Wednesday, April 29, 2009

Precious Metals, junk PM and change.

Anonymous said...

Hey FerFal, I wanted to ask you about silver. I have bought some silver as an investment / inflation hedge. Now I remember reading you said gold was much more valuable in Argentina post collapse. But I was wondering about the actual differences in price per ounce.

For instance here in the US as I write this, gold is hovering around $900 per ounce and silver is around $12 per ounce. What is the price per ounce in Argentina? Thanks in advance.

We have those same prices. maybe a few dollars more expensive depending where you buy.

It’s no saying one is more valuable than the other.
It’s just that gold is much more likely to be accepted at a street level.
I’m speaking entirely of a local situation here, this may or may not apply to your country.
Here for example, you are much more likely to find a street dealer that is interested in your “junk” 18k gold than in mint silver coins. Maybe he’ll buy the silver coins, maybe not, but gold is what they are most interested in.
On the other hand, the sales of silver Eagles in Argentina went up 200% compared to the same period last year.
It’s easy to see why: Gold coins are too expensive for us, and if you want a “mint” precious metal that isn’t “junk”, something you can put large amounts of money in, silver starts looking very good.
Here in Argentina we use your same Troy oz. prices, PM are pretty much priced the same way all around the world.
It’s also important to mention that buying precious metals now is a bit expensive because of the crisis. A few years from now when things calm down it’s likely to go down. But you shouldn’t buy gold speculating on the price going up, selling and making a profit. If you want to do that, now is not the time. Precious metals are a way of securing you savings, its not an investment.
If you are worried about gold going down in the future, my humble advice is reflects the “El cronista” local financial news paper: Silver shines a bit more than gold, at least in that regard, since gold is a bit “overpriced” these days because of the demand.

"Scrap" gold, sold on Ebay

I’d still buy mostly small gold coins, a bit of silver, some pre 95 junk silver and a bit of junk gold 18K jewelry. Even broken jewelry can be found, sometimes for less than its gold content value. These last two “junk” metals, I would consider a form of small pocket change.
You don’t keep 10.000 USD in quarters… but 100 bucks is a damn good idea. In Argentina people are currently paying 10% + its value for coins, so there’s a value in change.
Bus companies do this and sell the coins back to shop owners. Of course its illegal to do this but they do it anyway, and people end up paying 10%, even 15% for the change. So there’s absolutely a value in having change.


1 comment:

theotherryan said...

Great points all around. I don't keep a bunch of change around but do have $20 in quarters and a fat stack of ones.

As for the precious metals I split my money between small gold coins and assorted silver. For the silver if I can find 90% change for a reasonable price I get it, if not then I buy one ounce rounds.