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Wednesday, August 29, 2012
Almost every day, investment newsletter readers hear the same advice...
Buy gold. Buy silver. Precious metals are going higher.
What they rarely hear about is the simplest, easiest, and lowest-cost way to own silver... And the right way to think about your silver holdings. I figure maybe one silver owner out of 100 knows this stuff. Not even your broker or financial advisor understands it.
Before we cover "the right way to buy," let's first cover "the right way to think."
Over the years, I've helped thousands of people make money in silver... And I've personally owned silver for a long time. But I'm not your typical silver owner.
I don't think there's going to be a big crisis in America soon. I don't think the dollar is going to collapse. And I don't think you need to stock up on canned food and guns and go live in a bomb shelter. I own plenty of U.S. stocks and bonds, and I recommend you do the same.
But I also believe in insurance. Silver is an "insurance" asset that could soar if a major crisis in the world's paper money system occurs.
It's not a dividend-producing "investment" like a position in Coca-Cola shares. And I don't expect to get rich with silver. I would actually prefer to see silver stay the same price it is now for a long time. If a paper-money crisis sends silver to $100 or $150 an ounce, there are big problems in America. (That's why it works as "insurance.")
My favorite vehicle for owning silver allows you to maximize the "insurance" silver offers. It allows you to take physical possession of silver... without paying huge markups to spot prices... and without getting ripped off by dealers who charge huge markups on special "commemorative" coins.
I'm talking about dimes, quarters, and half-dollars that were minted before 1965. Unlike most of the coins we mint today, these coins had real silver in them.
People in the industry call these coins "junk silver." They get tagged as "junk" because they have no value to collectors. They circulated widely in pockets and purses and show a lot of wear.
But what's bad for collectors is great for us as investors.
Collectible and uncirculated silver coins often have premiums of 25%-50% or more than the spot price of silver. But because these pre-1965 coins don't have collectible value, you can buy them right now at just 1%-2% above the current spot-market price for an ounce of silver.
How do you buy it? Junk silver comes in $1,000 face-value bags of either dimes, quarters, or half-dollars. So the breakdown of a bag could be 10,000 dimes, 4,000 quarters, or 2,000 half-dollars.
Regardless of which denomination you choose, the amount of silver you are buying is the same... about 715-720 ounces.
Right now, the current retail price for a $1,000 face-value bag of dimes, quarters, or half-dollars is about $23,600, plus shipping and insurance (which should range from $60 to $120). But many dealers will split bags into smaller bags to fit your budget.
In addition to the big discount you get buying junk silver, you have three other reasons to own these coins rather than bullion, ETFs, mining stocks, or collectible coins:
First, these coins are already well-known and don't require verification. You don't need to certify the authenticity and value. Again, there's no collectible value, and everyone understands they're 90% silver.
They're also easily "divisible." Unlike a silver bar or gold coin, junk silver coins are already portioned in smaller amounts should you ever need to use them in everyday transactions.
Finally, they're liquid. There has always been a demand for these types of coins. Thanks to a dealer network and places like eBay, plenty of buyers are available should you ever want to cash in your gains.
In sum... congratulations. Just by reading this essay, you are far ahead of 99% of silver investors out there. You know how to think about your silver holdings... and you know the cheapest way to acquire the stuff.
If you're looking for some diversification outside of conventional investments like stocks, bonds, and real estate, consider owning real, hold-in-your-hand silver.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
You can also diversify out of traditional investments through gold coins. Last year, rare-coin and collectibles expert Van Simmons spoke to our sister site The Daily Crux about the benefits of adding these rare assets to your portfolio... the keys to successfully investing in them... and how to find a reputable dealer. You can read the interview for free here: The World's Greatest Investment Ideas: How to buy rare coins, art, and collectibles.
OUR BIG, CHEAP TECH IDEA IS RAMPING HIGHER
The big uptrend in the technology sector looks ready for another "leg up."
For several years now, we've recommended some of the safest, cheapest names in the tech sector. We've noted that companies like Microsoft, Apple, Intel, and Cisco are sitting on mountains of cash. Even better, business is humming along for each of these names, which means each of their cash piles is only growing larger. So there's plenty of room for increasing dividend payouts to investors.
Earlier this month, "internet plumbing" giant Cisco said it plans to raise its quarterly dividend by a whopping 75%. The increase brings Cisco's annual dividend yield close to 3%. Not bad for a stock trading at a bargain-basement valuation of nine times forward earnings.
And the trend is up. The Big Tech sector fund XLK broke out to an 11-year high last week. XLK is a "one-click" way to own all of the big names in tech, like Apple, Microsoft, and IBM. Many of the fund's holdings are slowly but surely upping their dividend payouts to investors. Considering the solid fundamentals and cheap valuations, there's no reason for this uptrend to slow down anytime soon.
– Larsen Kusick
In The Daily Crux