http://www.silverstockreport.com/2008/90-US-Silver-Coin-Bags-Junk.html

Since 1 ounce rounds, 10 ounce bars, and 100 ounce bars are getting very hard to find, and a 6-8 week delay is unrealistically unacceptable, some of you may be considering buying 90% Silver, which are more available in places these days, especially, I hear, from www.fidelitrade.com. So, I figured that some of my readers would like my experienced opinion on acquiring this kind of silver product.

Definition: 90% US Silver Coins come in “bags” of $1000 face value, which consist of 10,000 dimes, or 4000 quarters, or 2000 half dollars. The coins were regularly minted, circulating U.S. silver coinage dating 1964 or earlier. Usually, a “bag” is split up into two or four actual canvas sacks to make it easier to carry. The coins exclude silver dollars, which are another product. The silver is 90% silver, the rest, the other 10% is copper, to help harden and toughen the coinage. There is 0.72 of an ounce of silver in each $1 face value, or 10 dimes, 4 quarters, or 2 half dollars, but the industry counts it as if it’s .715 ounces, due to coin wear. A full $1000 bag weighs about 54.5 pounds. The most common form is quarters, about 70% of the time. 20% of the time, you get dimes, and 10%, half dollars. Seems that the dealers hold back the dimes and half dollars because they might be more interesting.

Known as:
“Bag” U.S. 90% Silver Coins
90% Silver Coin Bags
90% Junk Silver Bag $1,000 Face Value-715 Ozs. Of Pure Silver
90% Silver Bag – 715 Troy Oz., $1,000 Face
$1000 bags of 90%
Silver Bag 90% $1,000.00 Face Value
Silver US 90 Percent Coinage
US 90% Silver Coins $1,000 Face (pre1965) (715.00 oz.)
90% Bags, $1,000
90% Silver Coins

Benefits:

1. Easily divisible into small amounts, since they are already broken up into small amounts.

2. As former U.S. circulating coinage, the risk of confiscation might be the lowest of all forms of silver.

3. They just don’t make this kind of silver anymore!

4. This silver is very difficult to counterfeit—once you get some, you will see how our modern coinage is so different, as today’s coins are lighter, the metal looks different, and toda’s coinage has the copper strip in the middle. Silver coinage also has that distinctive “ring” to it.

5. This silver has historical value and significance; as our forefathers worked a day’s wage for these exact same silver dimes and quarters! It’s amazing that you can get a silver dime for about $1.20 each, in bulk!

6. Price varies. Sometimes 90% coinage had a 30-50% premium, or extra value over the spot price, such as 6 months to a year prior to Y2K, as people wanted spendable, usable or more practical forms of silver.

7. Rarely, you might be able to pour through a bag of dimes, or half dollars, and find some coins that might have some numismatic value. I have separated out my mercury dimes from the rest, but nobody is paying any signifianct premium for these, maybe $50/bag which is not yet worth it. My mercury dimes might even end up having less value, being more worn down.

8. 90% silver is among the cheapest kind of silver you can get today, and it tends to be more available and easier to find. When this silver is the cheapest, you end up getting the most silver for your dollar, which is a significant advantage. One strategy among silver investors is to buy the kind of silver that is the cheapest at the time, and then sell the product that happens to be most highly valued in the marketplace at the time.

9. 90% silver might not be a reportable transaction. However laws change, and this is not legal advice. Check with your attorney (Yeah, as if attorneys know anything!)

Drawbacks:

1. In 1980, when silver was being melted at the refiners, 90% silver coins were bought for about $35/oz. when silver was $50/oz, due to the fact that the refineries were backed up with too much 90% silver to melt down, and smelting them down is an added cost if there is a need to turn them into 1000 oz. Comex bars. (Personally, I don’t think that’s much of a worry or concern, since I’m not investing in silver hoping for a Comex-driven short covering spike and crash; instead, I’m expecting more of a permanant revaluation upwards as society must return to real silver and gold in commerce when paper money fails.)

2. Counting requires a coin counter, which can cost $1000; but most coin shops have these counters. (Or you can use a scale to see if the bag weighs 54.5 pounds.)

3. Regular, coinage, dated 1965 or later, can slip into the mix. This usually happens when 40% silver halves get slipped into the 90% silver half dollars, since they are more difficult to tell apart, since the 40% coins have no copper strip in the middle, and so you have to check the individual dates. One time my dealer found about 5-10 coins of 40% silver in one bag that I had bought years earlier.

4. Most people I tell about silver are not as interested in buying 90% silver, due to the fact that the conversion factor is “too much math” for most people to figure out by multiplying $1 face value times .715 ounces of silver. Most people want to easily know how much silver they have, and what it’s worth. Most people prefer 1 ounce rounds, in my experience, because it’s easier to know how much silver you have, and what it’s worth.

5. There is a scam going around where 90% junk “walking half dollar liberties” are being sold for up to 72% over the spot price, and on leverage, (with no delivery of product) with interest on the loan of up to 15%, which is a horrible deal. These coins are not numismatic, and have no numismatic demand, and no numismatic value.

As always, the best place to find silver is your local coin shop, and then try some large internet dealers. For more, see:

http://find-your-local-coin-shop.com/

Sincerely,
Jason Hommel
www.silverstockreport.com
www.miningpedia.com

http://fairuse.100webcustomers.com/itsonlyfair/latimes0285.html

Los Angeles Times

“The number of Americans being secretly wiretapped or having their financial and other records reviewed by the government has continued to increase as officials aggressively use powers approved after the Sept. 11 attacks. But the number of terrorism prosecutions ending up in court … has continued to decline, in some cases precipitously.”
“The trends, visible in new government data and a private analysis of Justice Department records, are worrisome to civil liberties groups and some legal scholars. They say it is further evidence that the government has compromised the privacy rights of ordinary citizens without much to show for it.”

“High global food prices are a new fact of life, a major report warned on Thursday as 22 countries, mostly in Africa, were listed as being at severe risk from record food and fuel costs.”

“At the same time, there were calls for an end to restrictions on the export of food, with open trade said to be vital in any solution to the record prices which have sparked protests in many countries.” Read more

http://silverstockreport.com/2008/silver-shortage.html

The biggest proofs of the silver shortage are the position limits at the NYMEX. These are 7.5 million ounces in the spot delivery month. Another usually unenforced limit is that the exchange can arbitrarily limit all physical deliveries to all market participants to as little as 1.5 million ounces, in their discretion, if they want to.

These are big limits, and most of my readers will not “feel the pinch” of these limits, because the vast majority of us don’t buy 7.5 million or even 1.5 million ounces of silver in a month. But the limits exist, and they are the proof that there is a shortage.

Why do these limits exist? Because there is more cash than silver. The demand side in the fundamentals of silver is not the 40-75 million ounces of silver demanded by investors, but rather, the demand side is potentially everyone who holds any dollars, and who may one day wish to buy silver or gold to protect their money from inflation.

But nobody will talk about that; that’s the big elephant in the room that is ignored. The $14 trillion of M3 of money in U.S. banks is not even backed by the 261 million ounces of gold held by the U.S. government, which holds no silver at all anymore. With $14,000 billion in M3, and only $1.1 billion of annual investor demand for silver, there is a big problem brewing for the dollar, and for the silver market, if anyone in America ever became concerned about inflation!

Many uninformed market commentators continue to deny there is a shortage of silver, even though the largest silver exchange on earth is saying there is a shortage through the existence of position limits. I will quote one such well known willfully ignorant induhvidual.

From:

http://www.kitco.com/ind/Nadler/may272008B.html

“Silver fell apart dramatically today, losing 4.5% to $17.40 (down 79 cents) as the “phantom shortage” of small fabricated products has proven to be real only in the minds of those uninformed pundits who were trying to scare investors into creating a real one. The backpedaling on the allegations of shortages has already begun. Expect the reputations of the propagators of such nonsense to be the ones damaged, not those of the various mints that were selectively targeted. At last check, Platinum dropped a hefty $52 to $2118 and palladium fell $14 to $441 per ounce.”

This commentator must have an attention span of about 15 seconds, since a few weeks ago, he was admitting the silver shortage had hit small fabricated products, such as Silver Eagles.

Currently, there is a wait of about 6-8 weeks on 100 ounce bars, which are the largest fabricated products available in the silver market, besides the 1000 oz. COMEX bars, upon which the previously mentioned position limits apply.

Therefore, there is a shortage all the way around in the silver market, everywhere you look, for big, medium, and small buyers.

1. On 1000 oz. COMEX bars, the position limits of 7.5 million ounces per month, or even a possible 1.5 million ounces per month for everyone in total.
2. On 100 oz. bars, there is a delay of 6-8 weeks from the major manufacturers, Johnson Matthey and NWT Mint.
3. On 1 oz. Silver Eagles, which, even though the mint is making twice as many this year as last year, are still in short supply.

The only one who could deny that such shortages exist must either be willfully ignorant, willfully stupid, willfully blind, or just flat out hell bent on lying to you.

However, maybe Mr. Jon Nadler does not understand that shortages result from low prices, and maybe, he was thinking that the dip in silver prices yesterday proved that there was no shortage. So, I’ll give him the benefit of the doubt for today, and merely instruct him in basic economic principles so that he can understand and mature as a commentator.

Shortages take place when prices are too low.

http://en.wikipedia.org/wiki/Economic_shortage

“Economic shortage is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus.
Economic shortages are related to price—when the price of an item is “too low,” there will be a shortage.”

Further, some “silver shortage deniers”, think that if they can find and buy a small amount of silver, then there must not be a shortage. But that’s no evidence of no shortage.

I grew up in Sacramento, California. We had droughts in some summers, and sometimes there was a rather acute shortage of water. We were told to conserve water. Take quick showers. Don’t let the water run which you brush your teeth. We were told to capture the water in the sink to show how little water we used when brushing our teeth. We were told, “If it’s yellow, let it mellow. If it’s brown, flush it down.” We were told to limit how often we could water the grass.

But the fact that water continued to run from the tap, was no proof that there was no water shortage. We always had water for the swimming pool, even though there was a water shortage.

So, when I say there is a silver shortage, I’m clearly not implying that there is no silver available at all. Clearly, something around 550 to 650 million ounces of silver is being mined each year, and it’s being sold to a lot of different people, and most people are getting the silver they want. But some people, or even many people, at the very edge of the market, are not getting the silver that they want, and they can see a shortage quite clearly, because there is a shortage for them!

Shortages may result in:
• Artificial controls on demand, such as rationing.
• Non-monetary bargaining methods, such as time (for example waiting in line), nepotism, or even violence.
• Price discrimination
• The inability to purchase a product.
We are seeing all of that in silver.

1. The Mint was rationing Silver Eagles to their dealers, as indicated

http://www.silverstockreport.com/2008/rationing.html

2. We see people “waiting in line” so to speak for silver, as there are delivery delays of 6-8 weeks.

3. We see price discrimination at Kitco, where there is one price for the pool account, and another, higher price, for physical delivery. Also many silver dealers tend to offer price discounts on silver for larger orders.

4. Many people simply cannot get silver at all, because their dealers have no silver.

We have all the evidence of shortages. It’s simply amazing that even people in the industry cannot see it. But then again, that’s what makes a market. If the whole world could see what we see, there would be no such thing as paper money.

Clearly, most of the entire world is blind to reality, in more ways than one. So Jon Nadler shouldn’t feel too bad, after all, he’s a part of the vast majority.

Oh, by the way, shortages also often end up creating much higher prices in the long run. But it might take much more than 24 hours to see this effect.

I expect that a major delivery default, either from a large institution such as the Perth Mint, or from the COMEX, could set off a real panic, and orders by mints or refineries could be canceled as spot prices begin to run wild. It appears that with 6-8 week delays, as we are seeing now, such an event could take place at any time.

When my readers ask me where to buy silver, I tell them they ought to search for their local coin shop.

http://find-your-local-coin-shop.com/

At that link, I provide links to a database of over 4000 coin dealers, and all the major refineries in the world who supply silver to the COMEX, where the acknowledged shortage and position limits exist. It may be wiser, therefore, for large buyers of silver, to bypass the COMEX, and contact the refineries directly, and buy silver before it ever gets to the COMEX in the first place. I hear that you can get silver at the largest Mexico refinery more cheaply than in America. But I don’t know anything at all about import/export rules and restrictions.

Sincerely,
Jason Hommel
www.silverstockreport.com
www.miningpedia.com

“The first global food crisis since World War II is the result of converging factors across the world. Some facts:
Food prices on international markets have nearly doubled in three years, threatening 100 million people with hunger, according to the World Bank.

Government policies and rising oil prices have led countries such as the United States and Brazil to divert corn into the production of ethanol for fuel. Read more