.  If you're near the Seacoast, maybe I'll see you at Barrington tomorrow at the Octoberfest Chowda' Cookoff.

PM me if you're interested.  I normally place my orders in the first week of each month, but if there are others who want to jump in on an order right away, I'm fine with placing it earlier.

[K. Darien Freeheart]

Do you still make trips to Maryland now and then?

[William]

I'm not really concerned about you so much as the person you're sending the money to. If you're telling me that you'll get me 180 ounces of silver for $2,000 us then my deal is with you. The most convenient way for me to operate would be to say right now, "I'll take it". You say ok on this public forum and we have a deal that is I owe you two grand and you owe me the silver.

Since you may not trust me or have the liquidity, we can meet and I'll give you the cash but at that time, but you would need to agree to provide me 180 ounces of silver within 30 days no exceptions. Also, by the time we meet the price may have changed to either more or less which would make it a different deal than it would be if we agreed right now.

I just want to be clear that my deal is with you and not with an unknown third party.

[margomaps]

I'm not really concerned about you so much as the person you're sending the money to. If you're telling me that you'll get me 180 ounces of silver for $2,000 us then my deal is with you. The most convenient way for me to operate would be to say right now, "I'll take it". You say ok on this public forum and we have a deal that is I owe you two grand and you owe me the silver.

Since you may not trust me or have the liquidity, we can meet and I'll give you the cash but at that time, but you would need to agree to provide me 180 ounces of silver within 30 days no exceptions. Also, by the time we meet the price may have changed to either more or less which would make it a different deal than it would be if we agreed right now.

I just want to be clear that my deal is with you and not with an unknown third party.

Ah, OK.  I can tell you that in all my orders with APMEX, it has never taken longer than about 3 weeks from order to delivery.  However, with Northwest Territorial Mint (that's where I plan on placing my next order), I've heard anecdotal accounts of slightly longer delays.

Bottom line: if NWT mint takes 35 days to deliver the silver (totally outside of my control), I don't want you demanding delivery from me on day 30, since obviously I wouldn't have the silver yet.  The main benefit you're getting is the ability to secure a lower premium over spot by joining a larger volume order.  A secondary benefit is you don't have to deal with placing the order, having your personal information on file with the company, signing for the shipment, etc.

Maybe this means the deal is in fact between me, you and a (known) third party -- NWT Mint.  You can look at it whichever way you want.

As for the payment terms....no.     All I'm trying to do is facilitate a group buy to everyone's mutual benefit.  I'm not sure about the most practical way of handling the payment and locking in the spot price.  Ideally, I'd call you up and tell you I'm placing an order at $X/ounce, and you'd tell me how many rounds you want.  I'd add your items to my order, secure in the knowledge that "you're good for it."  Since you wouldn't want to leave me in financial limbo, you'd send me the money for your portion of the order expediently.  The preceding scenario is what would happen if we knew each other well and trusted each other.  I'm not sure what the best approach would be for dealing with strangers.

A while back (maybe it's even somewhere in this very thread), I proposed the idea of a web site to handle group buys like this.  People would create limit orders with a target spot price and desired number of rounds.  Anybody who wanted to take the initiative on a group buy could select any number of these potential orders from people whom they trust.  That person would place the order, and it would be up to the parties involved to come to terms with how to arrange for payment and delivery.  This model puts the financial risk on the person placing the actual order; in the worst case people would back out of their committed orders and the person would be stuck with a larger order than they wanted.  But then again, this is where trust comes in.  I might not take your limit order for 1,000 rounds if I don't know you, or don't have confidence that you can actually afford your order.  But even if I don't know you, I might take your limit order for 10 rounds if it helps get my order large enough to secure a more favorable per-ounce premium.  The site could also incorporate feedback that indicates the level of trust people have in others on the system.

Sorry for the lengthy explanation.  Does anyone think a site like that would be useful?  If there's sufficient interest in it I might work on a prototype.  I guess it could also be used for things other than silver.

[margomaps]

Do you still make trips to Maryland now and then?

I do come through that area from time to time, yes.  If you wanted to join in on an order, I could probably find a way of getting you your portion the next time I'm in Baltimore.  Realize that this might mean you'd have to wait a bit longer than usual though, unless the order was serendipitously delivered shortly before I hopped on the plane.   

[William]

I don't know about the site but you can take my limit order for 18-180. As many as you're comfortable with ordering, I'll happily take. Just let me know the actual price when you place the order. They're at $10.64 right now with a 100 unit order.

[margomaps]

I don't know about the site but you can take my limit order for 18-180. As many as you're comfortable with ordering, I'll happily take. Just let me know the actual price when you place the order. They're at $10.64 right now with a 100 unit order.

I placed my order today.  This time around I decided to only include someone else on the order if they gave me 1) money upfront, and 2) a little more leeway with respect to shipping times, exact spot price, etc.  We only had enough for the minimum NWT Mint order of 50 1 oz rounds, and the price was around $11/oz.  In order to get into the next pricing bracket (for 100-499 rounds), I would have had to pony up an extra $550 of my own cash upfront, which I was not willing to do this time around.

The bad news is that NWT Mint is quoting a 12-14 week shipping time.      Fortunately we didn't have an urgent, pressing need to get the silver right now, and we're happy with the price we got.  And unless you want to pay a pretty exorbitant premium, I've found no way to get 50 silver rounds delivered in less than a month anyway.  The premium on Silver Eagles at APMEX.com is a stunning 82%, and for generic rounds it's 41%.  That doesn't even include at least $12.99 in shipping/handling fees.  At NTW the premium is a (relatively) paltry 14% over spot, with no shipping and handling.  But yeah...we'll have a long wait. 

[Pat McCotter]

An interesting story from lynncoins.com

Lavere Redfield
The Man Who "Loved Silver Dollars"

An interesting fellow

Who was Lavere Redfield? Some say he was an eccentric investor. Others say he was a shrewd stock and real estate investor. Still others said he was an average guy who had a distrust of big government and bought a lot of silver dollars, an awful lot of silver dollars! Perhaps all of them are right.

Lavere Redfield was born at the turn of the century. He died in 1974 leaving behind an estate worth over 100 million dollars and one of the largest silver dollar hoards ever discovered, now called the "Redfield Hoard".

Laverne Redfield started as a farmer

He was said to be very thrifty and appeared so, wearing jeans and wool shirts even after he became rich. Surely influencing him was his early life as a potato farmer.

In his senior years he drove around in an old dilapidated pickup truck. If you had seen him then, you might have thought he was still digging potatoes.

They called him the "junkman"

By scrimping and saving he was able to save a little. He began making investments, over time bringing him great wealth. During the depression he moved to California. There he began buying stocks that no one else wanted. Stock brokers used to love to see him coming because they would unload blocks of supposedly worthless stocks on him. Stocks that no one else wanted "at any price". He earned the nick name "the junk man" from the local stock brokers. Seems Redfield's shrewdness and timing paid off as some of them eventually became very valuable.

("Buy when no one else wants it and the price will be low.")

They also say he gradually began acquiring other assets and real estate at tax foreclosure sales.

Silver Dollars - Where did they come from?

As he began to amass wealth he moved to Reno Nevada (the heart of silver country). He started to acquire farm land and bought a good size stone house. Here his passion for accumulating silver dollars matured. From time to time he would go to the bank and buy some bags of 1,000 silver dollars. (Back then US silver dollars could be acquired for a dollar and were readily available at banks.) He'd haul them home in his pickup truck and stash them away. Seems word started spreading about his love for silver dollars and he was robbed more than once. Probably because of the robberies he began acquiring his bags from as far away as Pennsylvania, picking them up in person and hauling them back in his pickup.

What's in the Basement – the Secret Stash

He also began storing the bags in his basement. They say he would come home with a load of silver dollar bags and drop them down an old coal chute. Sliding down into the basement they'd go, where they remained safely hidden behind a concrete wall until his death. Most of the bags were mint condition un-circulated coins. However, some were heavily marked from banging against each other as they were hauled in his pickup, or from handled at the mint or banks.

How many silver dollars were there?

So, how many were there? At the time of his death over four hundred 1,000 coin bags, or 400,000 silver dollars, were found in his home. Yep, that's four hundred thousand! (He must have had a very large basement!)

The bank vault wouldn't hold them all.

Some say Redfield didn't trust banks and his distrust lead him to store the silver dollars in his home. However, when you think about the space these silver dollars would have taken and the massive weight all it of, where else could he put them? He would have needed the equivalent of several personal bank vaults to store it all! His stash of over 400,000 silver dollars would weigh 22 thousand pounds!

What happened to the silver dollars?

Lavere Redfield's cache of Morgan and Peace type silver dollars became known as the "Redfield Hoard". It was the largest silver dollar hoard discovered in decades. After his death, in 1976, his silver dollar hoard (collection) was sold at auction. The price paid by the winning dealer was a record breaking 7.3 million dollars. Prior to the auction, companies that were to bid on the collection were unable to look through all of the coins due to the massive number of them. They just didn't have enough time or people to look at everything. (Some accounts say that after the sale, when the coins were individually evaluated, the real value of the holdings was discovered to be three times what was paid.)

The Redfield silver dollars were sold

Once the estate was settled and the silver dollars were auctioned to the highest bidder, the coins were catalogued and sold throughout the world. A good number of the bags he had saved were "S" mint Morgan style silver dollars produced at the San Francisco United States Mint. He also had some "CC" Carson City United States Mint dollars and even had some bags of the Peace style silver dollars. Most coins graded various degrees of mint un-circulated condition, although about 15% were said to be circulated. To sell them, some coins were packaged in special holders with labels indicating they came from the Redfield hoard. Others were put in tubes or individual holders. Then they were sold by the roll or by the lot to various investors or dealers.

So, where are they now?

Where are the Redfield silver dollars now? Although dispersed a quarter of a century ago, they might be anywhere today. Occasionally, you will find a dollar in one of the special holders with Redfield's name on it. However, over time most have been placed in individual holders or tubes that offer more protection during storage. (Unless they are in a special holder of some type, you can't tell them apart from other old US silver dollars.)

Imagine, today when you purchase a silver dollar, you might actually hold in your hand one of original silver dollars once owned by LaVere Redfield.

Share the passion for silver dollars

If you like silver dollars, in some ways you share the passion for them that LaVere Redfield had. The next time you admire a silver dollar, perhaps you will think about the Redfield Hoard and remember LaVere Redfield, "the man who loved silver dollars".

[William]

Yes, We Have No Silver
by Sean Brodrick  (from: Money and Markets newsletter)


As the price of silver pulled back under $10 an ounce recently, I
started loading up on the white metal. Or, I should say, I tried to
load up. While I was easily able to buy silver coins with numismatic
value, my first attempts to buy silver bullion coins met with
frustration.

I think this says a lot about the silver market right now. On paper,
it's cheap. But in the real, physical market, silver is getting very
precious indeed.

In fact, if you can buy silver bullion for under $10 an ounce, I
recommend you grab it and run!

Hi-yo, Silver!

Maybe you have your own stories of the silver rush to share. Here's
how things are going for me.

First, my success. I was able to buy some 1921 Morgan Silver Dollars
from Eastern Numismatics (http://www.uscoins.com) at a pretty good
price. I say that because I checked eBay, where 1921 Morgan Silver
Dollars for VF and AU (very fine and almost uncirculated quality) were
selling for higher prices.

But with silver under $10, I knew that while numismatics (rare) coins
were good, this was an even better time to buy bullion.

So, I checked a couple of my local favorite gold/silver shops. At the
first one, I was told that silver bullion coins (I asked for silver
Eagles) were unavailable. At the second one, I was told they were
available, but "not at any price you'll want to pay."

How much was that? Oh, about 60% more than I expected to pay.

"That's outrageous!" I sputtered.

"Call me next week," the dealer told me. "Maybe we'll have more then."

So then I turned to the Internet. I decided to buy some bullion coins
straight from Pan American Silver (PAAS). This company has mines in
Peru, Mexico and Bolivia, and development projects all over the place.
It also sells its coins and bars, minted at the Northwest Territorial
Mint (http://www.nwtmint.com). While its coins may not be as well
known as silver Eagles or Maple Leafs, I think most gold/silver
dealers would recognize them pretty easily.

I called a couple of times, but couldn't connect with anyone but a
recorded message that said the mint was overwhelmed with call volume
so no one was answering the phone. In frustration, last Friday, I
wrote an email to the Northwest Territorial Mint, asking how I could
buy 1-ounce silver rounds (coins) from them immediately.

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Later that day, the mint wrote back. The message said, in part:

"We have been experiencing an unprecedented volume of sales, and we
have been unable to answer each call in person as we would prefer. We
are adding to our bullion sales and customer service staff and
upgrading our telephone systems to better respond to customer
inquiries.

"When you reach one of our bullion sales representatives by phone, you
can lock in your purchase at the current market price. However, please
note that most of the precious metal bullion products we produce
currently have a 12-to-16-week lead time before delivery."

The email went on to say ...

"Because the United States Mint and the Royal Canadian Mint have
significantly curtailed distribution of their bullion products until
2009, we are quoting delivery of new orders for American Eagle coins
and Canadian Maple Leaf coins into March 2009."

A 12-to-16 week lead time for delivery? Un - freaking - real. And
while that may sound crazy, it pales compared to the lunacy of not
being able to get American Eagles and Canadian Maple Leaf coins until
March of next year! And it's not like it's the mint's fault — they're
working as hard as they can and adding staff.

Tell me again about the surplus of silver. That's a good one.

Physical Silver versus Paper Silver

Of course, there is a difference between minted silver rounds and 1-
or 10-ounce bars on the one hand, and silver you can buy with a
futures contract on the COMEX on the other hand. A silver futures
contract is for 5,000 ounces, or 1,000 ounces for a mini-contract.
While you can take delivery of a futures contract, who the heck would
want to do that?

Well, David Morgan, that's who. He's an independent precious metals
analyst and the founder of silver-investor.com. He also writes a blog
at http://silverblogspot.blogspot.com.

Silver coins and smaller bars may be harder to find right now, but
certain forces are at work that may soon affect prices and
availablility.

Morgan and I met on a tour of mines belonging to Endeavour Silver and
Great Panther in Mexico, and I found him extremely knowledgeable about
silver, its history and trends. So, I called him up and asked him what
he was seeing in the physical market. And it turns out that what he's
seeing is making him more bullish — so bullish, he bought a
1,000-ounce mini silver future contract and took delivery.

Morgan says he's not the only one doing arbitrage between the paper
and physical silver markets. He said entrepreneurs could "take
advantage of the discrepancy between physical and paper silver — these
people could take gold and silver off the exchanges at the spot price
and turn it into gold and silver coins and reap the large premium now
available."

Maybe that will ease the pressure in the physical silver market, and
make coins and smaller bars readily available again.

The Bulls and the Bears

There are both bullish and bearish forces at work in the silver market
right now. The interesting thing is that the bearish forces seem to be
at work in the paper (futures) market, and the bullish forces are at
work in the physical market.

Let's sum up some of those forces ...

Bearish Forces ...

1) Fear of a global slowdown. Silver is an industrial metal as well as
a precious metal. And while the global economy was hot, silver demand
soared. Last year, industrial demand for silver jumped 7.2% to a
record of 455.3 million ounces.

But the global economy is slowing into recession, and that slowdown
could last well into next year. The International Monetary Fund
forecasts a reduction in global growth to 3% in 2009 from 5% in 2007.

If there is any single force that can send the price of silver lower,
an economic slowdown is probably the one.

2) Mine production. Before the global economy started to slump, global
silver production was expected to grow by 6.5% in 2008, faster than
last year's increase of between 3.6% and 4.1%.

But that was then. Now, thanks to the slowing global economy, mines
are closing. You see, two-thirds of the world's silver is produced as
a byproduct of other metals. For example, Oz Minerals is cutting zinc
production at its Golden Grove Mine Australia by 35%. But that mine
also produced over 3.1 million ounces of silver in 2007.

So, if the global economy worsens, we're likely to see silver
production go down, and perhaps sharply lower.

3) Selling by big funds. As the global markets careen into the mother
of all financial crises, hedge funds have been imploding one after
another like overheated Christmas bulbs. And it's not just hedge funds
— whole trading desks have disappeared. This has removed a lot of the
paper demand for silver.

And liquidation in silver futures has been a drag on prices. On the
bright side, hedge fund liquidation won't go on forever. Silver will
find a new base, and use that to head higher.

Now let's look at some bullish forces ...

Bullish Forces

1) Supply/Demand Squeeze. Did I say there was an increase in silver
mine supply? Well, that's true. But there's also an increase in
demand. Goldfields Mineral Services recently estimated that current
world silver bullion stocks of coins and silverware stand at a mere
400 million ounces. That's down from more than 2 billion ounces in the
late 1980s.

2) Investor Demand is accelerating. The iShares Silver Trust has
already seen a massive increase of silver accumulation since 2006 —
over 220 million ounces. Take a look at this chart ...

This and other silver ETFs in London and Zurich have made it easy for
investors to move in and out of silver.

3) Silver is cheap compared to gold. The price of gold recently traded
at 82 times the price of silver. This is about 36% higher than the
ratio over the past eight years, and looking back over history, the
ratio is closer to 20 to 1. If we return closer to historical ratio,
the price of gold would have to go way down, or silver would have to
go way, way up.

Why is the gold-silver ratio out of historical whack? It goes back to
silver as an industrial metal: Investors are terrified that a global
economic slowdown will dampen demand for silver in batteries,
superconductors and other electronic components, so they've dumped
silver futures overboard.

But that conflicts with silver as a precious metal — the global
economic crisis is causing more investors (like me) to buy physical
silver as a refuge of safety.

After all, Central Banks around the world are flooding the financial
system with trillions of dollars — a money deluge worthy of Noah — to
try and douse the four-alarm financial fire that is the credit crisis.
Give them their due; they've actually blunted the worst of the
immediate threat. The problem is this threat is ongoing, and it could
get much worse from here. And that makes physical gold AND silver look
even better to me.

These two worlds — the paper world and the physical world — are going
to collide. While I think the shortage of physical silver coins and
bars will ease down the road, I think the most bullish forces in
silver are yet to come. I think the physical world will win out over
the paper world ... and silver could go much higher.

The Best of Both Worlds

Don't worry about my quest for physical silver; by the time you read
this, I'll have more locked up. As for your own portfolio and
investment needs, I think a little physical silver never hurts.

And there's an investment that combines the best of physical and paper
silver — the iShares Silver Trust (SLV). It owns physical silver and
issues shares against its treasure hoard. Sure, in this volatile
market, it could go lower. But if, like me, you think the price of
silver is going higher in the longer term, then the SLV looks cheap
right now.