OK, I don't get this. I've noticed on eBay and at my local shop that there is a big difference in premium charged on old US silver coins. Here is an example from today. Local shop is charging $1.85 each for 40% silver halves where spot is $1.75. They're charging $5.40 each for 90% silver halves where spot is $4.29. Last, for war nickels they're charging $0.60 where spot today is $0.67. I mean I understand why new ASE coins command a premium, but not the range of these old US coins...the nickels are UNDER spot! And why the huge difference between 40% and 90% halves? Silver is silver right? Any explanation would be great.
one word, PROFIT.... We coin dealers do not like to sell coins for free. We wouldn't stay in buisness long giving away coins for free. You are quite lucky to get them at that price. I sell my common vg/F Walkers for $6.00 EA.
Most people are selling junk silver for 11 times face value. I don't know of a single person that will sell me silver at spot price!!
It's just supply and demand. Some coins are more popular than others regardless of spot prices [which are overrated anyway since they represent the paper price quoted by COMEX and not real physical metal sales].
If you are looking to begin investing or speculating on silver, you need to permanently remove that idea from your thinking. There are many market aspects regarding silver. The first thing to consider is "spot rate". Spot rate is simply the bid for delivery "on the spot". This is true whether you are talking precious metals, food commodities, foreign exchange, or any other form of commodity. The second consideration is the "market" that you are obtaining the spot from. I will over-simplify things for understanding's sake. There are a number of different and diverse markets. And within each type of market, you have various exchanges. In talking about silver, the most prevalent market is the contract market. We are familiar with the contract market through the New York Mercantile Exchange. These contracts are what I refer to as "paper silver". "Paper silver" is a promissory to deliver the specified amount of silver at a specified maturity, or date. Frequently, these contracts may be bought back, in which case no physical silver ever exchanges hands. The spot price is determined by the Over-the counter (OTC) market, which may also include matured contract buy backs. Silver traded over-the-counter are traded in bulk with immediate physical delivery (up to two days on the London OTC), and usually overseen by what can only be called a cartel. Now, consider the situation so far. The "spot price" is a price for bulk silver trading on the spot, affected by investor speculation and future expectation, which is overseen by a trade cartel (for the London Exchange: the London Bullion Market Association, who are themselves overseen by the Bank of England). Thus, the "spot price" really does not have quite the same effect on a market that is neither the "paper silver" market, nor the "official" OTC market. The market you are looking to participate in is quite different indeed. I would refer to this market as a "peer market". This is a low volume, demand and deliver, peer to peer market based solely on supply and demand (unlike the "paper" and OTC markets). Now do not get me wrong. I am not saying that "spot" has no bearing on our particular market. It is most definitely used as a guide, because our governments who are producing the silver products we use in our peer market utilize the OTC market to obtain (or reduce) the amounts of silver available to them for such purposes. But, the pure economic basis of supply and demand have a much greater affect on the peer market than it does the "paper", or even OTC, market. This should help you to understand why there is a premium on silver content coins to begin with. At this time, coin silver (90% pure silver coin) is trading at an ask of approximately $15 per ounce, while the OTC "spot" rate is under $12 per ounce. The reason for this is demand. Because of a high demand for no- to low-bulk silver, those who physically have the silver available are able to seek a higher ask price. Now, you did notice that there were premium differences between the 90% and 40% silver content coins. As well, you noticed that the silver nickels were even UNDER spot. First thing to consider is who your peers in this market are. You not only have speculators looking to obtain low-bulk amounts of silver to spread to those trying to "hedge against inflation" (which is a myth, but we won't go into that for this post), but also those who would use the actual silver in commercial production (jewelers, pharmaceuticals, photography, etc.), as well as bulk coin searchers trying their luck at that rare find, and even to other speculators and investors. This is where the difference in premiums comes from. Like I had said, there are a number of commercial uses for coin silver. But, in order to use the silver in the coins, the silver needs to be purified. It is quite a less expensive process to purify metal that is already 90% pure as opposed to metal that is only 40% or even 30% pure. Because there is definite demand, and it is cheaper to process higher quality silver, the 90% holds a much higher premium to 40% or lower fineness. For anybody to obtain "on the spot" silver at the prices published by the exchanges, you would have to do so in bulk quantities that are far more than any jeweler will ever need. I hope this helps a little in understanding more about "junk" silver prices and why things just do not seem to be matching up to the "spot" pricing. "Spot" prices simply are in a completely different market than the one most of us deal in.
I second the motion. Same price we charge. We buy at or near spot and it takes money to run a business. A good friend of mine is always looking for silver at or near spot. Occasionally he runs across some but when one runs a shop people come to you not the other way around. In short dealers HAVE the supply. On occasion we run into "better" junk silver and I'll let my buddy know and he'll happily pay my boss' price. Far as that goes I will as well.
Time to stock up on some war nickels. LOL... I will, but you will have to be a patient person. (90 Day Delayed delivery.) That is over current spot. (Silver value $9.17) Of course, not too long ago it was probably under. http://www.coinflation.com/coins/1878-1921-Silver-Morgan-Dollar-Value.html HOWEVER, still a GREAT price if you can get them because they are Morgans. We dealers have bills to pay too you know... sometimes we dump stuff (such as war nickels) because we have a ton of it or it has been in stock too long... better to take a small loss and reinvest than freeze assets in stock. However, don't expect to see that often with Half Dollars... the demand is there and the investment may be near $4 or $5 a coin so the price stays up. One rule of economics (not sure if it has a name) that also applies here is that prices rocket up, but fall like feather. Also, people are used to paying $5 - $6+ / half and most speculation is Silver will go up... so there is another reason the price stays steady. As far as eBay... the bidders set the premium. Well, at least with most of my auctions I start them at a penny... so the price goes to what people are willing to pay... seems fair to me. Regards, Michael
Answers at Spot (Paying 5% under Bid) You got a lot of good answers, all of them illuminating some aspect. I point out that the "big diffrerence" is small indeed, about 5% or 10% over spot. A good retail mark-up is 60%. If you want to pay spot spot, you have to take delivery, FOB: Free on Board. That means that they take your money and how you get the item -- bullion, lard, or a Mercedes -- is your problem. Look at the "spot" price for wheat and then consider the price of a loaf of bread. You can buy one silver dime at a coin shop. In Chicago, you buy 1000 ounces of silver, about 50 lbs., for about, what? $12,000 or $15,000... Also, it is true that dealers seek profits, of course, but it is a fallacy of our public school socialist thinking that dealers set prices. They could claim A Million Dollars an Ounce if that were true. What sets prices is DEMAND. Other people are in line with you, wanting to pay more than you to get what you want, too. ... or they are not... I went to the MSNS convention last weekend and found lots of bargains. One: I had some cash. Two: the economy sucks and Three: CINC was the same weekend, so things were slow. Money talks. I got great deals. Finally, no one takes "spot" seriously right now. Last October the Chicago Mercantile Exchange (I think it was the Merc, not Comex) refused to deliver bullion and foced people to take their payout in money. That drove the price of physical silver and gold up. Moreover, according to GATA, the central banks are cooking the books to hide their situations, carrying LEASED gold as an "asset." Thus, the price at the coin shop is the real price because the coins are really there when you really want them.
Nice reality check there. Not long ago I got an "offer" on a small site for some common Standing Liberty Quarters. He offered me $2 each. I told him to open a brick and mortar and incur overhead if he wanted those prices.
