24 Feb 2011 by Jim Fickett.
For many years I have owned some old silver coins that were, for me, more in the category of keepsakes than investment. But with the silver price where it is, the value of these coins rose to where the investment aspect could no longer be ignored, so I sold (about 0.5% of the portfolio).
The nominal gain was 316%. That sounds much more impressive than it really is. If the purchase price is converted from the dollars of 1985, when the coins were bought, to today's dollars, and expected taxes on the nominal gain subtracted out, the real gain was about 73%. That works out to about a 2%/year real return. Quite modest. But then again, any positive real return is actually harder to achieve than most people think, so it is an OK result.
I don't want to get into the debate about whether precious metals preserve value or not. But I will say that with precious metals, as with any other volatile market, it matters very much when you get in and when you get out. Yes, it is a nice feeling, when you own metals or other commodities, that you have title to something real. But if you want to make money, you still have to take care to buy low and sell high.
Silver is high. Very high. I sold.