Why is it?

Discussion in 'Bullion Investing' started by manny9655, Nov 24, 2020.

  1. manny9655

    manny9655 Well-Known Member

    Why is it that I can buy a 1 oz. silver bullion coin for about the same price as $1.00 face value in junk silver, when there is more silver in the bullion coin? Why are the premiums so high on junk silver lately????
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  3. Paddy54

    Paddy54 Variety Collector

    Supply and demand
    capthank, Spark1951 and MIGuy like this.
  4. techwriter

    techwriter Supporter! Supporter

    Quite correct; AND the liquidity of silver coinage versus bullion. "Average" person knows and understands coins; bullion not so much.
    capthank likes this.
  5. Pickin and Grinin

    Pickin and Grinin Well-Known Member

    It is more of the standard. There is a premium for coinage, because even though the coin has wear (cull) There is always a numismatic value, That may be an overlooked variety, or a missed date mm combo.

    I am not kicking silver bullion, it's just not my style.
  6. techwriter

    techwriter Supporter! Supporter

    @Pickin and Grinin , I agree, "just not my style". However, I buy American Eagles for the grandchildren.:)
  7. Sunbird

    Sunbird New Member

    How long has this been true? Just recently? Maybe it's not the normal long-term situation.

    I doubt that the average person knows anything about old silver circulation coins. In my experience, most people know nothing about the use of silver a few decades ago, and would not know the relevant years or how to value junk silver, so I don't think wide knowledge can be the reason for the discrepancy. As each day, week, and month passes, fewer and fewer people will know anything about it, as more knowers die off and more young people come of age.

    Any dealers here? Seems like they would know why the discrepancy. One thing that occurs to me is that the dealer cost of dealing with junk silver is likely much higher than dealing with standard bullion. I always wondered how these big online dealers process junk silver. So they buy some bags from individuals, and maybe huge lots from other dealers. Then what? How do they know what they have in all those bags? They'd have to properly count it, vet it. That seems like a huge hassle. Do they have specialized coin counting machines for this? I've never seen them for sale, though I remember a machine for counting copper pennies. Do they have to use people to count all the junk? That would be such a hassle. I mean they don't just need to count it – they have to vet it. They have to check the dates of all these coins, and maybe weigh them. After all, some could be fakes, others could be post-64. If I was a dealer, I wouldn't be able to sell these at the same margins as 1 oz rounds and bars.
  8. Pickin and Grinin

    Pickin and Grinin Well-Known Member

    If you were a dealer you could sell them for what ever makes you happy. But, if you sold them for cheap you would be selling yourself short. A coin that has been struck by the mint will always have a numismatic premium. And it is usually about equal to the value of a silver round. This is not new, and has been that way since I first started buying coins.
  9. manny9655

    manny9655 Well-Known Member

    I have to disagree somewhat. I used to be a small-time stamp dealer. Mostly high volume, low end stuff. Most of the time I didn't care what the stamps went for in the price guides (there were exceptions) so long as I could get a decent markup and sell them and make money. BUT...no way was I going to sell them for MORE than what normal catalog value was (with exceptions), like the junk silver dealers are doing now. YES, I had to vet them. Yes, I had to break the sheets down into sets and package them for sale. Yes, I had to look them up just to ID them if nothing else. I was a sole proprietor and had to do it all myself. I certainly understand that the dealers have to make money, but to sell junk silver for way more than melt value is just ridiculous. The 15% rule used to pretty much apply; buy at 15% below melt and sell for 15% above it. That rule has totally gone out the window, at least with online dealers. Then you also have to figure in shipping costs. While I get it that dealing in stamps may be different than dealing in coins, it can't be all that different. Yes, PM prices are far more volatile, but...
    Spark1951 likes this.
  10. CaptHenway

    CaptHenway Survivor

    Two reasons:
    1. Law of Supply and Demand
    2. If the price of silver were to drop to zero, the bar would be worthless but you could still spend the coins. Not very likely, but that's the way some people think.

    Back in 1997 the Royal Canadian Mint issued a one ounce gold bullion coin called the "Mountie." Face value $50 Canadian, but on the actual coin it said that it was guaranteed to be worth $310 US through Jan. 1, 2000. They sold a bunch, and then in November gold fell below $310 US. The market bottomed out in August of 1998 at $273 something. Of course the RCM got most of them back for the $310 redemption. The joke was that shortly after that gold started going crazy over Y2K worries.
  11. CaptHenway

    CaptHenway Survivor


    Attached Files:

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  12. coinaline

    coinaline Active Member

    I wonder if this might be because when the SHTF (as it may for many reasons) the junk silver is perfect for barter and exchange in the worst case scenario. I think that's why some people are buying silver right now. They are planning for a worst case scenario. It's not just an investment to them. A 1 oz. coin can't be split as easily, and if it was it would no longer have a recognizable amount of silver. Silver dimes would be a perfect denomination in a dystopia.
    manny9655 likes this.
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