If silver ever goes up to $50 an ounce isn't it gonna be better just to have junk silver? Although I have bought silver ounces in the past I have finally realized that it may be better just to stock up on junk silver lots. Reason being, usually ASE's cost more money. The second reason is because if you have a bunch of silver that is in original gov't packaging are you really gonna get your money's worth when you sell it? Last question is where's the best place to buy junk silver? I don't see too many lots on ebay going for good prices at all, what about you? Anyone?
Personally, I find that investing in "junk silver" is the way to go. Now that's only my opinion, and I'm sure other would disagree. However, you're right in that ASE sells for a nice premium most places you look, but that's mostly for proofs and nicer condition coins. If you look at some of the larger dealers online, ie. APMEX, Provident, you can find ASE for $2.99ish over spot price and they're UNC coins. So it really depends on what YOU think is best. I have made some good deals for "junk silver" right here on CT in the For Sale section. I actually just bought 20 oz of "junk silver" right here and only paid $30 over spot for the whole lot. Which in my opinion is a nice deal. I also find that the local flea market is the way to go and I've found a dealer that I'm comfortable with and gives me good deals. But you would need to find a good dealer like that to make some small purchases from before they'll really be comfortable with you. But personally, I'd stay away from Ebay, I always feel like I never know what I'm going to get or if I'm going to get ripped off. And who knows if you're going to get your moneys worth to sell it, it all depends on the market price. I'm only 25 and have accumulated around 60 oz of silver, and I'm going to keep hoarding it until I feel like it's the right time to sell. Might be 20-30 years from now, only time will tell. Hopefully I've helped you out, and good luck in your silver collecting endeavors! -Cheeks
I think you will be able to recoup the premium when you sell bullion ASEs. They are highly recognizable and guaranteed for weight and purity. It does not hurt that they have a beautiful design as well. Choosing junk silver over one ounce silver bullion coins depends on your purpose. For the true silver bullion investor, junk silver may be the more effective way to go. For me, I buy if I like the design from anywhere around the world. I also try to buy as close to spot as possible. I was at a bullion dealer a while back. He had a trough full of junk silver. I looked through it for a while and many were very worn...some almost unrecognizable. I like bright white, shiny silver bullion so the choice is easy for me. TC
find a local coin dealer. mine sells it to me at spot. i dont think its going to 50 for a long time. imo
Both has its pros and cons. The premiums tend to go up in dollar amounts (not percentage wise) as the price goes up. I like bulliondirect.com For me, local dealers are horrible, not to mention dealing with sales tax. I wish I could get it for spot.
I would check out your local pawn shop. My guy buys junk silver (which by his definition also includes decent looking Frankies and Morgans) at 75% spot and sells it for spot or, in the case of the Morgans, $2.00 over spot. He makes a killing and and I'm a happy customer. :thumb:
Personally, I like having a mix. I like Eagles, Libertads, Philharmonics and the such, but I also like generic silver rounds, that I can usually buy for $1.00 over spot, which I have a buddy dealer that always does that for me. I know i'll always be able to get $1.00 over for generic stuff anywhere anytime. I also like holding the junk silver, but when I buy lots of it, I cherry pick the nicer AU, or semi key XF's and better and trade the other stuff away or sell it. Ofcourse thats on my silver stuff, I love gold too.
Yeah the coin shop around the corner from me has some good looking junk silver. Just cause they call it junk it doesn't have to look crappy. I'll be changing the bullion part of my collection for the purpose of quick liquidity and saving money. I just figured that I really don't have to have anything with gov't packaging anymore if it's part of my bullion pile. :thumb:
I absolutely agree about the Mint products and all the fancy packaging. ASE proofs are beautiful coins. However, the mark-up is so huge that silver spot would have to increase exponentially to recoup the cost. So, they are more a collectable than an investment for me. A coin dealer, pawn shop, etc. is not going to care about fancy packaging if you sell to them in the future. I look at all the world proof bullion products being issued now that run 5-10x spot and wonder if these will only be worth spot someday. TC
^ Well if you tried to resell normal proofs, you'd be losing money. They go for around $50-60 on ebay. So if you're buying at $60 from the mint, you're likely to take a 10-20% whack at the least upon resale. It's why you need to go for the lower mintage "collectible" if you're looking to pay a lot over spot. Otherwise, it just doesnt make sense. The downside to collectible bullion is that it can take longer for you to realize its full value because there's not as many people willing to pay that price for it. On the other hand, bullion SAEs, generic bullion etc, you can flip it all day at its going price. The collectible numismatic market does not respond in lockstep to the bullion market. Bullion prices may drop off a cliff, but a numismatic item that derives most of its value from rarity will not share the same drop. So makes sense to have both.
ASEs cost more, but you can normally sell them for something above spot price. There is no escaping the bid/ask spread, so it is a matter of choice. I like ASEs because someday the series will be discontinued, and it seems likely to me that every ASE will begin to accrue at least some numismatic value because the supply will be fixed but the demand will continue. This is sort of an extra kicker to owning ASEs for the long haul.
Depends upon the circumstance. There is something called "refinery risk." If everyone is looking to sell their silver at the same time, and it is not in a refined format, the dealer takes the risk of having to wait several weeks to get the silver refined while the price can fluctuate greatly. The dealer incurs more risk, so he pays you less for your coins, silverware, etc. to offset that risk. Whereas, something like silver bars are already refined and can be bought and sold immediately without the "refinery risk."
These days bags of old silver (non-numismatic) coins are considered monetary assets just like bars of silver. There is no longer any advantage to having them melted down. By bag, I mean a bank bag containing coins with $1000 face value.
The comment about "refinery risk" is from an interview of metals and coin dealer Robert Mish by Chris Martenson. Big investors only buy COMEX-approved bars. There is a list of the COMEX-approved brands on the COMEX Web site. There's also a thread about melting silver coins here on CoinTalk. These and other sources changed my mind about silver investing. "Junk" for apocalyptic economic events and "refined" silver (mainly COMEX-approved bars) for everything else. I've gone with a 20/80 ratio.
I agree with TC and Cloud that you USUALLY recoup this premium, but at a point OP you are right that you wouldn't. Two things going on with comparing your prices versus market. One is the market price, but the second is called basis. Basis is the difference between your buy/sell price and the market. This is what makes it hard to play the physical market game, since dealers change your basis to their advantage usually. When the market goes low in dealers eyes, they charge you a higher premium, and pay you less of a premium/greater discount when its high in their eyes. This makes any playing of the physical market difficult. If you believed the market was going up, I think the cheapest form of silver is the best to buy. Even assuming you keep ASE premiums, the premium you pay today cannot be used to buy more silver. So if silver goes from $25 to 50, you may keep a $3 premium, but that same $3 in silver you COULD have bought now is worth $6. That is the danger of paying premiums if you believe PM is going up. If its going up you wish to hold as many ounces as possible. Now, going down, premiums increase, so holding an ASE could help minimize your losses. If you want double protection, I kind of like items like junk barber coinage. You can buy it for melt nowadays, but if silver went down these would quickly be premium items again. Just a thought.
I'm at about the same ratio as you. I became bored with junk silver for awhile. I'm holding about $60 face in junk and the rest is in recognizable/marked bullion. did pick up some halves the other day but only because I bought them for $.37 each under melt. What doesn't easily fit in either category are the modern commems. They are 90% but don't fit in with the junk silver pile.
Premium recoup Premiums have to be evaluated during times of volotility.... Silver goes WAY up and all the sudden a dealer doesn't want to pay you more for your ASE. Now your wishing more of you money was in silver and less tied up in premiums. I have found both online and with local shopping, I pay more over spot (of course) for an ASE and get less of that premium back at resale. So if I were to buy $1000 worth of private mint rounds or junk 90%, I'd be getting MORE actual silver in my safe. I'm a 90% and private mint advocate. The price over spot is desirable for both and with 90%...the fractional aspect is desirable.
In the future when silver is no longer readily available for industrial demand the 999 fine bullion should command a premium over junk silver, in addition to the difference between melt value, because the companies that need silver for their bottom line will not want to spend the extra time, money, and energy it takes to refine 90% silver into silver that is pure enough for industrial use. I like junk silver plenty, picked up 2 Morgans yesterday, but if it's already pure silver that saves on cost and that savings will be passed on at some point.
Around here, you don't get very good prices selling bullion coins (like ASE's) to a dealer. For some strange reason, our local dealer sells ASE's for $4.50 over spot, but there are people on craigslist willing to pay $6 over spot for them. Why they don't just go to the dealer is beyond me. (Maybe they're afraid of a paper trail? I dunno...) If I ever decide to sell some of my bullion coins, I'm certainly not taking them to my LCS. His buy policy for ASE's is to buy them at spot. No thanks. I'll list them on craigslist instead...
