Oct 222015
 

Purchasing a 100 Oz Silver Bullion

Gold and silver may not be good investments, but I consider them to be a form of currency because they store financial value that can be easily exchanged for goods, services, or other currencies relatively quickly. ūüôā

The idea of sitting on cash to stay safe and secure sounds innocent enough. But that’s only if we isolate the discussion to one domestic country. Today the world economy is more connected than ever before. Due to low commodity prices Canada’s economy isn’t as productive as it once was. This drives down the price of our currency because global investors are less confident in our productivity. Over the last year the Loonie has lost 20% of its value relative to the $US.

This affects Canadian’s ability to trade with other countries because it makes importing goods like fruits and gasoline from the U.S. more expensive. ūüôĀ However, those who held some silver as a substitute for the Canadian currency during this time would have kept most of their purchasing power. That’s because the price of silver has increased 13% over the past 12 months when priced against the Canadian dollar. ūüėČ

So earlier this week on Tuesday I went out to my local bullion dealer and bought a 100 ounce silver bar¬†for $2,241 CAD. The shape reminds me of an iPhone 6 Plus, except the silver is almost 3 times thicker measuring 2 cm (3/4 inch) thick. And it weighs about 3.11 Kg (6.86 lb,) which is literally 18 times the weight of an iPhone 6 plus, lol. Who needs the gym when you can workout at home with silver? ūüėõ

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This highly purified¬†block of silver was produced by the Royal Canadian Mint. The front of the silver bar shows the RCM signature stamp and the year it was produced (2011,) along with a serial number. The bar is also engraved with the weight of silver in it, and the purity of the metal. ūüôā RCM is known for its quality and its brand is recognized worldwide. There is some clear scratching and general wear on the bullion, but nothing too noticeable. Overall I give this purchase 8/10. ūüôā Great product. A+ experience. Would buy again! After taking some pictures I’ve stored the bullion in my safety deposit box at my bank. I don’t plan to sell it until I retire, or run into some kind of emergency.

Last year I blogged some step by step instructions on how to convert one’s wages into physical silver. This 100 oz bar I purchased represents about 4% of my income for this year. So instead of making 100% of my money in Canadian dollars I’ve essentially divested 4% of cash earnings into precious metals. I’ve also converted about 16% of my income this year into U.S. dollars and bought U.S. stocks. ūüėÄ Diversification isn’t only about asset allocation. It’s about a holistic financial perspective, including currency considerations. ūüėČ

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Nov 182014
 

In the world of finance, the word “arbitrage” refers to buying something in one market, and simultaneously selling it in another, profiting from a temporary price difference. According to Investopedia, this form of profit is considered practically risk free for the investor/trader. ūüėÄ Well I have recently found such an arbitrage opportunity in the gold bullion market.

Introducing the 2014 Howling Wolf 99.999% Gold Coin

Several days ago I went out to buy the 1 oz. pure gold 99.999% Р2014 Howling Wolf coin made by the Royal Canadian Mint. The Howling Wolf gold coin cost me $1,389 CAD to purchase. The slight premium over the spot price of gold is due to the spread charged by the broker and the unmatched purity of the coin (most bullion is only 99.99% pure gold.) Details below with proof of purchase.

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If you live around Vancouver you can buy it from the VBCE, which is where I bought my coin. The current quoted price on their website is about $1,400 CAD. In Calgary albern.com currently sells it at $1429 CAD. In Florida, gainesvillcoins.com sells this coin for $40 over spot per oz. If you live around Toronto you can visit the Canadian Bullion Services to buy the coin. You can also order it online and pick it up in their store or have them mail it to you. In fact many of these companies I mentioned ship worldwide. There are hundreds of dealers across North America so this coin is relatively easy to obtain.

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Oct 102013
 

The U.S. government is nearing its maximum borrowing capacity. If Congress can’t agree on a budget soon they won’t be able to raise the debt ceiling which could mean disaster for the economy. I don’t think anyone is expecting the US to default, but there will probably be a lot of uncertainty in the next week.

But one thing we can do in the meantime to protect ourselves against the risk of hitting the debt ceiling is to buy some insurance. So earlier today I went out and bought an ounce of gold for $1,400, and a 10 ounce bar of silver for $250. My purchase was from the VBCE in downtown Vancouver. They are a walk-in bullion and currency exchange business. They accept cash or debt card. You don’t need to show I.D. unless you’re buying a lot of gold/silver.

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I chose to buy gold because in uncertain times, gold usually does well. It’s currently trading at around $1,300/oz USD. I don’t think there’s much room for it to drop from here. This is my reasoning. First, we know that gold has been a store of value for thousands of years and that’s probably not going to change in our lifetime. So if gold can never drop to $0 then what is the lowest it can go? To tackle this question, have a look at this excerpt from a Globe and Mail article published a couple of months ago.

“Many major gold miners have since started reporting what they call their ‚Äėall-in‚Äô cost of production.
Last quarter, Barrick’s amounted to $919 an ounce, while Kinross’s totalled $1,072 an ounce
and Goldcorp Inc.‚Äôs hit $1,279 an ounce. …Big names like Barrick and Australia‚Äôs Newcrest Mining Ltd.
have embarked on campaigns to either sell
or scale back their highest cost development and exploration projects.”

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Mar 192013
 

The government of Cyprus (a small island country near Turkey) announced they want to charge a one time tax on all their citizens’ savings and checking accounts, up to 9.9% of their balance (O_o) This is so the country can qualify for a $13 billion bail out package which they so desperately¬†need. It certainly sets a very controversial¬†precedent¬†for countries facing bankruptcy. Cyprus citizens rushed to the banks to withdraw their cash so they won’t be taxed only to find out the government has ordered financial institutions to stay closed for fear of a bank run.

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If it’s not even safe to store your money in the bank anymore, where CAN you put it?¬†The Fed is continuing its money easing policy and with an increased supply of cash and credit in the economy we will¬†inevitably¬†see some kind of inflationary pressure in the future. I was recently looking at the price of gold and noticed that it has really come down from a year ago. It also seem like the price of gold has found a support level at around $1550/oz.¬† Well today gold is roughly at $1600/oz. I like to buy stocks when they are undervalued. But right now it’s hard to pick a good company because the US stock market is at an all time high, lol. However gold is near its 52 week low. And historically it has been a great store of value, and a hedge against uncertainty and inflation.¬†So I think this is a golden opportunity for me to start accumulating some physical gold.

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But what kind should I buy?¬†There are gold bars which are pretty boring. Then there are collectible gold coins which usually demand quite a hefty premium over the spot price of melted gold. Finally there are the globally recognized 99.99% gold maple leaf coins¬†made for¬†high liquidity and circulation purposes. Last year I posted about the Royal Canadian Mint’s 100 kg (220 lb) 99.999% pure gold coin with a face value of $1 million. It holds the world record for being the largest fine gold coin ever created, and it’s purity is unmatched. Well for those who can’t afford the best in the world the mint has also made miniature 1 oz versions of this coin with the same design, quality, and purity. Sounds pretty good to me¬†(^_^)

So earlier today I went to the local bullion exchange and bought myself a one ounce .99999 fine gold maple coin. This shiny little bullion can be sold at any gold dealership. But it also has some properties that make it unique like a¬†collectible¬†coin. For example it’s 99.999% gold which the Mint said is unrivaled for its purity, compared to the standard maple leaf coin in circulation at only 99.99%. It also has a mintage so it’s more rare than the massively produced standard coins. Due to these special features it’s 2.2% more expensive than the standard maple leaf coin. But for an unmatched work of art and engineering I think that’s very reasonable. I spent $1750 on this little beauty today. The cost fluctuates depending on the market price of gold but the place I bought mine from, VBCE, has a website that lists their current spreads¬†so you can check online for the latest prices.¬†Click image below to enlarge. I included a toonie and quarter in the shot to show scale.13_03_1ozgold

I already own gold mining companies like Goldcorp, but this is my first time investing in the commodity directly. It’s quite amazing to hold something so small in my hand and know it’s worth more than everything in my closet, lol. ¬†It’s hard not to feel emotionally attached to gold after seeing it up close in its purest form like this. It’s just so pretty („āúo„āú)¬†I think gold is interesting from both a scientific and investment perspective.¬†As an element gold is known for its stable properties. It doesn’t break down, burn, or corrode so all the gold that has ever been extracted from the ground since the beginning of civilization, which is 171,300 tons (or 5 billion ounces) according to¬†the¬†World Gold Council,¬†is still being used somewhere today.¬†There’s 7 billion people on earth. So if all the discovered gold was evenly distributed each person would claim roughly 0.7 ounces. Which means as of today I own more than my fair share since I have a whole ounce :0)¬†About 50% of gold mined this year will be used for jewelry, 10% for industrial purposes like semiconductors, and the remaining 40% ends up in official holdings and investments like being made into maple leaf coins for example ūüėÄ

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As you can see the gold coin is enclosed in a plastic case and set in a 5″ x 4″ laminated card. On the front the coin displays 3 maple leaves matching the design of the larger 100 kg coin. On the back the coin displays Queen Elizabeth II and a visible “200 DOLLARS” is imprinted to indicate the face value of the coin.¬† The card represents a certificate of authenticity backed by the Royal Canadian Mint.¬† Overall I give this coin 10/10. Great quality. Would buy again ūüėÄ Click image below to enlarge.

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Jul 092012
 

I like to invest in precious metals, both on the stock side, as well as in¬†bullion. Lately I’ve noticed the price of silver has been under-performing relative to gold.¬†¬†The price of gold today (about $1600/oz) is pretty much the same as it was 12 months ago. ¬†But silver on the other hand went from $37/oz a year ago to $27/oz today. That’s a pretty big drop (O_o) Since I know that the value of either ore (^_^) can’t decrease indefinitely, I think now would be a good time to increase my silver exposure.

So a few days ago I picked up¬†3¬†silver coins at the local bullion exchange (VBCE) in downtown Vancouver. They weigh 1 ounce each. These beauties can be purchased by anyone. Just contact your local bullion dealership. You can also buy them from an online broker these days, or ask me for further details. If you don’t care for the maple leaf design you can also purchase regular silver bullion for practically the¬†spot price¬†of the metal.¬†For readers south of the border, you can buy the American Silver Eagles¬†instead.

It can be argued that precious metals (gold, silver, palladium, etc) aren’t real investments because they don’t generate any returns, and the price of these metals are largely based on speculation. But the reason I like to own physical silver is because it’s really shiny and fun to hold and look at. Plus it’s a hedge against inflation. And I personally believe there is a fundamental element of supply/demand that affects it’s price because silver is an essential component in the making of cell phones, cameras, mirrors, cars, solar panels, computers, laptops, TVs, and a bunch of other necessities for the modern society.

image credit: dailyreckoning.com

Bullion: A piece of high quality, relatively pure, gold or silver coin, bar, or sometimes ingot.
Spot Price: The current market price of a commodity if the trade was done immediately.
Palladium: A rare, metal element (Pd) with similar properties as platinum. It is mostly used in catalytic converters.
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Random Useless Fact:¬†In 2007 the government made a huge¬†gold coin that weighs 100 kilograms (220lb).¬†Back then 100 kg, or 3215 oz of gold was worth $2 million. Today it’s worth $5.1 million.