Bags
November 3, 2009
Not particularly popular, but often the subject is mentioned, so I will elaborate on them.
"Bags," are 56 pound bags of 90% US silver coins, be they dimes, quarters, or halves. They contain one thousand dollars face of these coins. Not mixed coins, but all dimes, all quarters, or all halves. There are half bags also, which contain $500 face value of dimes, quarters, or halves. A 'bag' will have 10,000 silver dimes, 4,000 silver quarters, or 2,000 silver halves. Half bags are figured by dividing full bag price by two, and adding $50, which is what Brinks charges to divide, and re-bag into two half bags.
They are the cheapest way to buy silver, and about that, there is no question. Currently, about a nickel over spot. Why? Because there is no manufacturing cost. They haven't been made in over 45 years. They aren't being made any more, so we don't have any, unless someone sells them to us. We've been thinking for years that we'd run out, but we never have. Prices go up and people sell. Fewer and fewer buy them, so I suspect they'll be around for a long time.
Personally, I have an intense dislike for them. Why? Because they're so damned heavy and difficult to store. Imagine storing a 56 pound bag of coins, vs. a few one hundred ounce bars. The bag takes as much room as three or four times the value in hundred ounce bars, and they only weight a bit over six pounds each.
People say, "Well, I like to have a few silver quarters or dimes around so I can barter with them." We have to have a currency, or the entire civilization would collapse. Barter is fine between you and your neighbor at a yard sale maybe, but you certainly can't go to a grocery store or gas station with your silver quarter, as they have bills to pay, and their bills are payable in dollars, not silver dimes. Besides that, how is anyone to know the quarter is silver in the first place? "Looks like any other quarter to me bud, and that makes it worth twenty five cents, not four dollars."
Hundred ounce bars are fifty five cents an ounce more than the per ounce 'bag' price, but they are well worth it. Try selling a bag or half bag to someone, as opposed to a Johnson-Matthey or Englehard hundred ounce silver bar. Everyone would know what a hundred or ten ounce silver bar is worth, as its weight and contents are stamped right on them. How much silver is in a 90% silver dime? Do you know? (.03724 oz of pure silver). Of course not, and neither would anyone else, even if you could convince them it was silver. I love what I do, and I will sell anyone as many 'bags' as they see fit to buy. I've got a couple in my safe, and they take up a huge amount of space.
Why buy them? Because on a per ounce basis, they're cheap? Because you think you'll barter with them? Neither reason is valid in my opinion. Does it make sense to buy silver? You bet. Why? Because throughout history, in Biblical times, Egyptian times, French Revolution times, and even in the 1980's, the ratio between silver and gold was 16 to 1. Gold was $850, and silver $53. In other words, gold was sixteen times more expensive than silver. Now? Gold is 64 times the price of silver. Why? I have no idea. Both are historic money throughout the ages. The first coin ever made, was made of silver. Jesus was betrayed by silver. If the ratio was the historic 16 to 1, silver, rather than being $16.35, would be $66 an ounce.
Will the ratio ever return to 16 to 1? I believe it will, which means that silver will go up, percentage wise, four times further than gold. When will this happen? Who knows? It does take a lot of storage space, as opposed to gold.
Why gold and silver at all? Even in Genesis 2:11, a land surrounding the Garden of Eden, was rich, because it had gold. Gold and silver, throughout the Bible, are used hundreds of times to describe wealth. Gold and silver, have always been real money, real wealth, and wanted, cherished, and desired. Why is it that when people call us and say they 'don't understand' about gold and silver, they don't know about history? Why don't they stop and think about what their jewelry is made of, and what makes it expensive and beautiful? We'll gladly explain of course, and do it every day. When you get gold and silver, you are getting out of failing dollars, and into something tangible, and of historic worth. When you get gold and silver, you are getting out of un-backed paper scrip, and into historic real money. You are 'hedging' yourself against inflation.
Gold and silver don't have to be backed by certificates or government guarantees. They are self backed, and are the result of exploration, mining, milling, smelting, and many stages of fabrication. Gold and silver will remain valuable forever, and in all currencies. Gold and silver require capital, energy, machinery, and huge expenditures to produce, as opposed to paper dollars, which can, and are being run off of presses by the trillions. Gold and silver are actual, historic, tangible, beautiful, wealth. A real hedge against falling paper currencies. Will gold and silver be 'confiscated,' as coin shops like to say, in order to foist off their rare coinage at exorbitant prices? No. FDR never 'confiscated' gold. He issued an executive order, telling everyone to turn in their gold, exchanging it for paper money, and some did. No one ever had their gold 'confiscated,' no one was ever fined, or went to jail. If gold was 'confiscated,' how come coins shops have it to sell?
One other item: Communist China, currently is producing tens of thousands of numismatic US gold coins, with old dates on them. They're made of real gold, but are fake antiques. The same thing happened in the 1970's by the commie Czechs. I hear there are coins being made of a mixture of gold and tungsten. Ours come directly from the various mints, and dealing with us, makes that impossible, if indeed there are such things in the first place, which I doubt. Most readers of these columns, don't realize that at the bottom of the web site, are three columns which you might enjoy. Raise the web site and you will see the columns. Go Yankees!
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