Porter Stansberry's $3.00 silver secret

Investment pitchman Porter Stansberry has another cryptic ad up, where he promises to give subscribers an investment secret.

The ad is here, and is worth watching. He's right about the investment merits of silver.

But what's the secret, U.S. government-created way to buy silver for as little as $3? That's easy. He's talking about pre-1965 U.S. dimes, quarters, halves, and silver dollars. I've written about this before. U.S. coins used to contain precious metal. They were actually worth something. In the 1960's, as the U.S. began devaluing the currency shortly before Nixon closed the gold window, the government wanted to be able to create money out of thin air without having to put anything of value behind it. So they replaced the valuable silver with a near-worthless copper-nickel alloy.

Stansberry is right. Old coins, commonly referred to as "junk silver," are an excellent way to invest in easily recognizable silver at a very low premium to the spot price. The $3 he refers to is the approximate value of the smallest denomination, a dime. That's an indication of how fast the government is devaluing the dollar. In 37 years, the last real silver dime has gone up 30-fold. In other words, the dollar is now worth just 3% of what it was just 37 years ago -- within the lifespan of many people reading this blog! Do you want to hold Bernanke Bucks for the next 37 years?

The math works like this. There are 0.71 Troy ounces of silver per dollar of old silver coins, whether that be 10 dimes, 4 quarters, 2 halves, or a silver dollar. The weights were designed in precise proportion back when coins were actually worth something, and the size of the coins today is a legacy of that era. The spot price of silver is now $40 (see exact spot prices here). So 0.71 * 40 = $28.40 per dollar of old coins. You will probably have to pay a slight premium to that value, but the premium is usually significantly less than you'd pay for newly minted U.S. Silver Eagles, Canadian Maple Leafs, or other international 1-ounce coins.

I started my silver position as an accidental investor, taking junk silver to round up my gold purchases over the California sales tax threshold. Boy, am I glad I did! Since then, I've bought silver many times on its own, and junk silver is always a good, low-premium way to go. I've bought on eBay (you have to calculate the melt value so you know what premium you're paying), but for newbies I'd recommend a reputable coin shop like Del Mar's Liberty Coin. If you're not in the San Diego area, they'll ship to you.


Independent Accountant said...

Way to go! I've told my clients to buy pre-1964 silver coins and sit on them for decades!


Unknown said...

I never made a dime off Porter's rambling sales pitch expose'hype. The problem with coins is crack heads and relatives rob them. Porter's "secret" is selling hot air which is actually exhaled CO2 sequestered in print form! It ain't easy being BUSKUS!

Anonymous said...

Silver is $15 today, some five years after you were buying at $40. What's your take on this strategy now? Not trying to be a wise guy, just asking if your strategy is the same.

W.C. Varones said...

I bought a handful of Rand Paul silver dollars last year. Rand Paul played out like silver prices this year.

I've never sold a single gold or silver coin, though I've gotten rid of some of the ETFs I bought 8-10 years ago.

Higher prices for precious metals could take years or decades to play out, but I'm patient.

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