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Two Letters Re: Which Form of Precious Metals?

Dear Sir,
Regarding comments made in the letter on which form of precious metals to buy, readers should be aware that numerous Chinese fake silver dollar coins exist in today's market. I recently became aware of these by an honest seller who identified the fakes as such, and sold me a couple for comparison purposes.

They are available as common Morgan and Peace dollars as well as more numismatically valuable styles such as draped bust and trade dollars. They look surprisingly realistic and appear to have normal aging and wear consistent with what you would expect. Believe me when I tell you that only a practiced eye would distinguish them by sight only! Clues to their identity exist, but more thorough examination is required. Weight is slightly low but might not be noticed by many buyers unless a scale is used. They are also a little thin, but again might not be noticed without a known good coin next to it or a micrometer measurement. Another method which can be used to identify real silver coins is by balancing the coin on a finger tip and tapping it with another coin. A real silver dollar gives off a low clear ring like a bell. The fakes give off a higher pitched ring which is not as clear and does not last as long. (Try this with a few real coins to hear the correct note.) The biggest tip off is that the coins are magnetic, being made in part from steel, and can be readily identified by their attraction to a magnet. No legitimates silver [or gold] coins will be attracted to a magnet

You's better believe that I am now a much more intelligent buyer, and will be carrying a magnet with me (at least) for all future silver dollar purchases. I would have never thought that it would be worthwhile for someone to counterfeit a relatively inexpensive coin like a Morgan silver dollar. - William L.

Sir,
recently you responded to a young gent about silver purchases. i forwarded your discourse to my sister who brought up a valid point -- you never mentioned in your response where you see the use for Silver American Eagles. I responded to her that maybe your advice was to use/purchase silver in this order: 1) junk silver; 2) Silver American Eagles; and lastly 3) silver bars.Ii chose that order due to the purity of the metal and its recognizability. Is this your opinion?

As far as the silver bars are concerned, I think that you have a point. Will Grigg once wrote of how his father had received payment once in silver bars, and when the 1980s [bull market in silver] hit, he was able to use them to keep the family going. Thanks in advance, - Rick B.

JWR Replies: Unless you have the opportunity to buy some Silver Eagles on the secondary market at a price that is close to the spot price of silver, then I do not recommend buying them. In most circumstances, they are over-priced. Why pay as much as 35% over their physical (silver ) value? This just plain bad investing. Some would argue that Silver Eagles are "readily recognizable? My question is, recognizable to whom? I'd guesstimate that 90% of the American population has never seen an American Eagle, and that 95% of the American population has never held one in their hand. In contrast, at least half of the population is familiar with pre-1965 mint date US silver coinage. (Although I wonder how many people know with accuracy that 1964 wa the last year of their minting.) I stand by my advice: Get pre-1965 "junk" silver coins for barter, and a 100-ounce serialized bars for investing.

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