Why are cull Morgan and Peace Dollars so expensive?

Discussion in 'Bullion Investing' started by Miko W, Dec 23, 2014.

  1. Del Pinto

    Del Pinto Active Member

    What market, the bullion market? Can you prove that?

    Re: culls. And maybe not be "fake" but also temporary? That's the caution. The market for whatever isn't always rational but proves so over time. If you have information to support high coin premiums for culls otherwise, please share. What's the average premium 3-, 5- 10- years back? And what's a reasonable forecast based on demographics, 5- 10-years forward?

    Unless a bullionist has long term data or some other coherent rationale to support the idea the current premium is "reasonable," then obviously overpaying for "numismatic-bullion" (or whatever commodity) is indeed "stupid." Buy low, sell high, right? We shouldn't defend (minimize, rationalize, etc.) others' bad investment choices either, however small.

    Culls may be attracting novice or quasi-bullionist attention (and some Doomer hoarding?) In that case, Chris' observation it's 'dumb money' is spot-on. This is a poor way to invest in Silver (or anything) he's right on that.

    However, I don't necessarily assume these impecunious cull buyers are primarily "bullionists", so it's really an apples-to-organges comparison. Suppose marginal demand is primarily a broad and deep segment of the coin collecting market (something like the State Quarter collectors, maturing) then something else is happening. Imagine people 35 or 40 years old who would have been spending more on "better" coins back in the 1990s are now substituting (or 'slumming') with what they can afford: two birds with one stone? Whether it's ammo or US Silver, hoarders overpay.

    This is one possiblity, to explain high US Silver bullion premiums now. Here to stay? I'm not so sure.
     
    Last edited: Dec 30, 2014
    SLACKACTION likes this.
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  3. Del Pinto

    Del Pinto Active Member

    "You can pretty much get a dollar face value of junk silver for $15 any time ($13 recently), without even negotiating."

    On 12/29/14 Silver spot was $15.80 and the $1,000. Face Value Wholesale or bulk rate (715 Ozt) was USD 12.458 or $ 17.42 per ounce of fine Silver. For bagged US Silver, the wholesale commodity cash price premium was ~10.3% over Spot.
    https://www.quandl.com/WSJ/AG_CNF-Silver-Coins-wholesale
     
  4. Miko W

    Miko W Active Member

    Interesting chart. All I know is that right now I'm buying four 90% quarters for $15.82, and that's not the cheapest it's been over the past couple of months:
    http://www.ebay.com/itm/300927883374

    Note that shipping is free after the first order of $1.00 face value.

    So why pay (even from this seller) $22 for a hacked up peace dollar? Best I've seen lately is $21.00 each for five coins at a crack, but I don't spend much time on them. The people who want them can have them.
     
  5. FryDaddyJr

    FryDaddyJr Junior Member

    I wouldn't buy culls. I'd buy almost good or better.
     
  6. Del Pinto

    Del Pinto Active Member

    Looking at the very cheapest Morgans on eBay (12/29/14) nothing sold for less than $21. and the average for the 25 lowest sale prices (< $24.25) was $ 23.05. At the lowest, dealers net just $20. on eBay. Assuming culls 0.7667 to 0.7734 ozt Ag, that's a retail auction bullion rate for Morgans of $29.68 - 29.80/ozt. These very cheapest retail auctions were ~70% over the Wholesale Face: so the effective numismatic premium for "junk" Morgans as bullion (per ozt.) is at least 88% over Spot.

    If most cull Morgan eBay sales averaged over $26, the Ozt. premium is closer to 92% - ouch! Better to scout& low bid for US Silver coin with grade, yes. Those Morgans sold for 55% over Spot were cheap, at year end.

    If someone was still determined to now buy cull Morgans as bullion at these eBay rates - the rationale still eludes me why - he'd presumably look for high def, cleaned coins nearer full weight (thus, with a lower premium.) This is certainly not a cost effective way to accumulate bullion, however: it's a stunningly poor value, as others call "stupid," but the retail market as such today.

    No matter: the actual buyers (novice collectors/dumb money) of these overpriced coins are probably happy with their cleaned/junk Silver. It's better than scratch tickets, anyway.
     
    Last edited: Dec 31, 2014
  7. Miko W

    Miko W Active Member

    Well, that's the thing about them... since you're getting whacked with such a premium right off the bat, they only make any sense if you go ahead and spend the money for a nice coin with some collectible value. I do not do much of that, as I am satisfied to have a few exceptional graded specimens of any given design... usually the first year of issue and a relatively affordable key date or two.

    One of the bigger companies sells what they call Worse Than Cull, and even those are not priced close enough to spot, particularly when they have content missing due to extreme wear, holes, etc.
     
  8. CoachQ

    CoachQ New Member

    Thank you for this outstanding reply. This is just what I was thinking...& you did it with a little class and in a non-condescending manner. I'll be the one in saying that some of these posts are from people who really think they know everything that one should know about why someone collects coins. Everybody does it for different reasons & if they're willing to pay more, they'll pay more!





     
  9. BooksB4Coins

    BooksB4Coins Newbieus Sempiterna

    You do realize that you bumped a nearly three year old necrothread for a partial purpose of castigating others you likely do not know, and in some cases may not have participated here in some time, right?

    What a fine, fine way to introduce yourself.... unfortunately, you'll also get a long just fine.
     
  10. rte

    rte Well-Known Member

    Here is a BUMP for CHRIS. :p
    And Welcome new collector.
    Example #101

    I bought a 100 plus year old silver dollar to put into a kids New Wallet, for his birthday present.
    It's his first wallet and the dollar is 100 years older than he is.
    Yes I paid a bit more then spot silver price for this one.
    :D
     
  11. afantiques

    afantiques Well-Known Member

    Quoting a quote makes it look as if I was saying buyers were stupid. I'd long forgotten the thread but looking back I see I was refuting some other poster's opinion with good reasons why the silver dollar in any condition has a larger premium over spot that you might expect.
    In general I restrict simple comments of stupidity to flat earthers, chemtrail fans, 9/11 truthers and others so far out of the playing field they occupy their own special planets.
     
    benhur767 likes this.
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