Precious Metals Like Silver Escalate in Value During Economic Difficulty
The value of precious metals often increases in the face of falling values of crops and other commodities. Silver prices per ounce gained a total of $1.169 in value for delivery this coming September. As a result of Standard and Poor’s decision to reduce American’s long-term credit rating from AAA to AA+, predictably, investors looked toward the commonly perceived “safe” or “timeless” investments like precious metals. The popular belief is that these precious metals tend not to slip in value in the face of unfortunate economic circumstances. To paraphrase one of the experts in the field.: Nowadays, the new way of spelling “fear” is “AA+.”
Oddly, another result to adverse economic conditions is the drop in common industry metals such as copper actually lost value. It fell by 15 cents this past Monday. Palladium fell as well. Investors seem to predict a reduced rate of industrial production.
Dealers often hear the following question from layman buyers: Why does “premium” value of silver per ounce differ from “spot” value? “Spot” value refers to the price of the metal in its raw form, not taking into consideration any labor or distribution fees. When you purchase coins from the U.S. government, you buy at a premium that takes into account these extra factors. As a result, the price increases by some particular margin.
Another factor which comes into play has to do with whether or not what you purchase qualifies technically as a “coin” in the sense that it represents a fixed amount of legal tender acknowledge by federal government. A bullion maybe round and feature the face of a president on it, and still not represent legal tender. As a result, for legal tender, you do pay extra for the “premium” mark-up, but the benefits are as follows:
(1) You may exchange your coin as currency, i.e. you can go to the corner store and use it to buy groceries. You cannot do this with bullion; you can only barter.
(2) Certain laws allow you to use properly recognized coins as component parts of either an IRA or a retirement fund.
If you are interested in getting the absolute best price-per-pound for your silver, bullion is the way to go. If you want to invest and have more long-term collecting goals, you may instead prefer to purchase properly recognized coinage that represents legal tender.