Basic Terminology 1

Welcome

So now you have entered the world of economics--or are attempting to--or you just stumbled into this blog by pure chance. Well, since you are here, you mines as well see what this page is about.

I wanted to clear up some terms you might have heard on the news or someone saying and was curious as to what exactly they were saying. Here is my best explanation.

Terms

Numismatics
The study of or related to coin collecting including foreign.

Numismatic Coin
A coin of some value that is highly collectable. Usually your limited edition / hard to find coins.

Graded Coins
Coins that have been professionally evaluated by qualified people and assigned a number based on their condition. MS 70, for example, is a flawless coin. MS 69 is an almost perfect coin. MS 68 and so on means the coin is less than perfect. Professionally graded coins are placed inside a sealed, plastic container with the grader's logo above it. It is also assigned a serial number to prove its authenticity. Some of the more well known graders are below:

• PCGS
• NGC 

Sometimes you may noticed right after the date a -(W) or -(S). This means these coins were struck either at west Point or San Francisco (minting firms). There are a limited number of coins struck at each of this minting buildings per year, so they tend to be more valuable than a regular dated coin

Another company that has built up a good, solid reputation like PCGS.

Both have been around for a very long time and have built a reputation of good quality graded coins. There are other coin grading companies out there, but they are not as reputable as PCGS or NCG. Thus, they may grade a coin MS 70 but, because the company has not been around as long or may be known for skewing the grades on their coins, it would most likely sell for less than a PCGS MS 70 graded coin. Do your own research though and decide what company you'd want your coins graded at.



It is also worth noting that some coins struck on the same year will have different labels. For example, you may see Early Release, First Strike, and __th Anniversary. You may also notice that at times there are different labels on the same year coins (American Eagle, Golden Gate Bridge, Brown Label, etc). They all have their different values and meanings. If you are a collector, it might be worth looking more into the value of specific labels. I've shown a few below before ending this lengthy section.

Before I end this segment, I wanted to quickly give a shout-out to PF Graded Coins (Proof). Basically, coins that are minted as proofs are created and lathered with special dies that give them a shiny, mirror like appearence. They are not circulated (like all coins that come directly from the mint). Below is an example of what a proof, graded coin may look like. Please note, like all coins, proof coins do not have to be graded.

Spot Price
How much physical silver is currently worth on the commodity markets. This price is live and tends to fluctuate often.

Premium
How much more the coin cost above Spot Price. For this example, we'll say the spot price of silver is $29.00. Gainesville coins charges an additional $2.75 above spot price for ASE (American Silver Eagles) which would be considered the premium. So the total cost of that one coin would be $31.75.

Intrinsic 
I love Webster's definition. Anyway, to make it more clear, intrinsic--in the terminology of coins--value defines how much the physical object's properties are worth. For example, a 90% silver dime has a face value of 10 cent, but we all know it's worth more than 10 cent (it's over $2.00). That is because of the coin's intrinsic value--the material that makes up the coin. For a better explanation, check out my children's book (ha ha, shameless promotion)

Fiat Currency
A currency that has no backing. For example, the USD. What does it mean though if your currency has nothing backing it up? That means that you are taking my word on faith that if I say a $1.00 bill is worth $1.00 then it is worth $1.00.
Our currency used to be backed by gold & silver (Hence, the Gold Standard). That meant we could go down to our local banks and exchange our paper money (silver certificates back in the days) for physical gold and silver. For example, a $1.00 Silver Certificate could be exchanged for 1 oz of silver. When we left the gold standard in 1971, our $1.00 Silver Certificates became $1.00 Federal Reserve Note.

Real USD

Fake--I mean, fiat, USD.

Why did we leave the Gold Standard? Because the government was allowing the Feds to print more money than we had gold and silver to back it up with. People realized this and began cashing their silver certificates in the bank for physical metals and depleting their supply of physical metals. President Nixon realized this and ended the Gold Standard, giving the Feds free liberty to print as much paper money as they wanted bringing us to today's current, inflated economy (this is an extreme overview though. Much happened between that time so it's worth looking into).

Market Terms
I am not really the one to attempt to explain this to you as I feel I do not have enough knowledge in this field to talk about it. However, I can give you an overview of what these terms mean.

Commodity Market 
This market deals with 'soft' and 'hard' physical assets. Soft commodities tend to be agriculture or livestock whereas 'hard' commodities tend to be your metals (gold, silver, platinum, etc).


Future Markets
People buying or selling commodities / future contracts that are to be delivered at a specific date (aka: the future).

Future Contracts
To put it simply, it is person A (a business / company / individual (?), etc) buying a commodity from another person (B) at a per-determined price in the form of a contract. It is people betting against the market price of an item in the future.
For example:
Person A wants to buy 1,000 ounces of silver from Person B within 1 year at $29,000. Person A bets against the markets and thinks silver will raise in value above $29.00 an ounce by next year. Person A makes a contract with Person B. Now, Person B thinks silver will go down by next year, making a clean profit off of it.
6 months go by and the spot price for silver is $35 an ounce. Person B starts freaking out, seeing how high silver is and fears silver may go even higher. He calls Person A and asks if he'd settle the contract now for cash. Person A agrees. Person B pays Person A $35,000. 

It can get a lot more confusing as there are always more than two people involved in a contract.

Long
Holding on to a contract for a long time (years). Believe in stock going up in price.

Short
Not a long term contract. They sell in hopes the stock will continue to go down.

The Bull Verses the Bear
Man, the DOW is sure looking bullish right now, aint it? When one says a market is looking bullish they are implying the market is going up or expected to go up.
When one says it is a bearish market, they are implying the stocks are going down and things aren't looking too good in the future for them.

Well, that's all for now. If there are any terms you think might be usual here send me a message or comment below.

This is to be used as just a guide or a beginning point for you to do your own research.

Published: The Silver Dime. Also, newbie guide to Silver

The Silver Dime is now available on Amazon!

Summary:

Ronnie Dutch Marks goes to ChinaWorld with one of his classmates, Bernie Ben Mankey, to purchase some candy. When they both present their dimes, Ronnie's silver dime purchases more candies pieces than Bernie's copper dime. A valuable lesson about the intrinsic value of precious metals!

I hope those who read the book will be encouraged to look more into precious metals. This is just a stepping stone into a very complex but interesting point on the intrinsic value of silver.

Did you know?

•  Dimes and Quarters were 90% pure silver up till 1964?
• Between 1942 - 1945 Nickels were 35% silver?
• Half dollars were 90% silver until 1964. Then between 1965-1970 they were 40% silver (clad). 
• 1 silver dime back in the 1800s could buy a loaf of bread. Today, that same silver dime can buy a loaf of bread.
• Today, silver is used in A LOT of our everyday items including batteries, computers, cameras, jewelry, mirrors, water purification, cars, pharmaceutical purposes (like X-rays), American Silver Eagles and other 1 oz collectable coins, etc...
• It cannot be created
• No one knows how much silver is left on the earth.
• There is an increasing demand for silver. 

I think I might be interested in this silver stuff...

Really? Well, since you're still here reading, let me give you some advice: Do some research. Read, read, and read some more. Read articles on the internet, read books, ask your elders, talk to others who have shown interest in the topic.

Recommended Books

These are a few books I read and really enjoyed. I'd recommend reading them to get a head-start into what silver / gold are and get a little background on the markets.

• The Silver Bomb: The End Of Paper Wealth Is Upon Us  by Michael MacDonald
• Crash Proof 2.0: How to Profit From the Economic Collapse by Peter Schiff 
• The Silver Dime by Joy McKemy

They both go into gold / silver and explain it. Michael MacDonald is one I highly recommend. He goes through the origins of precious metals to how we got to where we are today with our currencies. A very interesting read. Read the book in one day. Peter Schiff focuses more on the markets than the actual history and, as you can probably tell from the title, how to prepare yourself. And finally, Joy McKemy's book is an excellent book that illustrates the intrinsic value of a silver dime verses a copper dime and how the silver dime possess more purchasing power than the copper dime (and who wouldn't recommend their own book?)

There are articles and YouTube people too whom you can listen to concerning silver / Gold. I highly recommend YouTubing Ron Paul and Ben Bernanke.

What to Buy...

That is completely up to you as it depends on why you are buying. If you are buying because you are just wanting silver, then I'd go for silver rounds or junk silver (90% silver coins). The American Buffalo 1 oz silver coin is the most popular and cheapest way to buy silver as it has the lowest premium.

If you are wanting to collect and bet against the coin going up in value, then I'd go more for ASE (American Silver Eagles). You pay a higher premium though for these coins.

There are other coins out there too such as the Silver Maple Leaf and Silver Philharmonic. There are plenty of other silver coins too (Silver Year of the _______ coins, Silver Chinese Panda, etc). Once again, these coins will have a higher premium verses silver rounds.

 
Where to Buy...

If you have done your research and think it'd be fun to buy (or invest) in some silver, I can recommend a few site to purchase from:

•  Gainesville Coins
• Local pawn shops 

Gainesville Coins has proven to be one of the most competitive places to buy any precious metals on the market. They have a wide selection and offer great deals and discounts. They also allow bank wires up on orders that are above $3,000 (so you don't get hit with a %2.5 credit card fee). I have always found it best to order with other people that way you can reach that minumin and save money.

*Preservation of Wealth is the cheapest online coin dealer I have yet to run across. However, there is a catch: You have to be a member in order to buy their metals. The membership fee is $250 dollars (ouch) so I'd seriously do some calculating on how much you think  you will buy before signing up. They also offer a business side to being a member. The more people you recruit to join, the more money you earn. So if you're a good  sales person or think you'll buy a lot of silver to cover the difference, than I'd g for it. If you think you'll just buy a few coins, then go for Gainesville coins. 
Rather upset with Preservation of Wealth. I had placed an order on the 22nd of February and have yet to receive it [ 3/26/2013] I would be freaking out if I did not know people who had used this site to order, but come on, over a month and have yet to receive an email that the order has been shipped? Sorry, but I highly recommend you order from Gainesville Coins. I have always received my orders in a very timely manner and they shipped it out on the date they stated the order would be shipped.

Local pawn shops are going to be your most expensive place to buy. They will most likely charge you a higher premium to buy silver / gold than an online store due to them having to pay for rent / electricity / etc. for that building space. However, if you are looking just for junk silver (dimes / quarters / half dollars) than this might be the place for you. Just make sure you check the market spot price before going shopping so you don't get ripped off.
Wanted to add that pawn shops do vary in price place-to-place as they are private, small businesses. Your local pawn shop may have lower premiums on their silver than other pawn shops. It pays to do some research on your own and visit your local pawn shops. 
My advice on pawn shops: I would only buy silver from them if I was just looking to buy a few pieces and they weren't charging more than $4-$5 dollars over spot price. If you're planning on spending a couple hundred dollars on silver, your best bet would most likely be ordering online.

Final Words 

Please note: I do not recommend buying silver or gold without really reading and thinking about the risks of investing. I have only provided the information above so that people who are looking for starting places can use this information as a guide. 

Please feel free to comment or email me if you have any questions or suggestions. I'd love to hear where you buy your silver and possibly adding that spot on this blog!