Gold, Silver Bullion Premiums Close to Normal|
September 27, 2013
After gold and silver prices plunged in mid-April, buyers swarmed to dealers to purchase bullion-priced physical coins and ingots. The frenzy was almost as strong as in late 2008, after prices fell sharply in the second half of the year.
As id normal when demand increases by a huge amount, retailer and wholesaler supplies were quickly depleted. People largely stopped liquidating their holdings, so supplies were not replenished from that source. For several weeks, premiums rose and delivery times extended further into the future.
For instance, 90 percent silver U.S. coins had been selling for not much over the silver spot price about a year ago, the point at which gold and silver both started their multi-month price slide. During intra-day trading on April 18, dealers were bidding more than 20 percent above melt value to buy 90 percent silver coins and either refusing to accept orders at all or quoting selling prices around 30 percent over melt.
Premiums did not jump as much on gold coins and ingots, but the delivery times did run into weeks to over a month. Many dealers stopped taking orders for British sovereigns and other selected coins.
Prices rose significantly in August, but have since retreated part way. The good news is that virtually all products are now available for immediate or short-term delivery. Premiums have also come down, with most gold coins and ingots available at normal premiums. Right now, there is a large overhang of Canada 1 ounce gold Maple Leafs on the market. While this supply lasts, most dealers have cut their premiums on Maples about $10 per coin relative to melt. You should be able to acquire these coins for less than $50 over their gold value.
Premiums on silver ingots have fallen to normal levels, 5-10 percent over melt. There are some occasional delays on orders for the 100-ounce bars. Even quantity orders for U.S. silver Eagle dollars are priced only about $3 over spot with short-term delivery.
You can now purchase 90 percent silver U.S. coins for less than 10 percent over silver value. This was my favorite form to hold bullion-priced silver when it could be purchased retail for a premium of 4 percent or less, which was a lower cost per ounce of silver content than the ingots. Another feature I like about 90 percent coins is its divisibility, where one silver dime has about 1/14 of an ounce of silver.
At current premium levels, for gold products I would recommend purchasing Austria 100 Coronas, U.S. American Arts Medallions, Mexico 50 pesos, 1 ounce ingots, and the Canada 1 ounce Maples. In silver, I would put most of my purchases into 1 ounce ingots and rounds.
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.
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