Fine silver proof coins are produced by the United States Mint. These coins are created for investment and collection, in addition to their primary usage for trade through the US money supply. Such coins can be obtained by direct purchase from the US Mint. Identification of coins as “fine silver” and “proof” confer a particular guarantee of quality and authenticity on the characteristics of these coins.
The term “fine silver” refers to the purity of metal contained in the coins which is 99.9% silver, with only one-tenth of a percent of their alloy containing some other metal. Proof is a guarantee of the coin’s finish. Values of fine silver proof coins are determined by their rarity, age and condition. Proof coins are designated as the finest the US Mint has to offer, and are hand-polished and specially treated to retain collectible value.
The problem with these types of coins is the investment value is determined solely by how much someone is willing to pay for the coin when sold. Since they are sold at a premium to the value of the silver contained, they are merely “collectibles”, and are harder to sell.
By contrast, silver bullion rounds are sold by authorized coin dealers. The value of a bullion round relies only on its weight and the current market price of the metal contained in it. A bullion round’s value reflects only the amount of metal it contains, while a fine silver proof coin may be more or less valuable than its precious metal content. Silver bullion rounds, like the widely collected Buffalo Round or the Incuse Indian, although containing 99.9% silver are not treated like those designated as proof coins.
As an investment vehicle, bullion rounds are more liquid and can be turned into cash at a moment’s notice. This is why silver bullion rounds are best for an easily cashed store of value.
Periods throughout history that have been defined by economic upheaval have been fraught with deepening chaos in the marketplace. Financial crises, such as the ones currently plagueing economies worldwide, have been triggered, in large part, by unresolved outcomes from negative events affecting regional economies. This lack of resolution leads to economies that are initally unaffected or only slightly affected by these risks, to speculate about the solvency of their trading partners. Increased risk, whether real or percieved worsens the scenario by creating even greater economic imbalance.
The most recent such trigger threatening interconnected global markets is the debt crisis shrouding the soveriegn states of Europe. In this situation uncertainty prevails, because no one really knows who will take the fall from Greece’s fiscal meltdown. Many see the contagion adversely affecting the world economy as a single spreading infection. Others believe that the fiscally weakened countries of the European Union, like Greece and Ireland will bring down the stronger ones, such as Germany and France.
Whatever the mode by which the pestilence spreads, one thing is certain. Someone will need to bear great loss in order to set the financial system right. No one is happy with the prospect of sharing the burden by the printing of currency and its subsequent infaltionary result, but few other options seem emminent.
Dizzying point drops in US stock indices are already signaling extreme shifts in assets and liabilities on a worldwide scale. Those who take diversified portfolio positions that include physical stores of precious metals, will not be surprised by drastic market movement when others are racing to the exits to preserve other forms of capital.
Abandonment of the Gold Standard has turned some of the weathiest world powers into welfare states. Notable among these are Great Britain and the United States. While it is true that dumping their precious metals-backed currency systems had immediate effect on both countries, it seems that this shift is only now truly coming home to roost.
The century that has passed since the Bullion Committee of the British Parliament recommended a return to the Gold Standard, has seen even lower interest rates than those that initially spurred the recommendation. Real return on banked capital is now yielding less than one percent, a rate much lower than the almost five percent earned between 1811 and 1911. Even the rates paid during the mid 1970s, when double-digit inflation was rampant, pale in comparison to the money being lost by the frugal savers of today. At least the central banking system addressed the issue then, by setting its nominal rate at a base of eleven percent.
Today’s holders of cash reserves, who retain money in failing financial institutions, have effectively been morphed into unsecured creditors of increasingly insolvent lenders. Paying to bank their money has become the new reality for millions of pensioners and potential retirees, who are unable to make their savings profitable in their golden years.
The toils of the investor now serve no function in the marketplace, other than to keep the poorly oiled gears of fiscal policy turning. Unlike precious metals, whose scarcity has reason, there is no explanation for scarcity of capital. The fact that interest can no longer be collected on it would indicate that there is an ample supply of cash reserves. The only thing that is missing is the solvency to liquidate these assets.