When my wife and I were switching gears in life, we sold our house to get out of debt, be able to move, and supply money for our new future. Selling the house went great, and we wound up with a good amount of cash on hand once we were done with the process. It’s what I did with some of the money next that’s unfortunate.
Ever since my wife finally encouraged me long enough for me to listen to buckle down and start saving, we’ve always had some extra money on hand. I don’t just mean a few extra thousand in the bank, but literally “on hand”. A stack of Federal Reserve notes tucked away somewhere.
We also began to diversify, investing in precious metals. Silver was our first choice for multiple reasons. Unlike gold, which is mostly used for hoarding or jewelry, silver is also important in manufacturing electronics and is used in the medical field. Combining that aspect with the lower price per troy ounce for silver vs. gold lead us to choose silver. The lower price doesn’t just make silver more affordable for the average person, but it made more sense for us when we considered the possibility of one day needing to barter or trade with it. Having a small piece of precious metal worth $20 (silver) seemed easier to barter with than a small piece of precious metal worth $1300 (gold). Silver was just more easily divisible.
Additionally, we liked the idea of having something recognizable on hand in addition to cash. If something happened economically, and the dollar tanked, silver would be a great asset to have on hand. Also, it provided a “degree of separation.” What I mean is that having a large amount of cash on hand can be tempting to spend, thus eliminating your savings. There is nothing preventing the usability of it. With silver though, I couldn’t just walk into a gas station or grocery store and purchase what I needed. I would first have to conscientiously go through a step to “convert” it, providing a degree of separation.
Over the years we have purchased silver a couple different ways. Buying it from a local dealer is convenient and allows the purchaser to immediately have the silver in hand, but buying from an online dealer is cheaper. When dealing with an online dealer though, the transaction is not immediate, as it takes time for both the payment to occur and the shipment to arrive. Up until this last attempt at purchasing silver, we never had any issues with either method.
It was not the investment in silver itself that was the issue, but what happened to the company that I was dealing with. At the time, the best deal online was being offered by Northwest Territorial Mint, a company that I had dealt with before and purchased the 1 oz. Stagecoach Silver bars from. The front of these bars is attractive with the “For When You Have To Get Out Of Dodge” slogan and the back is marked in a way that it can easily be divided into ¼ oz. pieces.
Despite the fact that Northwest Territorial Mint was well known to have a long lead time (claiming that they first had to use your money to purchase raw silver and then process and mint it), they definitely had the cheapest price at the time, and this was going to be my largest investment so far, so the cheaper, the better. Plus, we had some months before we were planning of needing to use any of that money, so the long lead time wasn’t an issue. In the end, we attempted to purchase 384 troy ounces of silver for $15.24 each, for a grand total of $5852.16.
With the current price of silver being $20.16 (@9:01am 7-27-16 according to jmbullion.com) per ounce, our investment in 384 oz. would currently be worth $7741.44. That mean we would have made $1889.28 more than if we would have just held onto that amount in cash or left it in a bank account.
Unfortunately, between when Northwest Territorial Mint cashed our check and deposited it into their bank account and when they were supposedly going to ship our silver, they filed for Chapter 11 bankruptcy, so as of right now, we got nothing.
Now there is an entire process with being a creditor in a Chapter 11 bankruptcy case, and we may be able to reclaim some of our investment. Since they cashed our check and gave us nothing in return, we should be able to qualify as a priority claim which means that we could recover about $2850, but even that might be optimistic. (So in reality an investment that “should” have gained us almost $2000 has lost us almost $6000, but perhaps it will only wind up costing us about $3000.)
We will see what happens with this issue, but I figured that perhaps you could learn from my mistake. There are great online bullion companies to make purchases from, but there is still something to be said for making purchases in person. Even if a local dealer would have charged me $17.00 instead of $15.24, I would have gotten and still had the silver, and it still would have increased in value by almost $700.
Also, for more on what happened to Northwest Territorial Mint, you can check out their official website on the matter @ http://existingbullionorders.com/
Basically, those in charge may have been stealing both cash and the stored bullion from the company, eventually having only about $1M out of the $8M in bullion that they were supposed to be storing still on hand, a basically empty bank account, and now owing the creditors almost $56M total, including our $5852.16. :(
At home, I’ve taken full responsibility for this disaster, since it was my idea, and, thankfully, my wife has fully forgiven me. A financial disaster to be sure, especially at a time when we are in the process of buying land and attempting to build a house.
On the bright side, it looks like STEEMIT could potentially be used to fill in some of my financial gap, but only time will tell.