silver eagleCredit: Morgue FileThe definition of “savings bond” is “a bond issued by the government and sold to the general public.”[2]  The definition of “precious metals” is “gold, silver, and platinum."[1]  My personal experience with savings bonds has been terrible.  Over my lifetime I have received several of them.  Back in the day, that was the thing to do for other family members you cared about.  It seemed as though everyone was buying these types of bonds.  The idea behind is was that they could be bought for half of the price and could be redeemed for double what it was paid worth.  The only problem is, you have to wait decades to get the value doubled.  I decided to do some math on my bond and find out what it was worth.

In 1997 I had received a $50 savings bond as a gift from one of my Uncles.  It was a generous gift as he thought it would incur interest over time and by the time I was in my adult hood I could cash it out for double the value.  

He spent $25 on this piece of paper.  It is a 30 year bond so it will take 30 years to finally mature.  After looking up the serial number I have found that I have earned $16.82 cents on it, which brings it to the value of $41.82.  It is going to take another 14 years to earn what is left of maturity; $8.18.  This is absolutely a terrible investment.  With our economy, who knows if I will even be able to cash it out in another 14 years.  The interest rate is at an ultimate low of 0.63%

In 1997 the price for silver was at an average of $5 an ounce.  He could have bought 5 silver eagles with the $25 he had spent.  As of today, April 15th, 2013 silver is at $25.50 an ounce.  This is extremely low for silver to be at, but even so those coins be worth $125.  If he had bought silver eagles and I were to have sold them a few months ago when silver was almost at $50 an ounce, those coins would be worth $250.  Not only is silver a good investment because of the precious metal content they contain, but they are good for collectors as well.  Although the spot price of silver may be at $23.50 currently, a graded silver eagle in an MS-70 may be worth up to $50.  They may be worth even more depending on if it is a rare year or a rare mint mark.  If the coin is beat up and is in rough shape, the coin is likely worth the spot price of silver.

Precious metals will always be worth something because of their content.  Savings bonds just a piece of paper that you will have to wait years and years for it to mature.  Also, with the way the economy is, if things start going downhill they do not have to redeem them.  It is a much wiser idea to invest in precious metals instead of savings bonds.

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