Buying privately minted precious metals-Good idea or bad?

thebrewer
By thebrewer on Thu, Feb 21, 2013 - 3:04pm

As more and more private minters appear in the market place I have been considering adding some of these private rounds and bars to my holdings. On the plus side they usually have a much lower premium than  minted rounds for the U.S. Mint like the American Silver Eagles which currently have a significant premium over spot. So my line of thought is this...many of us that have become part of this Peak Prosperity community tend to think that at some point the U.S. Dollar may collapse, hence the reason we store at least a portion, if not significant portions of our wealth in tangible assests which include gold and silver.

Taken a step further, let's imagine it does come to pass and the dollar collapses. Commerce may stumble but it certainly won't grind to a halt. Hopefully it just transitions over to a non fiat based currency, i.e. silver and gold. In this scenario is where my hesitence lies on private minted items. Will they be as readily accepted as government backed minted rounds and bars. The US Mint guarantees all coins made within its umbrella but privately minted rounds have no such protection, at least not I’m aware of.

Look forward to hearing any insite or opinions you all might have?

9 Comments

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Prefer Junk Silver

thebrewer,

You are correct that privately minted bullion coins have a lower premium. That is good. They don't have the name brand recognition as an ASE or Maple Leaf coin. That means you won't get the selling premium either. That could be a problem if someone thinks you are trying to peddle a bogus coin (if there isn't any way to check the authenticity.) You'll get a deal now, but it may cost you later.

Have you considered pre 1965 US coins? Little or no premium to buy, excellent recognition factor, very low risk of counterfeiting, small enough denominations to be worthy of bartering. You can still get a gallon of gas for a couple of silver dimes - just like in 1964.

Grover

thebrewer's picture
thebrewer
Status: Bronze Member (Offline)
Joined: Nov 7 2012
Posts: 80
Junk Silver

I think that has merit Grover with the Junk Silver but I have not found the no premium situation to be the case. I looked into buying bags of Junk Silver from a couple sources and it seemed like a steep premium..upwards of 20%.

I've also tried coin roll hunting but it didn't payoff as well as I had hoped for the work involved. My last go around I bought a $500 box of quarters at the bank and came away with two silver quarters. Not hardly worth it since it was a challange converting the change bank without incurring additional cost. I think junk silver has been picked pretty clean.

I did however just read today that Arizona has a new bill in congress to mint their own gold and silver coins in preperation of the dollar collapse. It'll be interesting to see if it passes.

In the meantime I think I'm going to pick up a few private minted rounds just to see the quality. If they're really nice quality I think it might be worth having a small position.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
The system has shifted

Sorry for providing uncurrent information. Wow. Things have changed significantly since I last purchased junk silver (just before election day.) I noticed that several years ago when silver spiked above $21 per ounce and then plummeted to under $9 per ounce that premia skyrocketed. At that time, I couldn't buy for less than $13~ per ounce. Once prices started rebounding, the premia slowly dropped back to normal. Coin dealers must be expecting current silver prices to rebound, or they have purchased too much at too high a price. I doubt you'll see actual sales prices much cheaper even if the spot price drops dramatically.

The cheapest I could find (in a brief search) was a 5% premium at https://libertycpm.com/silver/1000-90-junk-silver-bag/

I've never bought or sold from these people. Tread with trepidation.

Grover

thc0655's picture
thc0655
Status: Platinum Member (Offline)
Joined: Apr 27 2010
Posts: 561
Junk silver

Interesting.  I bought junk silver quarters from a local coin dealer two weeks ago for 1.5% above spot.  It makes sense to me that if the dealer bought it at $28/oz he wouldn't want to sell below $27.  This is why many people say if the bottom were to drop out of the gold/silver markets (say, because of a default on the Comex) you wouldn't be able to get any physical at pretty much any price.  What little was available would get snapped up, and everyone would hold on to the rest.  That's certainly what I'd do.

DennisHand's picture
DennisHand
Status: Member (Offline)
Joined: Feb 23 2013
Posts: 1
Junk Silver

I am hesitent to buy government issued coins because of the high premium.  I understand the feeling that the premium will hold because of recognition, but I wonder if that is true.  I have all my silver in private mint issue, but I do have my gold in Krugerrands.  I can buy silver rounds at $0.79 over spot, where ASE are $3.00 over spot.  Dollar wise, that isn't a lot, but % wise it a factor of almost 4.  The silver round price has stayed constant over the last several years, regardless of movement.  I can buy bags of mixed junk silver at $2.09 over spot.  That is some of the highest pricing I have seen in a long while.  There was a point late in 2012 that you could get junk at spot.  Kicking myself for not buying at that time.  

Just a recommendation, it looks like Liberty has some good pricing, but on the same lines I use Gainesville Coin.  They have some of the best pricing, but I also used them because the are right down the street from me and I don't have to pay insurance and shipping.

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Welcome

Dennis

Welcome to the forums.  You'll find interesting people here.

Travlin 

Oliveoilguy's picture
Oliveoilguy
Status: Gold Member (Offline)
Joined: Jun 29 2012
Posts: 359
Silver Bullet Silver Shield

I'm buying a few coins from this outfit cause I like the entreprenerial spirit. Also the Freedom girl is kind'o sexy. The premium is high, but this is art in Silver form. My regular dealer charges 7% over spot.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 1476
Oliveoil

The first gen SBSS coins are certainly fetching well on Ebay;

http://www.ebay.com/itm/AOCS-Silver-Bullet-Silver-Shield-SBSS-Debt-and-D...

I don't have any yet, but I agree that the newest one is pretty...

You really do need one of these though just to show off to friends.. its a hunka hunka fun (I have it in the 2012 Dragon);

http://www.gainesvillecoins.com/products/160961/2013-1-kilo-silver-austr...

thebrewer's picture
thebrewer
Status: Bronze Member (Offline)
Joined: Nov 7 2012
Posts: 80
Private Mint

Well I broke down and bought my first privately minted rounds. Looking forward to seeing how nice they are. Got them from APMEX (American Precious Metals Exchange), they seem to be a good size outfit so I'm hoping that adds legitimacy if the need ever arises.

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