Foreign Silver Under Spot

Discussion in 'World Coins' started by Crate Digga, Nov 24, 2020.

  1. Crate Digga

    Crate Digga Member

    Not too long ago world silver coins would commonly be found under spot. Now at spot to +10% premium seems normal for common pieces (Canada .800 and Mexico .720 for example). My dealer has .900 france 1960s hercules restrikes and canada half dollars for 15% under spot.

    Should I look at his inventory as a chance to stock up on every $20/oz silver semi-numismatic coin I can get as a cheap way to stack? Or is it so hard when it comes time to sell I will regret having silver that has few buyers in foreign market. Or will there be new buyers who are turned off by high premiums (if there was a run to $30oz, 15% premiums wouldn't be unheard of) willing to buy at spot.


    I have another option like cull seated liberty or bust half dollar, or chopmarked cleaned cap 8reales. I enjoy variety of coins and like stacking affordable "uncommon" types.
     
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  3. Kentucky

    Kentucky Supporter! Supporter

    I wonder this too
     
  4. Robidoux Pass

    Robidoux Pass Well-Known Member

    I also will be very interested in the response to this question.
     
  5. Crate Digga

    Crate Digga Member

    I am focusing on Cuba and Panama "junk" which trades at roughly $25-$30 per peso/balboa. I love the designs and can safely keep stacking through dealers foreign inventory that doesn't keep with price flucations.

    Hell, several crypto currencies just had a +50% month, why is silver soon finding support at $35 so outlandish?

    I believe once silver sees suistained gains, buyers will seek any alternative to high premiums. If you asked me on 2020 new years day, if I thought selling war nickels in 2020 at over$1/ea was a guarenteed, I would not have put money on it.

    Price for Cull morgan dollars rose from $14-16 when spot was $16-18, to $25-$27 when spot is $23-$24.

    Approaching $30 I can buy interesting silver dollar sized world silver pieces (esp ones that state weight & purity).

    If Silver did a mad run to $50, what would happen to all the NGC ~$50 MS62 Morgan's? Would they double in price? Or would their margin compared to culls shrink?


    I know how "stuck" I felt last time I stacked canadian halves. But that was before covid. Even with the future of coin shows in flux and retail closing, will world silver be the last frontier of no premium silver? I double checked my math and he's over 20% below spot on 60s canada 50c
     
    Last edited: Nov 24, 2020
  6. Histman

    Histman Too Many Coins, Not Enough Time!

    I will chime in with my two cents. I typically will buy foreign silver (any denomination, condition, or ASW) at spot or below. I am happy to do so. However, since this current run of prices, I have stopped buying for many of the concerns addressed by the OP. I am in no hurry to sell off what I have (about 1,000 ounces) and will continue to buy once it returns below $18.00. I will probably leave it to somebody when I kick-off, but since I'm just stacking it, I can't justify buying it at spot above $18.00. Too costly in my book.
     
  7. Crate Digga

    Crate Digga Member

    Thanks for your feedback. The ASW price of world silver reminds me of a barometer for true bottom dollar per oz. I'm concerned about a 20% drop, thinking buying 20% under would keep my investment safe, but instead I find a buyers market flush with desirable product near spot, and world silver trading +20% under spot. Is worldsilver premiums plummeting a reality? Or has the market dictated the bottom with eBay selling 10% +/-

    I should buy a kilo and stop obsessing. If spot doubles, it's hard to imagine a kilo would be worth more than 103x .3ASW canada 50c coins. Today's cost would be $800 vs $565 for those items, so the kilo seems like the poor choice. Historically 10oz and kilos have had small premiums but with 10&5% respectively it seems like that's a thing of the past.
     
  8. Hiddendragon

    Hiddendragon World coin collector

    Here's one way you can actually make money if you have the patience to do it. If your dealer is selling all his foreign for a certain price based on silver content, buy the smallest silver coins you can with the most numismatic value. Recently I was at my local coin shop buying older British 3 and 6 pences and some shillings, along with Australian and South African smaller coins. Many of those dates can resell on eBay for well over the silver value. The bigger coins I bought like Canadian silver dollars just don't sell for enough to make up for the fees you pay to resell them.

    For example, let's say I got some early 1900s British threepences for $2 each, and I sold them on eBay for $5-$10. That's a pretty good profit if you get enough of them. But it doesn't pay on the bigger coins.
     
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  9. Kentucky

    Kentucky Supporter! Supporter

    I've noticed recently that the Franklin Mint coins made for some island countries will sell for about the melt price. Picked up quite a few of them.
     
  10. Crate Digga

    Crate Digga Member

    Franklin Mint coins are great example. They were so hard to move in the past at spot, now sell steadily at spot, with room to grow to small premiums. They have attractive designs and more character than most .999 modern round.
     
  11. Kentucky

    Kentucky Supporter! Supporter

    Would there be any difference between Franklin Mint "coins" vs Franklin Mint "medals" with similar weights and composition?
     
  12. scottishmoney

    scottishmoney Я люблю черных кошек

    Anything under .900 fine is a PITA, particularly the .800 Canadian.
     
  13. cladking

    cladking Coin Collector

    Over the years the discounts and premiums fluctuate. Generally I like to buy things with the lowest net cost (largest discounts) and later trade it for things that used to have the largest premiums.

    I avoid holding war nickels, anything under 50%, Mexico, Canada except BU/PF, and very common good silver in very low condition. I've done OK with most of these eventually but they tend to stay discounted.

    I think Mexico will be fine in the long run but it's been cheap for many years.

    Anytime something gets a nice premium I trade it for low premiums. You can do pretty well stacking things like low grade barbers at a discount. This is mostly a young man's game though and for those with patience. You'll miss great opportunities to buy so don't miss the chances to sell. I never dreamed that current solver eagles for $5 were a good deal back in the mid-'90's. Now you can get $50 or $60 each for some of these.
     
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  14. cladking

    cladking Coin Collector

    Right now the best deals are foreign coins (especially 720 to 925) and low mintage art bars from the '70's. You can pick up FM anything for way less than it should be worth.

    A lot of the best deals might be dependent on melting in the future and it might never happen. Imagine what things like the FM train set of bars would be worth if there were more demand than supply! This could happen even without melting but the only thing stopping most of this material from far higher prices is the huge overhang of supply. Things like FM's beautiful locomotive ingots had a mintage of only 3,763 and probably fewer than 3000 sets survive. The demand is probably limited to a several hundred to couple thousand world wide if these were well known. I believe bidding would be pretty spirited if there weren't stacks of this sort of thing sitting at every coin shop and every smelting furnace.

    There is lots of oddball stuff out there as well. Things like baggies full of Honduran Lempiras from the 1930's simply can not be common. The combination of time, low mintage, melting, and wide spread dispersal should make such finds almost impossible. Remember most of the foreign silver being bought by weight by wholesalers for the last 70 years has been melted and especially in 1979 and 2008 to date. Coins that are typically encountered in worn condition are not being protected by collectors so low mintages can mean low survival rates.

    Holding silver in such form when purchased at a discount probably entails little risk in the long term other than the risk of silver dropping. Of course there are great opportunities to trade when silver drops as well. If you save the right stuff it maintains its collector value and you can trade it for far more silver than it contains. Right now with a little finagling and lots of work you could probably set aside large numbers of '43-D war nickels for little over $1 each. But before this run up they were worth $1.25 each so if the price drops to $10 you might be able to trade 5 or 6 of them for an ounce of silver. Just be sure what you trade them for has some sort of potential. War nickels by the way are an interesting speculation. If you have access to a nice old hoard you might want to consider sorting out high grades and the five better dates to save and dump the rest. So many of these have been melted that wholesalers are paying a large premium for coins like the '44-S in Good or better condition. These are all far lower grades than you might think and many of them won't make G.

    It can be hard to actually trade but I've done a lot of it. I prefer to wait until I see prices declining and am confident it will continue for a week or two. I sell the stuff with the increasing premium and then buy back better silver a week or two later. This will usually wipe out the buying and selling costs or at least help defray them.

    Good luck.

    I'm a big fan of silver and years of disappointment has had little effect on that. I believe silver is the very best bet on the genius and ingenuity of man. Gold is insurance and a little should be set aside but silver is a "sure" bet.
     
    Last edited: Nov 26, 2020
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  15. Mr.Q

    Mr.Q Well-Known Member

    Lesson learned for today thanks everyone. Lot of valuable information!
     
  16. The Eidolon

    The Eidolon Well-Known Member

    My problem with holding junk silver, is that the longer one holds it, the worse an
    investment it tends to be. For example, I bought some 90% US coins at 3.5x face
    around 1995. Seemed like an attractive price at that time.
    Now in 2020 at about 18x face that would be a 5:1 gain.

    If I had put that money in an S&P 500 index fund and reinvested the dividends,
    I would have had about a 5.7x gain over that same time period. Even buying
    low and selling high for silver, it's very hard to keep up with other investment
    categories. And in the US coins are taxed less favorably than stocks.

    Seems like the only way to consistently make money on bulk silver would be to buy
    something which you know you could turn around and resell quickly for a profit.
    Longer term the cost of capital eats up all the potential gains.
     
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