Not all investments need be in stocks and bonds and funds.  Indeed, most investors should own some precious metals like silver and gold as well.  That’s because they help protect against inflation and may also stabilize your portfolio by going up, when the stock market goes down.

And while there are many ways to invest in precious metals, here’s a simple little trick I do to painlessly invest in pure silver and gold.  And every time I do it, I feel like one of the alchemist of old in the Middle Ages.

You remember the alchemists, right?  They were the guys with the funny hats that were trying to turn base metals like lead into silver and gold.  They also tried to create an elixir for immortality (sometimes equated with the name philosopher’s stone).

We’ll pass on the immortality thing as that seems a bit ambitious for this article.  But turning base metals into silver and gold… now that’s a trick we can imitate.  So more on that in a minute.

ALCHEMY THE OLD WAY – HOW NOT TO DO IT

But first, back to our ancient alchemists.  They would labor away in their secret labs, distilling chemicals and melting and mixing cheap metals in their quest to turn them into gold.  And they might throw some dried lizards tail into the mix, or something like that.  And mutter some mumbo jumbo incantations, and wave a wand  – kind of a Harry Potter thing – and see what happened.

Many were also careful to document their process, or spells, in case the thing actually worked, so they could repeat it and become fabulously rich.  Pictured below is one such alchemists 15th century distillation diagram.  Sadly, it’s written in Greek, so most of us will have to carry on and find another way.

15th Century Alchemist’s Secret Distillation Notes
Image courtesy of www.wikipedia.com

Now some Alchemists actually claimed they had succeeded, although this claim is quite suspect.  That’s because transmutation of metals cannot be done with chemical processes, which is all that the alchemists had available.  To succeed, it requires physics and knowledge of the atomic theory to add or remove protons.  And with this knowledge, transmutation of lead into gold isn’t just theoretically possible – it was actually achieved in 1980.  But that modern experiment only yielded minute amounts of gold and was very expensive.

However, lack of modern science didn’t stop some unscrupulous alchemists from making their outrageous claim.  Because they saw an income opportunity, and may have run a scam that went something like this.

A shady alchemist might pronounce he had discovered how to transmute lead into gold, and arrange a demonstration for the King.  Arriving before the King and his court, he would drop a piece of lead into a bowl, heat it over a flame, and the lead would begin to melt.

Then he would wave his mystical rod through the flames, all the while uttering mysterious incantations.  Then, waving his mystical rod back inside the bowl, viola, a nugget of gold would magically appear to everyone’s amazement.  They would all examine the nugget, once it cooled off, of course, and sure enough, it was real gold.  And visions of great wealth would fill their heads.

Now if only they knew how to do the alchemists trick.

So our alchemist might then reluctantly offer to give up the secret to the King, for some rather large amount of money.  And the King would pay up, reasoning that he would soon be able to make a fabulous pile of gold.  And the Alchemist would promise to write down his secret incantations overnight, give them to the King the next day, and also show him how to use them.

Alas, on the following day, the alchemist would have mysteriously disappeared with the King’s money.

And disappeared for good reason, since it was all a scam.  And the scam went like this.  The day before, the Alchemist’s rod had been hollowed out, with the lump of gold hidden inside.  And the end of the rod had been sealed with beeswax to hide the gold nugget, to keep it from falling out.

The Alchemist’s incantations were all for show, of course.  It was the waving of the rod over the flame that melted the wax, releasing the gold nugget and making the whole thing look real.

Now Kings are not known for their sense of humor in situations like this.  Anticipating this, our alchemist had acquired a fast horse, and had ridden all through the night into a country far away.  And for those shortsighted alchemist without a fast horse, well, they had a quick and unpleasant end to their careers.

Okay, so much for the Alchemist and some of their dubious methods.  Clearly we won’t use those.

ALCHEMY THE NEW, SURE-FIRE WAY

But here’s my own modern alchemist trick to turn base metals into silver or gold.  And my process, which is pictured below, works every time.

Pictured above: US coins (base metal), 7 ounces of pure silver and 1/10 ounce of gold.

So this is what I do.  Each evening I take my pocket change and throw it into an old 11-ounce Folgers coffee can.  And after 4-5 months the can is full of change.

That’s my base metal, because our coins no longer contain silver like they did before 1965.  Our coins today are made out of mostly copper, with a little nickel.  So from a metal content standpoint, they are not worth much.

Then once my coffee can is full, I take it to my local grocery store and empty it into a coin counting machine.  Note that the can weighs about 9 pounds, so at roughly $2 a pound for copper, that would be around $18 worth of base metal.  The machine sorts and counts the coins in about a minute, and prints out a receipt for about $140.  That’s the face value of the coins.

Then I take the receipt to the grocery store clerk and they give me $140 in cash.  And at today’s prices, I know I can buy a one-ounce silver coin for about $18 (99.9% pure silver, one-ounce American Silver Eagle coin).  So I take that $140 cash to a nearby coin shop and buy seven US Silver Eagles with it – with change left over (7 x $18 = $126).

Or, you can transform your  base metal money into gold, although you’ll have to add another twenty dollars or so to do that.  But with about $160, you can buy a 1/10 ounce South African Gold Krugerrand coin that is 91.7% pure gold.
YOU CAN DO BETTER THAN ME

Now, you can do better than me with this technique, as I’m not particularly efficient with it.  That’s because the coin counting machine deducts 8% from the total as a charge for counting the coins.

So if you want to count the coins and roll them yourself, and trade them for cash at the bank, you can duck that charge and get more money to buy silver or gold.  Or maybe you can get the bank to count them for you and make a deposit into your account.

Just please don’t show up at your coin dealers with a can full of coins and expect them to count them for you.  Go get the cash first.

And that’s how I do my alchemists trick to transform base metals into pure silver or gold.  That’s some trick for a modern day alchemist, right?  I’ve done this often, and it works every time.  And it’s all perfectly legal, although it still kind of feels like I’m stealing something.

But the next time you come home from work or shopping, just throw your pocket change into an empty coffee can.  And that will start your silver or gold fund right then.  Then just keep adding your change to it.  Because eventually you’ll have some real silver or gold in your hands for your effort.

Also note you can use a coffee can from a different brand of coffee besides Folgers, and the technique should still work just fine – chuckle.

And no alchemist incantations or fast horse required.

To your health and prosperity – John

P.S. In the interest of full disclosure, I have no financial interest in the Orlando Coin Exchange,  Folgers coffee or coffee can manufacturing companies.  I simply mention them as a satisfied customer.

P.P.S. Look for my new book Silver Investing For Beginners, which is scheduled to be published this fall.  It will reveal how the price of silver could explode in the future, how silver at today’s low prices is such a great value, and many other ways to invest and profit from it.