Why you should never, ever buy silver coins from the Franklin Mint

I was content to endure the Franklin Mint’s ads without considering the impact they have on consumers – until now…

Consider this my public service announcement for the week. You can boil it down to one commandment: “Don’t buy silver coins from the Franklin Mint.” Or – to make it simpler – “Don’t buy anything from the Franklin Mint.”

Fortunately, I don’t speak from experience, but I have seen the Mint’s ads on television and in magazines. They’re memorable in part because the company makes such a desperate attempt to look and sound like they represent the U.S. government without actually having a thing to do with the government. It’s almost like playing “Where’s Waldo?” Instead of searching for Waldo, though, you’re frantically searching for their disclaimer.

Still, I was content to endure their ads without considering the impact they might have on unwitting consumers until I read a recent Q&A in the Chicago Sun-Times titled “‘You’ve been snookered’ on silver coins purchase.”

In the article, a man who identifies himself as “DA in Troy, Mich.,” writes the paper in desperate need of help. He spent the past 25 years gobbling up “$47,000 in collectable silver coins and beautiful non silver coins from the Franklin Mint for my retirement.”

He did it because he thought “the scarcity and limited edition minting of these coins would drive up their value over the years and because I believed the silver content in the silver coins would also increase in value.” Now, he’s on the brink of retirement, and when he looked into selling the coins to a dealer, got offered $2,500 for the lot.

“DA in Troy” wouldn’t have even gotten offered that much if not for the fact that some of the coins he bought actually had silver in them.

“I don’t know of a single item produced by the Franklin Mint that can be sold today for its original cost,” financial columnist Malcolm Berko wrote in response to DA’s questions. “You overpaid for those coins by orders of magnitude. And you probably paid five or six times the value of the silver content for the silver coins you purchased. So while sliver has tripled in price since 1984, the silver value of those coins is still way less than your cost.”

As for the non-silver coins, Mr. Berko recommends that DA try selling them on eBay where he might get $100. It’s a sad story that reinforces one of our constant themes on this site: always do your own due diligence before making any investment decision. Reading a single blog post (even one of ours) and making a snap purchase of stocks or coins is a fast way to lose your hard-earned cash.

If you’re truly interested in investing in silver coins as a safe haven against an economic meltdown, I’d recommend Silver American Eagles (as sold by the U.S. Mint) or junk silver (pre-1965 U.S. quarters that contain 95 percent silver). Because both are quickly and easily verified as real silver, they’re easy to sell. You’ll pay a slight premium over “spot silver prices,” but at least you can rest assured you won’t end up with a drawer full of junk.

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