Discussion in 'Bullion Investing' started by manny9655, Nov 24, 2020.
Log in or Sign up to hide this ad.
Quite correct; AND the liquidity of silver coinage versus bullion. "Average" person knows and understands coins; bullion not so much.
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.
@Pickin and Grinin , I agree, "just not my style". However, I buy American Eagles for the grandchildren.
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.
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.
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...
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.
Separate names with a comma.