Chicago Gold and Silver Investing Fan Blog

Chicago's Largest Monthly Coin Show

Scene of vendors at the show (photo courtesy West Suburban Coin Show).

The West Suburban Coin Show (http://www.westsuburbancoinshow.com/) held at:

Park Place of Countryside Banquet Hall
6200 Joliet Road, Countryside, IL 60525

is the largest monthly coin show in Illinois.

Shows Held

2nd Sunday of the Month
9:00 AM to 3:00 PM

I have not attended this show yet. But I definitely want to go soon. As you can see from the picture above there are a lot of vendors. From what I heard over 100. There is everything there from jewelry, collectibles numismatic coins, rare coins, and plain old bullion.

I asked a fellow if they have good prices on bullion. His answer was probably not now, since silver prices are so low. He said no one sells under spot, but you may get people selling at $1 over spot. Even at $1 over spot, that is an incredible price. Most coin stores charge anywhere from $3-$6 over spot on an American Eagle SIlver bullion coin. If it is true that you can buy silver at $1 over spot, then at the minimum you can save $2 per ounce that you buy. So if you are a high buyer of silver, let's say you buy 20 rounds, that can give you a savings of $40. That does not sound much, but if you are a big silver bullion buyer, you can really save money if you buy it there as opposed to a coin store or even online.

Crazy year for silver bullion buying

A year ago the spot price of silver was at $31.28. It sky rocketed to $49.57 on April 28, 2011 - one of the highest silver spot prices in decades. Then from April until today it went crashing down all the way to $29.18 at the time of this writing.

So looked at from a short term perspective. This was not a good year for silver bullion buying. If you bought silver at any point of the year, except for about a 3 week period in January, and you compared it to the price today, you lost money from an ROI point of view.

On the other hand, this is not the time to bail on silver.

The price of silver is basically determined by supply and demand. From a demand perspective, silver had gone down from April until now. There are many reasons for this. For one, silver has industrial uses. If the demand for those industrial uses go down, then the demand for silver goes down and thus the price goes down. The world is still stuck in an economic recession, so the demand for the industrial uses has gone down.

Also, there is the monetary crisis in Europe. Foreign investors are dumping their European securities. The European Banks, who hold those securities have to pay off their investors. To do this, some of them have had to sell some of their assets, including silver assets. European banks selling silver put more silver on the market and thus lowered the supply.

What does the future hold as for silver prices? No one can predict for sure. I do know that companies and nations will continue to be in financial trouble. The past has shown that when governments and nations get in trouble, the governments tend to solve their problems by printing money. If they print too much, people start losing faith in their currency. The smart ones then look for other alternatives to hold their wealth besides the increasingly devalued currency. That is when they go to gold and silver.

In the short run I see prices of silver staying low, due to the reasons above. However, based on the behavior of most governments and central banks in the world, I don't see them making the difficult decisions necessary to get out out of this mess. That is why, I see a world - it could be in 2012 or sometime shortly there after where silver and gold prices will really rise.

Buying Silver Bullion

There are basically 3 major ways to buy silver bullion; at a coin store, online, and at a show.I've done all three. From a price perspective (price above spot) buying it at a show is cheapest, online is 2nd (if you buy in mass), and buying it at a coin store is most expensive if you buy in small quantities.

Online charges small premiums but you have to pay for shipping and handling. I found that at certain coin shows some dealers charge spot price for silver bullion. I'm thinking they do this for a couple of reasons. For one, a dealer may normally sell numismatics and he may want to try to get rid of his unwanted silver bullion. Secondly, there is competition. If only one dealer charges spot price, then the others find out and they lower their price to match the lowest price. If they do not, buyers will all go to the lowest charger.

US Investors Fleeing European Banks

What the heck is going on in Europe? Six major central banks have cut their lending rate according to the Wall Street Journal. This is major new but hardly reported. Lowering the rate gives troubled European banks much greater access to cheap money. This is a way of bailing out European banks. See, with the European currency crisis, US investors such as mutual funds are fleeing European banks. Fitch ratings report money market funds fromt eh US have pulled out 42% of their funds from the European banking system.

The monye is leaving. What the European banks are worried about is a run on their banks or what liberals call a liquidity crises. Allowing European banks access to cheap money is a way for them to pay out their customers who want their money.

So what the Fed is doing by giving them cheap access to money is basically a form of a bail out. They give them money that they need to prevent their flawed fractional reserve banking system from crashing.

But guess where the Fed is getting their money? Probably through printed dollars. These policies simply devalue the dollar even worse than it already is. Look for interest rates and inflation to rise due to these Fed policies.

Sears, Other Businesses Threatning to Leave Illinois

Economist article.

Illinois governor Pat Quinn raised the corporate tax rate from 7.3 to 9.5%. Now businesses are threatening to leave. Another example of a liberal policy that is backfiring. The theory sounds good to liberals: "Tax the greedy corporations." However, the reality is when you do that corporations will flee to more tax friendly states.

Local states and the Federal government seems to forget this. They are doing the same thing to the US Dollar. They are making the dollar watered down and have less purchasing power. The result will be that people will flee from the dollar to gold or something else that has real value or at least maintain its value.