Is premium silver worth the extra money?
BearlyHere
Posts: 279 ✭✭✭✭
Two schools of thought:
Silver Eagles and premium bars get a greater return when sold.
Buy generic and get more ozt for your money.
I tend to buy generic (occasionally spending a little more for a unique or desirable design). But my challenge to the community is this...
In 1980 and 2011 when people were lined up to sell their silver, did the coin stores pay more for premium?
The answer is NO.
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Silver eagles, RCM bars sell for more because the buyer is willing to pay the premium just as the seller was. Considering that there is normally no loss on premiums paid one has better luck selling these products because the buyer pool is much larger.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Stay away from all premium silver. It all melts the same. Harder to get the premium back out as prices get higher. There are typically bigger spreads at LCS’s on the higher premium stuff. Constitutional silver is best in my opinion. Low premium and very easy to sell.
Be sure to see this thread: https://forums.collectors.com/discussion/1092898/state-quarter-silver-proof-cheaper-than-junk-silver#latest
The Right Answer is buy Boutique/Premium silver at generic silver price and sell accordingly.
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At the shop I work at, I always recommend people buy the generic silver for the cheapest price.
The only time I recommend the Eagle is on gold…
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Double post
For gold I tend to recommend Canadian Maples. Just as liquid as eagles and no duty tax if you take 9999 to Canada. Which is a bonus with us being close to the border.
For me, it depends on how you define 'premium' silver. I tend to rate silver into 3 categories. 'Premium' is the stuff that some buy at very large premiums; things like runes, zombies, silver bullets, Harry Potter, all similar gimmicks. Not for me.
At the low end, there is generic silver, with lots of different designs, but I tend to stay away because much is not identified as the source etc. Not necessarily an issue if selling to a dealer familiar with such silver and can test them if needed, but can be an issue to some as to purity, whether all silver, etc.
I prefer the in-between category... silver rounds/bars that are well known and easily identified. There are higher premiums than generic... but not that hard to get some good deals from time to time. Nothing wrong with Philharmonics, Britainias, Perth mints, etc.
And constitutional silver.... is a great way to accumulate silver. A known quality and standard of purity; easily recognized, etc.
I think it is worth the extra cost to purchase interesting items.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
Nice if you can get it.
Monument Metals sells off quality minted coins for prices very close to their cheapest generics (and frequently they are the cheapest). The neat part is they usually don't have off quality and they will fill your order with perfectly good maples or other mints. I recently got 2 orders from the with Nuie Darth Vader coins:
https://monumentmetals.com/cull-silver-government-minted-round-random-mint-and-date.html
As long as you are willing to eat the premium if you decide to sell in a skyrocketing market. Personally I'm not, but then again, I won't sell, I'll trade for gold.
Exactly what I was referring to! Monument Metals has those good deals from time to time!
If the plan is to hold tight until metals spike higher and then dump it all, zero premium stuff is best. But if you're a long term holder and are willing to trade in and out to take advantage of changes in the market, it makes sense to buy better stuff when premiums are low, and then replace it with something more junky when premiums move higher on the better stuff. Considering how volatile premiums can be, that approach can be very rewarding.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I’ve done both really. But junk is so much more fun with the numismatic designs, etc. Years ago I would have said ASE’s and moderns, now I’m all in for junk. Junk is not junk! LoL!
The market for scarcer Engelhard poured bars has long since disengaged from melt value.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
In 1980 and 2011 when people were lined up to sell their silver, did the coin stores pay more for premium?
The answer is NO.
But did they pay less for non-premium? I believe the answer is YES.
It's not just the premium to consider, but also the spread. Both variables factor into the transaction.
In normal times, the premiums don't hurt you as a buyer. When there's a panic, those are the premiums that you might never get back.
I knew it would happen.
Paid $104 for this one oz pocket piece.
But, this is an exception to the rule.
I buy as close to spot as I can …. Or a couple percentage points back, for silver. (If the opportunity presents itself). I pay premiums for collectibles but those are numismatic. Mr Eureka sums up my thinking , as it were.
When premiums are low buy the best silver. When premiums are high buy the best of the worst. By this I mean you can get really interesting silver at a discount almost all the time. Things like war nickels or scrap jewelry usually contain numerous better items or coins. Then when premiums are low trade the junk for good silver. This process will get you great coins like OMM war nickels, silver eagles, Gem 40%, and scarce world coins for close to the average spot price. You can get this even lower by trying to buy the most when silver is cheap and trade off the most when it's high and premiums are low. Try to never buy boring metal and if you must because prices are low then trade it off when there's a chance.
There's a lot of great stuff out there and it's likely to all get melted if people don't save it. I'd wager even today that much of what's being melted are coins that are quite scarce but get no attention. Sure, you don't want to sit on a bunch of Dominican Republic 1951 25c in VF because this is a pretty typical condition. But nice XF's and AU's are far from typical so there can't be very many left. Try finding a stash of 1944-D war nickels in XF/ AU. This is a tough coin believe it or not.
I have the sense that the refineries will be working overtime for years and will destroy a lot of our history that has been recorded in silver over the last half a century just like all the base metal coins, tokens, and medals. How many people are collecting Mardi Gras doubloons and what is happening to the ones wanting a home? You can't even give away collections so what chance to the common ones have?
People have a fixation on buying some specific thing so anything in fashion like 999 or silver eagles just bring astronomical prices. Sell it. Don't buy it. I've never really understood paying big premiums. My favorite thing to buy is a really nice underappreciated silver coin that just lost all its numismatic premium to higher prices. I'll buy this and sell junk so it's equivalent to trading junk for valuable coins. No matter what direction prices and premiums are going there's always stuff to buy sell and trade.
Don't forget to trade back and forth between silver and gold a little as the ratio goes up and down. I used to do this a little.
Right now might be the best of times to trade gold for silver. Of course all you can do is play the odds and there's no reason gold can't leave silver in its dust even today.