Silver Prices Increasing On Euro Concerns

Over the past day, we have seen the price of silver start to climb upwards again after falling to a 3-month low of $27.26 per ounce. Prices are back over $28 now. The ongoing worries over the Greek debt crisis and potential breakup of the European currency zone has spooked markets worldwide. The Federal Reserve is paying close attention to the situation, and the results of their monthly meetings were quite interesting.

The FED suggested that another round of monetary easing may be in order as the economic recovery in the U.S. remains fragile. In the event that the European debt crisis gets worse, the FED is prepared to step in. Those of us in the precious metals community know what happens when the FED steps in – prices go up. Silver went to almost $50 per troy ounce last year when there was speculation of another round of quantitative easing.

Why Silver Rounds Are A Great Alternative To Bullion Coins

Silver bullion coins are one of the most popular ways of buying silver today. After all, they are beautifully made by their respective mints and come with assurances for their content. However they do carry higher premiums over the spot price of silver, which can be a drawback if you are looking to maximize your investment.

Fortunately, silver rounds are a perfectly suitable alternative to the more pricey bullion coins. They are minted from the same .999 + fine silver that is found in the bullion coins, they are minted in the familiar round  shape of a coin, hence the name “rounds”, and they do contain 1 troy ounce of silver.

Silver rounds are also widely recognized in the bullion world. Brands like Pan American silver are very liquid, and equally impressive.

1 Troy Ounce Silver Round from Pan American Silver Corp.

1 Troy Ounce Silver Round from Pan American Silver Corp.

 

Why Is Silver Getting Hammered?

It has been another ugly day for precious metals prices, with silver dipping below the $28 per troy ounce mark. The question many investors and silver bugs have, is why?

Look no further than the ongoing sovereign debt crisis in the European Union. Like before, Greece is seen as the main culprit because it has yet to form a coalition government that is willing or able to embrace the austerity measures that EU officials believe are necessary to address the Greek debt in a meaningful way.

This has cause an increase in demand for the US dollar, which has been gaining in strength. But, the problems of the United States faces are far greater than those of Greece, so buying silver when the price dips is actually not such a bad idea.

What Industrial Silver Demand Means For The Price Of Silver

One of the aspects that can sometimes get lost when discussing silver as an investment, is the rising use of silver in industrial applications. Silver is a unique element with so many useful properties. It can be found in a surprising amount of products that we use on an everyday basis.

Silver is an excellent conduit of electricity, which makes it a widely used component in consumer electronics. All of our flat screen televisions, hand held mobile devices, computers, and smart phone all contain silver in some form or fashion.

So what does this mean for silver prices? Well, if you are bullish on silver, then you will be happy to read this next part – demand for these consumer electronics is increasing worldwide! This means that use of silver by industry will continue to rise, which in turn will help to support silver prices.

The cost of technology naturally decreases over time, and in many corners of the world today, personal incomes are rising. For those of us living in the developed economies of the world, all we may be thinking about is the current economic recession. However, when one looks at global trends, the economies of developing nations like China, India, and Brazil have made amazing economic strides over the past two decades.

A growing number of consumers in these countries are now experiencing rising levels of income, which gives them more purchasing power. What are they buying? The same types of goods that people in the developed countries are buying, with consumer electronics in high demand.

What Continued Low Interest Rates Could Mean For Precious Metals

If the Federal Reserve continues to hold interest rates at historic lows through the year 2014, it could be very beneficial to precious metals prices. In recent testimony on the economy, Fed Chief Ben Bernanke reasserted the intention of low rates through 2014.

This creates an environment where there is very little incentive to save, as well as opening the door for inflation. Keeping rates artificially low prevents the natural equilibrium in borrowing costs from occurring, and investors will look for safe havens to preserve and protect the value of their assets.

Savings accounts are of little value when rates of return are 1 percent or less. Similarly, with the downturn in the real estate market, investing in property is not very attractive either. While the stock market has been up, the volume of trades is actually down from the highs of three years ago. This suggests that fewer investors are participating.

In such a gloomy investment environment, where are people to turn? The answer has always been, and continues to be precious metals. The price of silver and gold has been relatively flat in recent months, which may be just the calm before the storm when precious metals prices really break out. There is a large amount of sentiment in the market that inflation is looming on the horizon, and the best way to protect the value of your assets during inflationary periods is by owning physical gold and silver.

Value of Junk Silver Coins

There are several different ways of investing in silver these days, from silver bars, to silver coins, and even investing in silver mining companies. However, one of the most flexible ways to own physical silver is by purchasing so-called Junk Silver Coins.

You may be asking yourself “What are Junk Silver Coins”, and “why are they called Junk?”  As it turns out, the term Junk silver became a popular term that coin collectors assigned to all commonly circulated U.S. coinage bearing dates of 1964 and earlier. That is a key date, because it was the last year that these Half-dollars, Quarters, and Dimes were minted from 90% silver. They existed in large numbers, so they were not necessarily rare, and they often have the nicks, dings, and scratched that can be expected of any coin that has been out in the general circulation.

Because coin collectors prize the rarity and grade of coins, these 90 percent silver coins held little practical value, hence the term “junk.” However, as silver prices have been steadily rising over the past few years, these often disregarded silver coins have gained a whole new appreciation as flexible investments in silver bullion.

Investors typically buy junk silver coins in bulk. They are sold in bags of face value denomination, usually $1,000 US Dollars, which yields approximately 773 troy oz of silver bullion. Buying silver in bulk can also lead to lower premiums over the spot price of silver, but unlike buying large silver bars, junk silver coins offer the flexibility of having smaller units of silver, which can be used in barter, or melted down.

I don’t know how to buy silver eagles, do you?

For months I’ve been contemplating buying some silver, specifically silver eagles. The problem is I don’t know how to buy silver eagles or even where to start looking.

I could just google it but who knows how reputable any of these online retailers are? They are out to make a buck and just want your money I suspect. I was thinking Ebay but there is guarantee what the purity would be. I think the only decent idea is buy in person. You could find someone on craigslist and meet them at a starbucks but that is extremely risky. I recently found a local coin dealer that specializes in silver and they deal directly with the government who manufactures the coins.

American Silver Eagle coins are the top selling silver bullion coin in the world

Why Is Is Wise To Buy Silver On Price Dips

Everybody wants to buy something when prices are low, with the intention of turning a profit when prices go up. When it comes to buying silver, today is a great opportunity because the spot price of silver is dipping.

Spot Price of Silver Trending Downward Today

I am one of the believers that when silver prices fall to the $30 per troy ounce range, it is a signal to buy. It was about the same time last year that silver jumped quickly to $50 per troy ounce on worries that the Federal Reserve would institute a new round of Quantitative Easing.

While that did not come to pass, it just shows you how sensitive and quickly the market for silver can move. It is understandable that some people might say that silver prices could fall even further below $30, but over the past year they have been trading right around that range so it appears to be a price floor at that level.

Sales Of Gold and Silver Bullion Coins Remain Strong

Despite the slow trickle of positive economic news in recent months, sales of gold and silver bullion coins from the US Mint have continued to be strong during the first quarter of 2012. According to recently released data from the US Mint, sales of the American Gold Eagle bullion coin total 210,500 troy ounces, while sales of American Silver Eagle bullion coins total 10,130,000 troy ounces.

The high mark for sales of American Gold Eagle coins came in 2009, with a total of mintage of 1,435,000 troy ounces. The highest mintage figure for American Silver Eagle coins occurred in 2011, with 39,868,500 troy ounces being produced. While sales of the Gold Eagle may be trailing the 2009 record total, they are still on pace for a robust total for 2012. On the other hand, minting of the Silver Eagle is currently on pace to set a new record high if demand continues at the same level.

Below are the mintage figures for both the American Gold Eagle and American Silver Eagle bullion coins from the year 2000 through March 2012.

All figures in troy ounces.

Year

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

American Gold Eagle

164,500

325,000

315,000

484,500

536,000

449,000

261,000

198,500

860,500

1,435,000

1,220,500

1,000,000

210,500*

American Silver Eagle

9,133,000

8,827,500

10,475,500

9,153,500

9,617,000

8,405,000

10,021,000

9,887,000

19,583,500

28,766,500

34,662,500

39,868,500

10,139,000*

* = Figures through March 2012