Who, What, Why and Where to Buy Silver

Aristotle says that there are five causes or common questions associated with all things. They are questions or issues that we should all address when investigating into the truth of something. The five questions are Who, What, Why, Where and When (?). In the case of silver, these are definitely questions that need to be asked especially when it comes to buying actual silver. In this article, I will address the issue of buying real silver vs. other silver investments. Then I will address the question of where you can buy silver in Southern California (particularly in Los Angeles), and be assured that you are getting what you pay for.

Paper silver

You have all heard the term "paper" money. This is, of course, in reference to the FRN (Federal Reserve Note) or the 'greenback' as we like to say. Another term for paper money is 'fiat money' which means something that has no intrinsic value, and disassociated from anything that has real value (gold standard). The point I am driving at here is that paper is merely a representation of value, and, as such, is a dangerous thing when it comes to real money. If more paper is being printed than is relative to the quantity of silver and gold, then you automatically lose value in the dollar. This called manipulation or more commonly known as 'inflation'. The more money is being printed, the less value it has- necessarily. The same goes for paper stocks, funds, equities etc. These are all paper representations of something which can be manipulated. These paper representations come in many forms the ETFs, stocks and contracts. All of should be avoided, for the most part, the exception being silver stocks (which have some explosive potential, but large risks). Instead, get the real thing.

The Real Thing

The real thing. Bullion and face value coins primarily are your best bet. You can buy them. You can take them home with you. You can lock them up safetly, and it's virtually a private investment (at least it should be). There is no need to worry about auditing, security and just plain wondering "where my silver is now?". The fact of the matter is, anything other than the real thing can be manipulated in terms of value, and there are no guarantees. Futures contracts are probably the ultimate example of how dangerous the possibilities are. These quaint little investment vehicles are a promise to pay in silver for a locked-in, future price, at a certain date. The only problem is, there is no real limit as to how much you can future purchase, and this means danger in the limited supply of silver. ETFs are kind of the same way. Technically, an ETF is a promise to pay you out no matter how much is bought or sold. If silver prices do not really reflect the real value, and demand surges, there is nothing they or you can do (except file a lawsuit). They would not be able to keep up with soaring prices. The only real way to get paid is to have the thing in hand. If prices are manipulated, you still have ownership and can cash out. You can manipulate prices, but you can't control the real supply.

Los Angeles

Unfortunately, banks don't pay out in silver or gold anymore. The only places that the small investor can really buy and sell is at your local coin dealer. These are the only guys who really handle both coins and bullion. Moreover, as there are many coin dealers, of varying degrees of trust, you must do some homework. In Los Angeles, there are two reputable dealers that I know of, one is CNI (California Numismatic Investments). The other is Liberty Coin in Long Beach. I have personally dealt with both of them. They have both been around a long time, and both are straight forward, honest dealers. CNI is larger in size and better known. However, Liberty Coin is just as good, with its family-operated store.

Cash

I don't believe that most coin dealers, use credit card transactions. At any rate, cash is the preferred method of payment and checks may also be accepted. But cash is the way to go.

What to do?

What to do once in the store? Figure out about how much you want to buy according the spot rate, multiply by the number ounces and get a total. Bring about that amount, and then some. There is a small fee for both buying and selling, usually 3-5 percent, plus or minus, depending on whether you are buying or selling. You can even call before hand and ask what the selling price will be at the moment. Then simply ask for the amount of ounces you want. Bullion comes in increments of one, ten, one-hundred and thousand-ounce sizes (just multiply the spot rate by the number of ounces for the total). If you are just starting out, I would recomend buying a ten ounce silver bar. You will get a break on the per-ounce fees, and its a good investment to boot. Or just buy an ounce and watch as prices go up.

It is good just to have something that you own, even if its just a little ounce. It makes the investment opportunity real, as opposed to just watching the charts.

Bullion vs. Coins

If you are a beginner, do not let a salesman push you into numismatic coins. Though there is nothing wrong with numismatic coins,

they are an expensive investment vehicle, and require specialized knowledge on the subject. Also, there have been many counterfeits in the past, which should make anyone wary. There is nothing wrong with buying bullion, and you simply can't be lead astray.

Last Word

If you are completely new to investing, like I was, then some of you will be rattled by market volatility. This is completely natural and understandable. However, the only investments worth having are relatively volatile. Silver is volatile and can change anywhere from one to three percent in one day. It can drop fifteen percent in a week (rare). But there are some serious market forces at work, and you must understand that in the long term, these gyrations will pale in comparison to the profits, which are substantial.

Happy investing and just go for it. Go to a local (and trusted dealer) and just buy something, even if its small. Tell 'em Uncle Danny sent you.