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Circling around silver

Physical silver demand might be scraping along lows in recent weeks, and there is no telling how long it might stay depressed.

However in the past month I have had a couple of casual inquiries about the metal in the course of my daily life outside the usual communications that I engage in for work purposes.

In the most recent one, the conversation started out with the observation-question that silver is currently low, isn’t it?

I acknowledged that it was down by two-thirds since the $48 high in 2011.

I was asked if this might this be a good time to buy.

I mentioned that after the $50 high in 1980, the metal had dropped all the way into the $3s before it began to recover, but certainly buying at $16 an ounce is better than at $48.

Then I was asked where someone might go to buy silver if they were interested in getting some.

I asked what quantities might be involved.

After all, if all someone wants is an example of a silver Eagle, they could just pop into a local coin shop.

Larger quantities at the lowest possible prices would take them in another direction.

So I mentioned several options.

It would seem that this potential buyer was thinking of putting away a little at a time over many years.

That approach has the advantage of engaging in dollar cost averaging.

It is less about being right about price direction at any one purchase, and more about being steady.

This approach works for stocks and it works for precious metals. It is not an all or nothing bet, which is never wise no matter how certain you might feel that the metal is going to rise in value.

Another conversation I had a few weeks before that one was at a funeral lunch of all places.

Again, there was an inquiry about where someone might go to buy the precious metal.

I certainly was grateful to engage in a conversation that was not focused on the funeral we had just been through.

Neither conversation is all that noteworthy, but put the two together and I can observe that it has been a very long time since I have been sought out this way.

The last time conversations like this bunched together was when gold was approaching $1,000 an ounce and I was asked about how to buy that precious metal.

Is this a sign silver might be gaining the attention of new buyers?

It could be.

This might be part of a base building process that will see the metal rise from where it presently is.

Buzz blogger Dave Harper is winner of the 2014 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper “Numismatic News.”

 

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