New Spin: Same Type, Old and New

By Ginger Rapsus, Numismatic News May 27, 2011

This article was originally printed in Numismatic News.
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Type collecting makes a unique challenge in numismatics. It’s more than just filling holes in an album. Even if you can find an album for a type set, the collector has to answer a few questions. Does he want a 20th century type set, a 19th century, the full type set back to 1793, or what variation of these themes? Does he want subtle varieties, major varieties, metallic changes, or something entirely different?

Fans of type collecting and modern coinage can combine these two favorites and come up with a new kind of type set. Call it type collecting with a twist. Older United States coins can be augmented in a set by adding some modern issues bearing the same designs.

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The gold First Spouse $10 coins have been issued since 2007, featuring the First Ladies, as companion pieces to the Presidential dollars. Those Presidents who did not have a First Lady during their term are still honored with pieces featuring the Liberty figure used on coinage of the time. These modern renderings of Liberty can be collected along with coins bearing the original designs.

The 2007 Thomas Jefferson Liberty shows the Draped Bust, a design used on copper and silver coins of his time. Type collectors may want to assemble a set of the Draped Bust coinage – the half cent, cent, half dime, dime, quarter, half dollar, and silver dollar – and add a 2007 First Spouse gold coin to this set. Comparing the 2007 rendering of this old-fashioned design to the coins in actual use can be interesting. How does the modern Draped Bust look? Are there subtle differences? Has the design held up well over the years? How does the design appear on a gold piece?

Type collectors have a few more First Spouse coins to obtain. Andrew Jackson’s Liberty is the Capped Bust, a design so popular that a special collector’s club exists for fans of this Liberty. A 2008 Capped Bust gold coin would look great alongside the circulation coins: the half dime, dime, quarter and half dollar.

Speaking of specialty clubs, the Gobrecht Society boasts a number of members who appreciate the long-used Seated Liberty design, struck from 1840-1891 – and even earlier, if you include the famous Gobrecht pattern silver dollars. Martin van Buren’s Liberty, shown on another 2008 First Spouse coin, is the Seated Liberty. Add this piece to a run of Seated Liberty coinage, and add some modern touches to your type set.

James Buchanan’s Liberty was the Coronet head, used on gold coins from 1838-1907. That’s a long span, and quite a challenge for the gold coin collector who wants one of each date in any denomination. But a type collector can choose beautiful specimens of the quarter eagle, half eagle, and eagle for his set and include a 2010 First Spouse gold piece.

Look at the reverse of that old $5 gold coin, bearing the Coronet head of Liberty. An eagle with spread wings, shield on its breast, appears on this coin. This lovely design made a comeback in 2006, on a $5 coin commemorating the Old San Francisco Mint. Even the denomination, “FIVE D.” appears the same. When you see these two coins side by side you conclude they are indeed very similar.

A silver dollar was also issued to commemorate the Mint in 2006, struck with the Morgan dollar reverse. The differences between the old and the new are not apparent at a quick glance, but take a closer look at the lettering and the rims. A bit modernized.

One modernized issue that attracted many collectors at a major convention was the 2009 Ultra High Relief Saint-Gaudens gold $20. The original design, considered by many to be the most beautiful United States coin, could not be struck in large quantities, but modern technology made it possible for many more ultra-high-relief pieces to be made for collectors, art lovers and gold aficionados. The first strikes of these pieces were shown at a World’s Fair of Money; collectors stood in line to view these stunning coins.

There are quite a few differences between the original double eagle of 1907 and the 2009 piece. The motto “In God We Trust” appears on the 2009 piece, along with 50 stars on the edge to represent the 50 states; there were only 46 states in 1907. The modern coin is a bit smaller in diameter at 27mm and is made of .9999 fine gold, not .900 gold.

The 1907 ultra-high-relief double eagle, technically a pattern, is rare. If you can’t afford even a high relief gold coin, a Saint-Gaudens double eagle would look fine next to the modern 2009 piece. Always a favorite with collectors, the Saint-Gaudens design was brought back in 1986 for the obverse of the gold bullion American Eagles. The design was a bit modified, or modernized, including a slimmer figure for Miss Liberty. Perhaps a specimen of a 1 ounce Eagle, or a set including the three fractional Eagles, would be great companion pieces to a Saint-Gaudens double eagle.

One of the most beloved designs in American coinage appeared from 1913-1938 and has been brought back twice. That’s the Buffalo nickel, designed by James Fraser. An All-American design still popular with collectors, a commemorative silver dollar of 2001 featured the Indian head and the buffalo, although much enlarged. There was some criticism at the time, especially concerning the appearance of the buffalo’s legs. Show one of these dollars next to an uncirculated Buffalo nickel and note the differences. Was the criticism justified? Is the obverse rendering true to the original?

The first .9999 fine gold pieces struck by the United States Mint were the 1 ounce American Buffalo coins of 2006. Only 1 ounce pieces were struck in 2006 and 2007, with fractional Buffaloes following in 2008. One of the fractional American Buffaloes, next to an old Buffalo nickel, would look interesting due to the contrast. How does a well-struck modern gold piece appear next to a Buffalo nickel of 70 or more years ago? Some Buffalo nickels, especially some mintmarked coins of the 1920s, are notorious for poor strikes. Does the design hold up well and still look impressive after many years?

The Walking Liberty half dollar of 1916-1947 is considered to be America’s most beautiful silver coin. This design, too, was brought back for 1 ounce silver American Eagles in 1986. The obverse of Adolph Weinman’s famous design, a bit enlarged, appears on silver Eagles to this day. A Walking Liberty half dollar next to a new American silver Eagle looks great, and I have seen specially made holders for these two coins.

Add some depth to your type set of older United States coins by adding some modern issues bearing the same designs. Compare and contrast, admire the old and the new, and gain a new appreciation for the beautiful designs that will always remain favorites.

Ignoring Your Heirs Might See Them Swindled

By Richard Giedroyc, World Coin News September 13, 2010

This article was originally printed in Numismatic News.
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Former American Numismatic Association President Steve Taylor and his wife were present some years ago when I gave a talk on how to sell your coin collection. After I was done Steve told me the talk was the most morbid thing he’d ever heard. His wife just rolled her eyes at his comment. Maybe Steve isn’t the best example I could use. Steve always bragged that although he had been ANA president he wasn’t a coin collector – he collected bank notes exclusively.

Nevertheless, Steve’s collecting was an understatement. Steve had never sold anything from his collection in his life. Once he was gone his wife would be taxed with that chore; a chore she knew little about since she was not a collector.

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Perhaps this scenario doesn’t sound familiar to active coin collectors, but to coin dealers this same story plays out all the time. Someone in the family was a coin collector – past tense. Either the collector tried to explain what he had to his family and his family wasn’t interested in listening, or the collector simply never gave the family any idea what he had or how it should be disposed of once he (or she) is gone.

You can’t take it with you. As a coin dealer I can attest that some people have tried. Others are either too engrossed in their hobby to give anyone that all important information regarding what the collector has, what it may be worth, and where to sell it once he is gone. Yet other collectors are determined to give someone else what they see as their legacy—if the recipient wants it or not.

So, what information should you leave for the non-collectors in the family who may inherit your coin collection if you don’t dispose of it in your lifetime? The quick answer is to leave written information, but first you have to determine what information is relevant and how you can express it in a readable form for the non-collector.

Here are the problems. The first scenario is commonplace. The family collector is anxious to share his passion for coin collecting with his family, but there is simply no one in the family who is interested in pursuing the activity. Let’s face it. We’re in an age of all sorts of electronic wizardry, as well as a proliferation of sports activities ranging from almost as early as when you learn to walk through professional events. Both computer-related entertainment and sports are viewed by the general public as active pastimes, while coin collecting is viewed as a passive pastime. That’s a lot of competition for the time and discretionary money of each individual.

The family collector may have wanted to share his or her hobby, and no one paid much attention to it. The family collector may have attempted to explain what he had, and once again no one either listened, or since the family members were not actively involved in the hobby simply didn’t understand what was being conveyed orally.

The second scenario is also commonplace. Collectors often know what they have and simply don’t plan further ahead. If there are coin collectors in the following generation who are sharing in the hobby as a family activity the collection is likely in good hands. The problem is that often there is only one collector in the family, and the family is not always aware the individual is a collector. Even when they are aware they may not understand anything other than that “Dad is a coin collector.”

Then there is what I like to call “The Legacy Syndrome.” This is the collector who is determined to leave his collection to his family if they want it or not. He is convinced it is more than a hobby. To this individual his accumulation is an investment that in the collector’s mind is likely more valuable than it will prove to be when the collection is eventually sold.

I believe coin collecting is a hobby first and an investment second if at all. Coin collecting is a recreational activity. If you want to invest in coins you don’t collect them; you invest in them as a commodity.

You, as an investor, need deep enough pockets to buy the truly rare coins with a likelihood of appreciating in value, and even then just as with any other investment, you need to turn that investment over periodically and take some of your profits off the table. You are not concerned with assembling a collection as an investor.

The Legacy Syndrome collector doesn’t sell anything. In his mind his collection is appreciating in value, or if the collection is kept long enough it will magically become rare with age as if coins are a consumable commodity.

This collector who is determined to leave a legacy doesn’t look realistically at his family situation to see if anyone really cares about his collection, or if it will simply become found money to them when they get the chance to sell it. Will the collection survive intact for any significant period of time? Will the collector be remembered?

In some circumstances the family proves to have emotional connections to the deceased collector through the coin collection and the collection languishes in a closet without maintenance for yet another generation until the people of that third generation no longer remember who the collection belonged to, or the people who directly inherited the collection sell it. Regardless, nothing is forever. Coin collection legacies intentionally left to non-collectors is foolish. The best approach is to leave written instructions to family members, assuming the family members are not collectors, and need almost everything explained.

The first thing every collector should have is a reality check. If you have a collection of Lincoln cents housed in the No. 2 and No. 3 Whitman folders, do you really need to have each piece individually inventoried and graded? If you sell these two books to a coin dealer it is going to take him about one minute to quote you a price. These are low value items likely of value only because they are a complete set. If you have the 1955 doubled die cent in that collection then that specific coin should have been separated in the first place, with appropriate documentation accompanying it regardless of where and how the coin is stored.

Proof and mint sets are another good example of a problematic area. The family collector oftentimes purchases multiple sets each year, either giving them to non-collectors as gifts or hoarding the multiples he purchased with the intention of their being distributed equally following his demise.

First, if you check the retail prices of many of these sets you will see them now sell on the secondary markets for lower values than when they were first purchased. Second, the non-collectors who receive these sets typically fill up a box under the bed with them, only later to take them to some coin dealer who buys them at current market values, these values typically being a fraction of what the collector perceived their value to be.

This also brings up the subject of realistically valuing your collection for your heirs. Yes, you should inventory your collection as a written record for them. The completed date sets, type sets, and bullion coin hoards should each become one-line items, while more significant coins of true individual value should be inventoried separately with as much information about each piece as possible, but what about the value information you want to leave to your heirs?

Regarding the date sets, type sets, and bullion coin hoards this value will in many cases be tied to current precious metal values. You may want to consider identifying how many ounces of silver you have in silver rounds, silver American Eagles, generic well-circulated silver Washington quarters, and the like. You may want to explain that your circulation U.S. silver coins are .900 fine, while your British silver coins struck between 1920 and 1946 are .500 fine. The condition of these coins may not become a factor in their resale value. What will need to be explained to your heirs is what a reasonable percentage of the spot price of the precious metal composition of bullion valued coins is a fair price at which they should sell. It is pointless to try to set an exact price on this moving target.

Proof and mint sets don’t need to be graded to be priced, although if you have a rare variety such as a coin lacking a mintmark in a set you again need to separate that set from the balance of the others. Original packaging becomes important when selling such items. Writing someone’s name on the package doesn’t help its future resale value either. You should explain this to your heirs both orally and in writing.

Grading and values will go hand-in-hand when it comes to your better individual coins. Using a worst case scenario, look at the difference in value of any $3 gold coin between such minimal grade differences as MS-60 and MS-63. Collectors do not consider MS-60 to MS-63 as being a minimal difference, but to a non-collector this is splitting hairs. In addition, since $3 coins are notorious for being counterfeited, why not have your coin authenticated and graded by a well-recognized third party certification service within your own lifetime? Then explain all this in writing to your heirs.

Coin values are subjective and for this reason are the most difficult thing to attempt to document for your heirs. Coins that will likely be sold for bullion content rather than because of their rarity should be inventoried without assigning specific values, or with values that are identified as having considered gold, silver, or platinum at a specific spot price. Explain how to find the current spot price of these metals, and where to find the precious metal content of your bullion related coins.

Coins that have significant individual collector value and coins that have some relative collector value must be treated differently. Once again, have a reality check first. If you have a single example of a common 1865 2-cent coin in Fine condition, this is not a coin for which a dealer or other collector is going to pay very much. The same coin in About Uncirculated or in some Mint State grade is another story. First, are you certain you have graded the coin properly?

Second, is it problem-free? Third, are you certain your heir can justify that grade if challenged when selling the coin at a later date? The value you place on that coin – is it a retail value you saw in a coin catalog, on the Internet, or in a coin dealer’s advertisement, or is that value a realistic price a dealer would purchase the coin for when adding it to his inventory? Do not assume your buddy, some fellow coin collector, will pay more. He’s a bargain hunter, too. If your collection is of significant value this collector likely doesn’t have the deep pockets a coin dealer has that will be needed to make the purchase. What’s worse, what if the collector cherry picks the better material, leaving the lesser material for the family to contend with later?

This in turn also leads to addressing your additional final instructions. Who would you like to see purchase your coin collection if your heirs decide not to keep it? Have you ever tested the waters by selling a coin from your collection to see if your perception of its value is correct? At the same time, perhaps one individual quoted you a price that was significantly lower than the price quoted by two other individuals. Perhaps this is not the individual, be that person a coin collector or a coin dealer, to whom you want your family to have a numismatic financial relationship. Is your collection of sufficient value that it should be liquidated (if so desired) at an auction, and if so, through which auctioneer? If you don’t leave some instructions your heirs may sell the collection for a pittance to the wrong people.

Documentation in writing of what you have collected is always important. It is important for your own use, for insurance purposes, and to your family. This article assumes no one in your family is going to keep your collection once you have gone to that big coin club in the sky, and that the collection will likely be sold through a coin dealer rather than to a designated fellow collector with whom you are already friendly. Regardless, don’t rely on explaining what you have to others orally. Do not assume you can make a collector out of a non-collector simply by giving your collection to that individual. Do not assume another family coin collector will have the same level of expertise about your collection as you have.

Consider inventorying your collection, including grading and reasonable value information where appropriate. Explain your thoughts regarding its appropriate liquidation once you are gone. It really isn’t necessary to put a curse on the collection should anyone alter its content after you are gone, but remember you can’t take it with you and you will likely be more pleased to know it will be treated properly once you are gone if you do some homework now.

Richard Giedroyc is a full-time coin dealer and numismatic writer based in Ohio. There is an introductory chapter to the many ways a coin collection can be liquidated in his book The Everything Coin Collecting Book. Giedroyc can be contacted at Giedroyc@Bright.net.

Suspects Steal $250,000 While Dealer Loads Vehicle

	Why Silver is a sizzling investment
	By Jeff Clark Silver has been sizzling and causing lots of buzz in the industry. Investors are excited.Part of the hubbub is due to its current run. Since its February 8 low, silver has roared ahead 22.4% (through June 21) and has doubled from its November 2008 low.This excitement has spilled over into greater investment demand – especially so for coins. The U.S. Mint sold more Silver Eagles in the first quarter of this year – just over nine million – than any prior quarter in its history. The Royal Canadian Mint produced 9.7 million silver maple leafs in 2009, also a record. Take a look at the jump in U.S. Mint coin sales since 2007. Silver bullion ETFs are growing, too, experiencing a five-fold increase in metal holdings since 2006. There’s plenty we could talk about with silver, but our goal is to make money. So let’s focus on answering just two questions: Is today’s price expensive or cheap? And, what are the best silver coins, ETFs, and stocks to own? We have all the answers straight ahead, including lots of actionable info, so let’s jump right in… Why Should I Buy Silver? There are several reasons to own silver in addition to gold. First, it’s cheaper! Known as the poor man’s gold, those with limited budgets will find it easier to purchase. You might hesitate plunking down $1,200 for an ounce of gold, but you can pick up 32 ounces of silver for half that amount. Second, silver has wide industrial use and this component can help or hinder its price. As its consumption increases across a growing number of industries, this should help place a floor under demand. And because of its unique properties, new uses continue to be discovered. Third, silver is money and has served this role more than any other material on earth, save gold. Due to its historical role, silver will always have monetary value and offer similar protection as gold to the ongoing global currency devaluations, and will definitely benefit from the inflation hurricane we see as inevitable. Silver is more practical as a currency used for everyday purchases. When the time comes, you can sell the requisite number of silver coins to cover a specific need, as opposed to being forced to liquidate a high-dollar-value gold holding. Silver is perfect when smaller amounts of cash are required. Fourth and last, silver could possibly outperform gold before this bull market is over. The market capitalization of silver (and silver stocks) is much smaller, making its price more susceptible to demand spikes than gold. In the latter part of the 1970s precious metals bull market, gold gained over 700% – but silver soared over 1,400%. If you’ve got a bit of Gordon Gekko in you, we recommend investing a portion of your dollars in silver. Caution – Hot! Like all things, silver has its drawbacks, two in particular. First, the price is volatile. Over the past 12 months, silver has seen gains of 53.8% and 22.9% and drops of 21.9% and 19.6%, all within a period of months or even weeks. If you’re going to own silver, you must be prepared for big price gyrations. The best way to do that: buy it and forget about it. And… ►Make price volatility your friend. Big price swings present the opportunity to snag silver at a big discount. We give some guidance on prices below. Second is the storage issue. As your pile grows, the advantage to storing gold will become self-evident. At $1,200 gold and $18.50 silver, $10,000 will get you eight gold eagles that will fit nicely in the credit card slots of your wallet; however, it will buy 540 silver eagles, weigh nearly 34 pounds, and fill a small bank safe deposit box. ►How to store physical silver. There are several ways to solve the storage dilemma, even if you plan to buy like the Hunt brothers. Spread your holdings around. Not only is it wise to avoid keeping all your physical silver in one place, diversifying your storage arrangements allows you to buy more. Hide some at home in several locations (no cookie jars, though), and obviously tell only one trusted person. Store some in a bank safe deposit box and use more than one bank as your holdings grow. Buy bars. Silver bars take up less space than a pile of coins of the same weight. We wouldn’t start out with nor have all our holdings in bars, because you want the advantage coins offer. But the larger your holdings, the easier it will be to store some of it in bar form. Use pool accounts and unallocated storage. With a pool or unallocated account, you’re essentially getting free storage no matter how big your stash. That’s hard to beat. You’ll pay fabrication and delivery charges if/when you convert your holdings and take delivery, but in the meantime, you save on storage costs. Great value for the large holder. Private storage. Store your silver with a private vaulting company. The advantage is that it’s outside the banking system; the disadvantage is that it’s usually expensive, though it can be cost effective for large holdings. Do your own due diligence if you go this route because we can’t vouch for any facility, but you could start by checking out delawaredepository.com. Keep in mind that using a vaulting facility beyond a reasonable driving distance will mean added shipping/insurance costs and restrict quick access. Is Now a Good Time to Buy? With the gains we’ve seen in silver, would we buy right now? Let’s first look at the big picture. The following chart shows how far silver is below its inflation-adjusted peak reached in 1980. .Since our current bull market in precious metals began in 2001, the ratio, while fluctuating wildly, has never gone below 45. And yet look where it went during the precious metals peak in 1980: it bottomed at 17. Even though gold was soaring at the time, silver outran it. The ratio might show relative strength between gold and silver, but it’s not a good buying indicator. A falling ratio could mean silver is rising faster than gold, like it is currently, or it could mean silver is falling slower. As a result, we’d use the ratio to determine silver’s upside potential but not necessarily when to place an order. These big-picture signals tell us silver is undervalued and, at the moment, a better bargain than gold. And given the currency crisis we’re convinced is in the cards, we wouldn’t want to be caught without any. If you have a long-term mindset, silver is a buy today. Would we wait for a better price? If you do not own any, and plan on holding what you buy until a mania develops, then we wouldn’t wait. The risk of buying silver at current prices is lower than owning none at all. If you do own some but want to add to your holdings, we’d probably wait for a drop in price, in part because silver could more easily fall when the economy is found to be more fragile than what many believe. And with industrial uses comprising approximately half of silver’s demand, it would be more susceptible to sell-offs than gold if our research is correct about global economies. Further, summer usually brings pullbacks in prices, and this can be especially true for silver stocks. This is the tendency, though we can’t be sure if this summer will follow past trends. Still, our best guess is to anticipate another leg down this year. If you already own silver, we’d look for a correction to add to your holdings. In our opinion, owning no silver in this bull market would be a mistake. And your first (and biggest) investment in silver should be in a physical form. How much physical silver should you have? There’s no right answer and one size will not fit all. But we do recommend holding more gold than silver. Our suggestion for your precious metal holdings is roughly 80% gold and 20% silver. Like gold, silver comes in different forms. We’d start with the more popular one-ounce coins and then branch out into other types as your holdings grow. Jeff Clark Senior is a Editor with Casey’s Gold & Resource Report Courtesy: www.caseyresearch.com

 

VANCOUVER, BRITISH COLUMBIA (Commodity Online): Majority of the investors who took part in the 2010 Resource Investor Survey felt that gold prices will reach $1500 by end of 2010, according to Dig Media Inc.

Dig Media recently conducted its Resources Investing News 2010 Survey to gauge the interests of its readers and gain insight into investors’ perception of the markets.

The survey results showed that nearly 69 percent of respondents said they believe the price of gold will reach $1500 before the end of 2010. This bullish sentiment is most likely supported by the increasing flight-to-safety climate currently taking shape in Europe and North America as investors contemplate the likelihood of a slow economic recovery and the possibility of a double-dip recession.

Our audience is very focused on the resource investing market and as such has some interesting insights into the current state of the market,” said Nick Smith, Publisher at Dig Media. “Our reporters have taken these results and are digging into the background to provide readers with some interesting insights on the market overall and specifically in gold, uranium, copper and oil and gas.”

It’s not surprising that such a high percentage of respondents would answer yes when many analysts this past month have been calling for $1500 gold this year or next, including commodities analysts at Citibank, Macquarie Securities, UBS AG and Fairfax IS plc, Dig Media said.

Quoting Wayne Atweel, Managing Director at Casimir Capital and former Morgan Stanley Managing Director, the Gold Investing News brought out by Dig Media said that the longer term outlook for gold prices is rather bullish with the precious metal at $1500 to $2000 an ounce within the next one to three years, his short-term outlook goes against the grain, pegging gold as trading in a band between $1100 and $1300 an ounce through the end of the year.

When gold hedge won’t do, consider investing in silver

If you’re a gold investor, you have to be worried about an unwonted outbreak of good news. What if the economy doesn’t enter hyperinflation? What if peace breaks out, or the world’s terrorists scare themselves to death? Gold rarely thrives on good news, so you might consider adding silver to your portfolio. Like gold, silver is a good investment if paper money collapses. But unlike gold, silver is also an industrial metal, and demand for silver should rise in an economic recovery. As an added bonus: An ounce of silver is far cheaper than an ounce of gold.

 Like gold, silver is widely used as a medium of exchange when paper money loses its value. It’s a good store of value, and easier to carry around than chickens or canned hams. Silver and gold have been rising in the past few years, and with good reason:

 •U.S. government debt is now $8.6 trillion, or $13 trillion if you include intragovernmental holdings, such as the Social Security trust fund. The nation has the option of using a mix of tax increases and budget cuts to reduce the budget deficit and, ultimately, the debt. It also has the option of inflating its way out of the debt. Gold’s rise in price reflects the widespread notion that we will use the printing press to reduce our debt.

 •The euro has been sinking the past few weeks, as the world tries to figure out if Europe will be able to stabilize its more fiscally creative members, particularly Greece, Portugal, Ireland and Spain. Whenever the future of a currency is in doubt, investors look for an alternative, such as gold or silver.

Gold has soared from $258 an ounce in March 2001 to $1,221 Thursday, a 373% gain. Silver has trailed gold slightly during the same period, rising from $4.30 an ounce to $18.34, a 327% gain. If you buy any precious metal now, you’re certainly not getting in on the ground floor. But the metals may still have some room to run. “This is the best environment to invest in precious metals,” says Shanquan Li, manager of Oppenheimer Gold & Special Minerals fund. “The worldwide currency problem isn’t easily solved.”

 Industrial uses

 Unlike gold, silver also has myriad industrial uses. It’s a great conductor, so it’s in widespread use in electronics. The chemical industry uses about 700 tons of silver a year, according to The Silver Institute, an industry trade group. And it’s an effective antibiotic, useful in water purification, which accounts for its appearance in the portfolio of the Kinetics Water Infrastructure fund (ticker: KWICX).

 Should the global economy recover, silver should have some additional upside, says Joe Foster, co-manager of Van Eck Global Hard Assets (GHAAX). “I expect silver to outperform gold, because it has some industrial applications as well,” Foster says.

 If you’re interested in investing in silver, you have a number of choices:

 •Physical. The most cost-effective way to buy silver is in large bars, says David Beahm, vice president of economic research at Blanchard & Co., a New Orleans precious metals dealer. Those are a problem if you only want to sell a quarter of your bar, he notes. Most people buy 1-ounce silver coins. “Look for the coins with the lowest premium, whatever that might be — American Eagles or other 1-ounce coins.” A premium is the coin’s markup from the silver spot price. You can also buy bags of “junk” silver — pre-1965 silver coins — but those, too, are cumbersome. Try hauling around $5,000 in quarters some time.

 Bear in mind that you’ll have to store your silver somewhere, and that depends, to some extent, on how much you trust your neighbors. If you put your silver in a bank safe-deposit box, your rental fees will eat into any profit.

 •Exchange traded funds. Several ETFs now invest in physical silver, which makes the problem of storage much easier. If you’re worried about a financial collapse, however, your silver shares won’t go far at the corner grocery store.

 •Silver-mining stocks. Silver is typically a byproduct of something else, and so there are few pure plays in silver. But silver stocks aren’t followed as closely as gold-mining stocks, says Oppenheimer’s Li, and that can be an advantage.

 One interesting silver stock: Silver Wheaton (SLW), which buys silver production upfront for a fixed cost from miners, typically as a byproduct. Its cost of silver in the first quarter was $4.04 per ounce.

 Silver is a highly speculative investment, and if you’re worried about taking losses, then you should be investing elsewhere. But if you think the world is in trouble — but are willing to admit you could be wrong — silver is one way to go.

 John Waggoner is a personal finance columnist for USA TODAY. His Investing column appears Fridays. His book,Bailout: What the Rescue of Bear Stearns and the Credit Crisis Mean for Your Investments, is available through John Wiley & Sons. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com. Twitter: www.twitter.com/johnwaggoner.

What Gold Can (and Can’t) Do For You

It wasn’t so long ago when the Euro was flying high and some experts were predicting that the dollar could be replaced as the world’s reserve currency because of the United States’ ballooning deficit. Now, there are fears that Greece could default on its debt and even the Euro may cease to exist. The dollar has made gains against the Euro, but the real winner in this debt crisis can’t be printed by central banks. It must be harvested by miners: gold.

While the Euro has taken a hit, gold has shot up to all-time highs, above $1,200 per ounce. Investors must decide for themselves whether or not commodities like gold belong in their portfolio, but for those who want to know what all the fuss is about, here are a few things to know:

[See U.S. News's list of the Best Mutual Funds for 2010, and use our Mutual Fund Score to find the best investments for you.]

It has never been easier to invest in gold. Exchange-traded funds have revolutionized investors’ access to commodities. “The ease and liquidity of ETFs have really opened up commodities in general as a new asset class for investors,” says Tom Lydon, editor of ETFTrends.com. “In the past, for investors to buy gold, they either have to buy the coins or the bullion, and now in the form of ETFs there’s a whole variety of options,” Lydon says. In addition to buying gold through futures contracts, investing in physical gold—bars in underground vaults—through ETFs is now possible.

[See The Appeal of Gold ETFs.]

Gold can diversify. A small amount of gold can limit the overall volatility of your portfolio because it often performs differently from mainstay investments like stocks and bonds. “Gold and some other types of commodities are what you call non-correlating assets, so they tend to move independently of overall moves in the market,” says John Diehl, senior vice president in the retirement division at the Hartford. Gold sometimes reacts differently to market selloffs, which can help offset losses in stocks.

Gold as a reserve currency. The past few weeks have been a roller coaster ride for stock investors, punctuated by steep falloffs and strong rallies. The market’s behavior is partly due to worries that debt problems in some European countries like Greece could spread to other parts of the European Union and damage the Euro. The dollar has rallied somewhat in responses, but the United States has debt problems of its own.

The world’s primary reserve currency—the most commonly held currency by central banks around the world—is still the dollar, but when fear strikes the market, many investors flock to the safety of gold. “It’s not irrational that people are buying more gold right now because in the past, you had two reserve currencies, potentially, then you were down to one with the Euro, and now you may be down to none for a while, so gold is really the ultimate reserve currency,” says Paul Zemsky, head of asset allocation for ING Investment Management. “It’s the only thing that holds its value even if central bankers and governments are eroding the value of their own currency.” When there are global concerns about monetary policy, Zemsky says, gold will benefit from a flight to quality.

It has been a good, long run. The shiny metal set record highs last week. Diehl says he is worried that some investors who are new to commodities may not know what they’re getting into. “If fear in the market is at a high and everyone you talk to is saying, ‘Hey, you should put your money in gold,’ as a contrarian investor, that should be somewhat of an alarm to say, ‘Is this really the right thing to do? When everybody says, ‘Now is the right time to buy anything,’ you can generally feel fairly confident that it probably isn’t,” he says. A general rule of investing, Diehl says, is to look for asset classes that seem to be undervalued, and gold could be reaching its peak price.

Gold can be extremely volatile. Gold can provide diversification, but investors should be aware of the risks of investing in commodities. “Gold is really a precautionary hedge and not something your whole portfolio should be in,” Zemsky says. He recommends that investors only have 3 to 5 percent of their overall portfolio in gold. Diehl is even more cautious. “A singular bet on gold is, at its core, still a singular bet,” he says. “Just as emotions are volatile, the price of gold is a pretty volatile asset.” He suggests finding a fund that invests in a broad basket of commodities and not just in gold alone. Two popular choices are PIMCO Commodity Real Return Strategy Fund (PCRAX) and PowerShares DB Commodity Index Tracking Fund (DBC).

LONDON (Commodity Online): Will gold price zoom past the record of $1227 per ounce that the precious metal achieved in December 2009? It looks gold price is surging once again prompted by a number of reasons that include the Greek financial crisis, volatility in dollar and Euro and several central banks’ decision to raise interest rates.On Monday, gold price started climbing in global markets across several continents from Asia to Europe. Gold prices hit a fresh four-months high in Asian trading on euros rebound as EU offered a bailout package to Greece. Gold for immediate delivery was seen trading at $1165.35 an ounce at 11.30 a.m while U.S. gold futures for June delivery was at $1,166.40 per ounce.Bullion analysts said that gold price is once again on a boom. Gold’s steady ascent to a record of $1227 per ounce began in October 2009 in the aftermath of India buying 200 tonnes of gold from the International Monetary Fund (IMF). IMF decision to sell gold to India at a high price led to a frenzy in bullion markets around the world, resulting in the precious metal’s historic rally to $1227 per ounce on December 4, 2009. Precious metals analyst Mark Robinson says gold price is once again on a surge. “Gold has turned out to be the best investment asset for common people, banks, brokerages and investors around the world. Everyone is betting on gold on increasing political and currency worries in several nations from Greece to Brazil,” he pointed out. “April is going to be the month for gold, it looks. The current gold rally has the potential to cross the $1227 per ounce. I am looking at a gold price of $1250 or above per ounce in short terms. Gold is surely going to achieve another historic record. Gold is on a bullish run on global investment demand,” Robinson told Commodity Online. Analysts like Robinson say that the bull run in gold will continue for some months now as investors are scouting for pouring money into gold funds, gold bars, gold coins and several other bullion-based assets. “In countries like India, one of the largest gold consuming countries in the world, people are buying into Gold ETFs and gold funds based on mutual funds. This is all leading to another bullish run on the yellow metal,” he added..Several bullion analysts are now banking on the bull run theory on gold. David Levenstein, another precious metals analysts posted this report on gold on Monday: “In dollar terms the gold price is now about 5 percent below its all time high, but the weakness of the pound and the euro against the American currency means that the price of the yellow metal in sterling and euros has just made new record highs. The price of an ounce of gold has thus reached record levels of £754 and €865 in recent trading, and the dollar price has reached a three-month high of $1,157. In August last year the gold price in sterling terms, for example, was £562, so British gold investors have made a profit of 34%, compared with a rise in the dollar price of 23% over the same period. During the past week, the Euro was very volatile especially as the financial drama in Greece continued. As expected, the ECB left the main refinancing rate at 1% in April, and both growth prospects and inflation were largely unchanged from previous meetings. ECB President Trichet addressed questions about Greece’s deficit problem and said that ‘default is not an issue for Greece’. Although the Euro edged up higher on Friday, the trend for the week has been down. There were a number of Central Bank events last week. Australia raised rates by 25bps to 4.25% as widely expected, and the Bank of Japan and Bank of England left rates and the quantitative easing program unchanged. The U.S. Federal Open Market Committee minutes for March’s meeting unveiled the Fed’s dovish monetary outlook. While forecasts of real economic activities remained largely unchanged from previous meeting, policymakers were surprised by deceleration of inflation. At the same time, the Fed noted unemployment would be undermining recovery. Nicholas Brooks of ETF Securities, which runs exchange-traded funds, said: “The strong performance of gold, despite the strength of the US dollar, indicates that investors are increasingly viewing it as an alternative store of value, not just to the US dollar but to fiat [paper] currencies more broadly, as sovereign risks continues to rise. “Traditionally, investors concerned about the structural outlook for the US dollar would buy euros, British pounds or yen. However, with policy and debt risks rising in all of these countries, investors – as well as central banks and sovereign wealth funds – are increasingly looking to gold as an alternative ‘hard asset’ store of value.” On April 8, of this month The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings hit an all-time high at 1,140.433 tons surpassing an earlier record of 1,134.03 tons touched on June 1, 2009. The rise in the ETF holdings to a new record level reflects strong investor demand. In my previous report I mentioned that the IMF had turned down a bid from Eric Sprott to buy the remaining 191 tons of gold on offer. Evidently, the IMF claimed that Sprott’s desire to purchase the gold from the IMF did not comply with ‘protocol”, and that the IMF only sells gold to central banks. When Sprott explained what happened, he also mentioned that “I’m a 100% believer that central banks have suppressed the price of gold. I find it hilarious today that they have these programs to sell gold – it’s of no use. It’s one of the dumbest decisions in the last decade.”

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