The price of silver and ASEs.

I'm by no means any expert on bullion investing.

I know pretty much all of your run of the mill silver bars and rounds are usually worth about spot + 10%.

However ASEs are minted by the government and have a numismatic value.

With that said, if silver fell to $18 an oz, would ASEs have the same falling out, or is there a "base price" derived from the numismatic value?

 

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I think that depends on where you are buying, from the mint or in the after market.
The mint will adjust prices based on spot silver price not numismatic value,
where as in the after market the numismatic value takes hold. Just my opinion.

 

My dealer treats them like bullion and attaches a $3 premium. That was even on the new 2012s.

 

ASE prices rise and fall with the price of spot silver. Same for AGE prices.

 

I use ebay to price silver eagles versus spot. They are running about $8.34 over spot at the moment (spot at $28.66 and selling at about $37). It depends on the year of course. Thus, the ASE's are running about 30% above spot. My opinion is that they typically run at least 20% over spot.

 

With most years (dates) a drop like that (silver) would precipitate a similar drop in the price of ASE's. Their value is tied mostly to the price of silver. They are by no means, rare coins.

 

Many dealers who bought silver eagles when spot was 30 will increase the premiums when spot hits 18. Most in my neck of the woods do not want to lose money on anything.

I suppose that if the premiums attached make the inventory sit, they may want to cut the premiums closer to spot in order to move product and free up capital.

When buying though they will still try to buy for spot or under spot.

 

It is true that the price of ASEs move up and down with the spot price of silver. I have noticed that when spot increases, ASE prices increase right away and premiums are usually stable. When spot decreases however, ASE prices are slower to decrease and when silver spot falls substantially as we have seen in the past 6 months, the premiums tend to increase. Another phenomenon you see when silver spot decreases significantly is that dealer inventory seems to disappear and it is often difficult to find ASEs to buy at the lower price. Not sure how to factor numismatic premium into all this, but this series is very popular and when the ASE series ends, there will likely be an increase in numismatic value. TC

 

An amazing coincidence TC. My feeling is they hide 'em in the back room......

 

Thats what he does at my local coin store, when the price of silver gets to a certain price, all the ASE disappear. But when he does sell them they are $8.00 to $10.00 over spot. I don't buy them there.

 

It really depends on the state of the PM markets, for example back during Lehman crash a lot of coins were selling at spot. Post 2008 few times silver dipped at 28-30 levels, ASE where still selling at higher prices than they are now due to expectation that silver will go back up. But now i am seeing ASE sell for $37 indicating that buyers believe that silver won't come back upto $30 for the time being, if there is further fear that PM prices will come down premiums will go down even further or in other hand signs of QEIII and PMs prices going up will increase premium.

 

Two shops within 15 miles of me are currently selling ASE tubes for just over $2.80 premium and buy them at $1.00 over (per coin).

This confirms your ~10% premium, but certainly not for generic, that's bullion ASE. Generic rounds/bars are sold for ~4% premiums at these same establishments.

All of it follows the spot price so much so that they fix the price on your purchase by looking up the real time price when you state your intent to buy. Be sure to look around, especially in big towns where there are such market makers. These guys don't hide or run out of inventory during volatility either.

Odd thing is that one of these places has been selling junk 90% for -2% of spot lately. I've been helping them dispose of some of that since I noticed it.

 

Lots of the buzz with the Silver Eagle series is because of increased interest due to high PM prices, so if we saw a totol collapse of silver prices to below $10 per once i think many collectors would be put off by that and less people would collect them. I could see "Key" date coins such as the 2011 reverse proof loosing 50% or more of its value if silver drops below $10 because of reduced interest in the series.

 

I wish i could find a dealer that sold Eagles near spot. Around here you got to buy online and sell online to sell for better than "Cash 4 Gold" prices and buy for cheaper then 5 over spot.

 

From what I've inferred from CT board posts in general, your situation seems more common than not. Loads of folks talk about the local coin shops and describe higher than usual premiums along with lots of price sensitivity. That, or they discuss remote options like AP's, refiners and web venues. When involved, shipping/insurance is often a deal killer. My LCS doesn't stock bullion since he doesn't want the pricing concern; he runs what comes in down to the nearby market maker almost immediately.

It would be interesting to figure out how prevalent the physical market makers are and how influential factors like population density/taxes may be. My city is Saint Louis and Missouri does not tax these purchases/sales.

 

When I got my first ASE in 1986, I paid $7 for it which represented about a $1.25 premium over spot. Today the same dealer charges about a $5.00 premium. I wonder if some of that premium is to cover the cost of the silver spot price that he paid earlier

 

In theory big PM dealers are not in the market of investing in PMs for their profit but in making their money on the premiums off sales. To prevent losses from the drop of the price of the PM itself they hedge themselves over time by selling at a loss when the market drops and selling for a gain when the market rises and over time they break even on the PM itself but make their money on the premium.

 

I didn't buy ASE's in 1986 but it appears that they ran about 22% over spot. They are running about 20-30% over spot today. IMO, it seems like 25% over spot might be a good average on most years but again it depends on the year and somewhat on the condition.

 

Mintproducts.com runs theirs at about 20% over spot but then you have to figure in the shipping costs, and depending on how many you order, the percentages get a bit skewed.......

 

$4 to $5 over spot is typical at many different coin shops in my area. Usually I can't find them for less than $4.50 over unless they are totally circulated they're $2 over like generic bars. When silver first dropped to $30 back in September all I could find was in the junk bin. They have no need to pull their inventory at my LCS because it's not on display in the first place unless it's a numsmatic. Basically I just tell them what I'm looking for and they go into the safe. They did have other eagles on the desk behind the counter, but they weren't for sale - personal stack. I can respect that.