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January 1, 2008

Why Silver

by Dan

I got a rare chance to see both my brothers and their families this last weekend. It was great talking to them both and catching up. I didn’t get much of a chance to bond with Owen or Tia. But Kristy’s family was very generous. It was great to experience Texas hospitality again. Scott and I went to see a movie that neither Kristy nor Cheryl would’ve wanted to see: I Am Legend. It was fairly good, but made me jumpy later that night.

Dave and Carly stayed the night in order to cut an hour or so off their drive back to Phoenix the next day. Little Addison is growing up quickly, even since I saw her at Thanksgiving. And I discovered that Dave has also considered buying silver as an investment. Since I purchased some silver recently, I wanted to write a bit about why and how I did it.

First, silver is a precious metal and has often been used as money at various times in history. Second, it is an industrial metal used to make stuff. Third, we’re using more silver than we’re digging up — the amount of above-ground silver has decreased by 90% over the last 60 years. Fourth, the current price doesn’t reflect the increasing scarcity. Fifth, there are now several convenient ways to own it. Theodore Butler has written a great article describing the reasons to own silver in more detail.

There is now an exchange traded fund (like a mutual fund, but traded in real-time instead of at the end of each day) that specializes in owning silver. Apparently, there is an ETF for oil too, but I haven’t looked into that.

I also wanted to take physical possession of some silver. I did quite a bit of research and price comparisons and ended up buying American Silver Eagle coins from Bullion Direct. The coins are minted by the U.S. Mint and are trusted to have very high quality. The coins cost a bit more than raw silver does, but are easily recognized and should therefore be easy to sell or trade when the time comes.

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