I have recently been asked by several people which metal I prefer and in what form should it be bought. First, as I have said for years, Silver should outperform Gold in the long run. Until Silver trades to at least a 20 to 1 ratio to Gold, I believe it is the better buy. The problem is that if you are talking about anything over $100,000, Silver is just not manageable. As a rule of thumb, I think that 10 or 20 ounces of Silver for every 1 ounce of Gold owned is a good ratio. I say this because your Gold will be “portable”, your Silver is just too heavy (for now). Were Silver to make it back to a 10 or 20 to 1 ratio which I fully believe it will, you will then be in a position where you are close to 50/50 in Dollar, Yen or whatever currency terms that then prevail.
I do want to say that if you have NO METAL at all, I would start with Silver. I say this because Silver will, in a time of financial collapse where your ATM and credit cards don’t work, “spend.” Don’t get me wrong, Gold will also spend but how do you get your “change” back from an ounce of Gold? One of the several reasons that I believe that Silver will outperform is that it always was and soon will be again “people’s money” or “poor man’s Gold.” Gold will trade out and above the realm of the average person, Silver will become the go to place for the average Joe.
That said, if you are buying Silver, I have always recommended “junk” (pre 1965 U.S. dimes and quarters) because they are already broken down to small denominations for you. Not only that, in today’s world, more importantly, they virtually cannot be counterfeited. Many have said “Silver coins” are not profitable to counterfeit. Yes and no. I can still remember the ignorant bonehead in my office coming in to work one day smiling like the Cheshire Cat. He told me that he bought some “1 ounce Gold coins” for $19.99 per coin. What he bought was Gold plated. I bring this up because with Silver at $35, a 1 ounce “plated coin” could probably be produced for $5 or less which leaves plenty of margin left over to rip off the unsuspecting.
Same thing… especially, goes for “1 ounce rounds”. These in my opinion will be more difficult to trade in the future, especially at higher Silver prices and after more scams and counterfeits become publicly known about. This is why I believe that “dirty old junk” coins offer you the best value of all. You can purchase these nearly at “spot” prices with no premium, they are “worn,” clearly identifiable and probably will avoid any confiscation attempts by governments.
Mind you, you won’t be able to store huge wealth in this manner unless you are very strong or have a wheelbarrow and some sort of vaulting ability. You should however have in my opinion, at least 1 bag ($1,000 face) of junk for each person in your household before you begin to seriously store your wealth in Gold or mining shares.
Think of it this way, if (when) the financial system comes down, Silver will be your “survival” money. It will get you from here… to there. “There” being a new monetary system. In a new monetary system, Gold (and Silver to a lesser extent) will be your seed corn capital to spread around into productive assets. At some point in time, you will want trade your “money” for something that actually produces for you like rental real estate, utilities, makers of widgets or whatever. I look at it this way, Silver will allow you to survive and make it to the point in time where you can safely exchange your real wealth (Gold) for newly “devalued” productive assets. These “devalued productive assets” may have even gone UP in Dollar terms, they will be lower in terms of real money and thus devalued relative to YOUR store of wealth.
The above said, if you have already bought a boatload of Gold in various forms, you are OK. I just think it will be appropriate, if not convenient to have some coins already denominated in amounts equal to a gallon of gas or a couple of loaves of bread. In my opinion, you will be buying cars, houses and even bakeries with your Gold!