If Silver Spot Goes to $50 ozt . . .

halfhunter · May 21, 2009 1:54AM

. . . Will "premium" bullion coins maintain their premium?
I'm talking stuff like common date Proof & "W" ASEs maybe MS-63 Morgans etc.

I just traded a guy 2002-2008 (7) Proof ASEs for 21 generic .999 rounds.
At APMEX prices, the dollar value was about even.

Was this a good trade?

Regards,

John

SilverEagles92 · May 21, 2009 2:07AM

Nope.

Edit: As in, nope they won't retain premiums. I think bullion is bullion in a SHTF/$50/ozt scenario.

Whether or not it was a good trade? If you're happy with it, it was a good trade.

Coll3ctor · May 21, 2009 2:07AM

If silver reaches $50.00 I think the premiums will shrink. Regardless I think you received the better end of the stick

dbcoin · May 21, 2009 2:35AM

premiums for Vintage Saints and Libs in AU55-MS62 are still sky high

but that's gold

PutTogether · May 21, 2009 2:39AM

On one hand, I doubt seriously that current premiums would be sustained on a percentage of spot basis. The other side of the argument is that as silver gets more and more expensive, maybe people would be willing to pay extra for government guranteed purity/accuracy.

Weiss · May 21, 2009 3:07AM

<< 

Was this a good trade?

Regards,

John >>

Not to me, but I don't like generic silver. I don't recall if dealers discounted generic in 1980, but I wouldn't be surprised if at least some of them did. And I would expect some or all to do it when and if silver goes that high again. That potential alone keeps me from buying generic. There is a reason it's called generic, and there are reasons it trades for less than name brand. In a swap situation like yours, you kind of have to take what you can get.

SportsModerator · May 21, 2009 3:12AM

You would be shocked as to what went into the melting pot back in 80.

roadrunner · May 21, 2009 3:21AM

premiums for Vintage Saints and Libs in AU55-MS62 are still sky high

True for now. But how about when/if gold gets much higher in price, say $2000-$3000/oz? Would you pay a 10-30% premium for a MS62 Saint over bullion? How about a 2x premium for a MS65 Saint?

For those who think there is no value in 90%, what will happen when when you need fractional silver from your 1 oz, 10 oz, 100 oz bars? Will you shave some of the silver off with a file?

While we didn't have a SHTF scenario in the 1970's, we are much closer today to having the need for 1/10th and 1/5th silver fractionals than ever before. At least in prior major economic crack ups (1930's, 1870's, etc.) there were actual circulating fractional silver coins to assist. Even in the 1970's there were still jars of silver coins in a large % of households. We're high and dry right now.

roadrunner

halfhunter · May 21, 2009 5:15AM

<< You would be shocked as to what went into the melting pot back in 80. >>

I do remember that. Seems that everything silver was being sold and carried to the refiners. BU Morgans, 90%, small bars & ingots, sterling silverware . . . everything was game. Of course there wasn't any Govt. issued .999 at the time, that I'm aware of.

If the price run-up hadn't been so short lived, there probably wouldn't be any "junk 90%" now, and common Peace & Morgans wouldn't be so common. It was a wild ride there for a few months. Some dealers got rich in just a few months buying, then selling to the refiners.

Regards,

John

rgCoinGuy · May 21, 2009 5:22AM

<< You would be shocked as to what went into the melting pot back in 80. >>

I just noticed your sig line.

As to the OPs question, I would say it depends on what that premium is. If its 5-10 dollar premium, obviously not. If it is a 10-20 times premium, like your 2008 Reverse of 2007, yes.

Weiss · May 21, 2009 5:35AM

<< You would be shocked as to what went into the melting pot back in 80. >>

Oh I remember. I was only 13 or so, but I'd been buying and selling gold and silver scrap with paper route money for a couple of years!

AU and BU coins. Whole rolls of commems. Watches and candleabra and tankards. My dad sold his massive high school ring at the very peak (at my prompting). Just about made him cry, but the money he got was astounding.

cars · May 21, 2009 5:41AM

I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that?

MrOrganic · May 21, 2009 6:17AM

<< . . . Will "premium" bullion coins maintain their premium?
I'm talking stuff like common date Proof & "W" ASEs maybe MS-63 Morgans etc.

I just traded a guy 2002-2008 (7) Proof ASEs for 21 generic .999 rounds.
At APMEX prices, the dollar value was about even.

Was this a good trade?

Regards,

John >>

1. Apmex prices is not the "market"
2. proof ASE $30-$40 x 7= $210-$280
Rounds $16-$18 x 21 = $336-$378

halfhunter · May 21, 2009 6:30AM

<< I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that? >>

Because the Hunt Bros. wanted 1000oz bars.

halfhunter · May 21, 2009 6:32AM

<< 

<< . . . Will "premium" bullion coins maintain their premium?
I'm talking stuff like common date Proof & "W" ASEs maybe MS-63 Morgans etc.

I just traded a guy 2002-2008 (7) Proof ASEs for 21 generic .999 rounds.
At APMEX prices, the dollar value was about even.

Was this a good trade?

Regards,

John >>

1. Apmex prices is not the "market"
2. proof ASE $30-$40 x 7= $210-$280
Rounds $16-$18 x 21 = $336-$378 >>

Greysheet ask for 2002-2007 = $42
2008= $80 Total $332

APMEX Rounds = $16.10 X 21 Total $338.10

Regards,

John

NumbersUsacom · May 21, 2009 8:26AM

When Silver hits $360 an oz. you probably wont be too concerned with the pemium.

Bear · May 21, 2009 9:26AM

If wishes were horses,

then beggars would ride.

NumbersUsacom · May 21, 2009 10:21AM

Whats the matter Bear, if you believe in an explosion in the rare coin market in the next 2-3 years which you most recently conveyed,
why can you have no faith in an equally impressive explosion in the metals market. Watch and see.
A rising tide floats all boats and a tsunami lifts like no other.

And when its over, it will have been just another bubble in the wind of time.

ProofCollection · May 21, 2009 11:48PM

<< premiums for Vintage Saints and Libs in AU55-MS62 are still sky high

True for now. But how about when/if gold gets much higher in price, say $2000-$3000/oz? Would you pay a 10-30% premium for a MS62 Saint over bullion? How about a 2x premium for a MS65 Saint?

For those who think there is no value in 90%, what will happen when when you need fractional silver from your 1 oz, 10 oz, 100 oz bars? Will you shave some of the silver off with a file?

While we didn't have a SHTF scenario in the 1970's, we are much closer today to having the need for 1/10th and 1/5th silver fractionals than ever before. At least in prior major economic crack ups (1930's, 1870's, etc.) there were actual circulating fractional silver coins to assist. Even in the 1970's there were still jars of silver coins in a large % of households. We're high and dry right now.

roadrunner >>

RR, part of the runup in gold will be caused by a retail shortage of gold material (more so than anything we've seen recently). As such, I believe the premiums will maintain and continue to increase for old collectible gold. I think gold bullion will see better percentage returns, but those who hold the collectible stuff will continue to do well.

jmski52 · May 22, 2009 12:15AM

I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that?

Silver was being bought in bulk, simply on the basis of oz. of silver. It didn't matter what form of silver came through the door - it got totalled as oz. of silver.

The profit? Well, if you bought some .999 1 oz. silver rounds a couple years earlier at 6.50/oz. and someone down the street was buying them for $42.00/oz., then you really wouldn't care if it was .999 when you sold it any more than the guy who was buying it. The buyer didn't care either, because he already had it sold at $45.00/oz. and was buying as much as he could, as fast as he could. And that's basically what was going on.

Overdate · May 22, 2009 1:15AM

>>I don't recall if dealers discounted generic in 1980, but I wouldn't be surprised if at least some of them did.<<

Dealers were discounting *everything* in 1980, to compensate for risk of a price collapse between the time they bought the silver and the time they sold it. 90% coins were discounted as much as 25% to 30% at the height of the boom. War nickel discounts were even worse.

If silver spikes in the future, I would expect the same pattern to repeat. But if silver has a gradual and sustained rise, 90% silver coins could maintain their modest premium, especially since so many were melted in the 1979-80 boom, and many more off-and-on since then.

cars · May 22, 2009 1:21AM

<< I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that?

Silver was being bought in bulk, simply on the basis of oz. of silver. It didn't matter what form of silver came through the door - it got totalled as oz. of silver.

The profit? Well, if you bought some .999 1 oz. silver rounds a couple years earlier at 6.50/oz. and someone down the street was buying them for $42.00/oz., then you really wouldn't care if it was .999 when you sold it any more than the guy who was buying it. The buyer didn't care either, because he already had it sold at $45.00/oz. and was buying as much as he could, as fast as he could. And that's basically what was going on. >>

What I was inquiring about is the comment where everything was being melted down. Why melt .999 silver? Was it to make larger bars like stated by another poster. Seems smaller bars would be wanted @ a time where its $45/oz and larger bars when its $6/oz. Why melt smaller bars to form larger bars when silver is so high? Where there not enough large bars for buyers so they had to produce them to meet supply? I'm sure people were also wanting 1 oz bars.

cars · May 22, 2009 1:23AM

When silver hit its high in '80, How long did it stay there before it dropped? How fast did it drop?

gecko109 · May 22, 2009 1:28AM

<< I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that?

Silver was being bought in bulk, simply on the basis of oz. of silver. It didn't matter what form of silver came through the door - it got totalled as oz. of silver.

The profit? Well, if you bought some .999 1 oz. silver rounds a couple years earlier at 6.50/oz. and someone down the street was buying them for $42.00/oz., then you really wouldn't care if it was .999 when you sold it any more than the guy who was buying it. The buyer didn't care either, because he already had it sold at $45.00/oz. and was buying as much as he could, as fast as he could. And that's basically what was going on. >>

I think Rick's question is "why would any of the .999 stuff end up in the melting pot?" Just to make different size bars, or what?

roadrunner · May 22, 2009 5:44AM

RR, part of the runup in gold will be caused by a retail shortage of gold material (more so than anything we've seen recently). As such, I believe the premiums will maintain and continue to increase for old collectible gold. I think gold bullion will see better percentage returns, but those who hold the collectible stuff will continue to do well.

I'm not adverse to that happening considering I personally like the pre-1933 US gold coins. I think certified Saints are a nice store of value. At least they have done so as the price of gold has doubled from $475 to $950, most of the saints have more than doubled and most $20 Libs have tripled. I just don't know if this will continue into the future.

If the price of rare coins go up a lot in the next 2-3 years it won't because coins are dragging the precious metals along with them, but just the opposite. Gold and silver will be lifting the coin market.

roadrunner

halfhunter · May 23, 2009 12:46AM

<< 

<< I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that?

Silver was being bought in bulk, simply on the basis of oz. of silver. It didn't matter what form of silver came through the door - it got totalled as oz. of silver.

The profit? Well, if you bought some .999 1 oz. silver rounds a couple years earlier at 6.50/oz. and someone down the street was buying them for $42.00/oz., then you really wouldn't care if it was .999 when you sold it any more than the guy who was buying it. The buyer didn't care either, because he already had it sold at $45.00/oz. and was buying as much as he could, as fast as he could. And that's basically what was going on. >>

I think Rick's question is "why would any of the .999 stuff end up in the melting pot?" Just to make different size bars, or what? >>

I can't honestly say exactly what happened to the .999 stuff once it got to the smelters.

I do know, from reading that dealers like Art Kagin, I believe, (Coinage article several months back) had private jets waiting to fly the days take to the refineries.
Also there were alot of small bars & fractionals being produced around this time (late '70s - early '80s) as i'm sure cars is well aware. As with most bubbles, it seemed that those that weren't selling Ag, were buying it thinking that they were going to get rich as there was no end in sight. There may have been many dealers holding back any .999 for resale. Hard to remember but I don't believe there were alot of small .999 bars before this time.

Maybe some of the "old timers" or folks that are more well read than I, can help me out here.These are in large part just recollections of an old fart to be taken with a grain of salt + what little I've read on the subject.
It was indeed an interesting time though.

Regards,

John

cars · May 23, 2009 1:28AM

<< Also there were alot of small bars & fractionals being produced around this time (late '70s - early '80s) >>

Thank god for the hunt bros

ProofCollection · May 23, 2009 3:44AM

Well I think the question about melting .999 is a good one.

If you have a 1oz (or any other size) .999 silver bar, ingot, whatever, why melt it? It's already assayed and measured. Unless you want to consume it, dilute, or you absolutely must have it in a different size or shape, melting it makes no sense.

jmski52 · May 23, 2009 4:20AM

If you have a 1oz (or any other size) .999 silver bar, ingot, whatever, why melt it? It's already assayed and measured. Unless you want to consume it, dilute, or you absolutely must have it in a different size or shape, melting it makes no sense.

I don't know exactly how a metal refinery works, but if you are buying all kinds of silver alloys and melting them in one pot, don't the metals separate once they are liquified?

If that's the case, my guess is that they were fulfilling specific orders for specific-sized bars, such as 100 oz. or 1000 oz. Even though the .999 ozers are pure already, it may be that it's more cost-efficient just to throw it into the mix and re-pour it.

tincup · May 23, 2009 4:30AM

<< 

<< I was born in 80. What benefit was there to melting .999 silver? I can understand the scrap stuff and 90% but why refine .999 silver? Where's the profit in that?

Silver was being bought in bulk, simply on the basis of oz. of silver. It didn't matter what form of silver came through the door - it got totalled as oz. of silver.

The profit? Well, if you bought some .999 1 oz. silver rounds a couple years earlier at 6.50/oz. and someone down the street was buying them for $42.00/oz., then you really wouldn't care if it was .999 when you sold it any more than the guy who was buying it. The buyer didn't care either, because he already had it sold at $45.00/oz. and was buying as much as he could, as fast as he could. And that's basically what was going on. >>

What I was inquiring about is the comment where everything was being melted down. Why melt .999 silver? Was it to make larger bars like stated by another poster. Seems smaller bars would be wanted @ a time where its $45/oz and larger bars when its $6/oz. Why melt smaller bars to form larger bars when silver is so high? Where there not enough large bars for buyers so they had to produce them to meet supply? I'm sure people were also wanting 1 oz bars. >>

I think it all came down to efficiency (or inefficiency, depending on how you want to look at it) in the market. If the refiners had buyers waiting for their product, the refiners would surely take all the .999 they could get, melt it into their bars or products, etc., so they could fill their orders. The end buyers of the bars, etc from the refiner would probably have been interested in the .999 that was being sold to the refiner; but they were not in the position to obtain it. Everyone wanted to move the silver FAST so they could make their profit..... so that is why .999 silver was probably not held back to try to locate the end buyers....

Sevensteps · May 25, 2009 4:24AM

<< Well I think the question about melting .999 is a good one.

If you have a 1oz (or any other size) .999 silver bar, ingot, whatever, why melt it? It's already assayed and measured. Unless you want to consume it, dilute, or you absolutely must have it in a different size or shape, melting it makes no sense. >>

This was done because the large buyers couldn't have cared less about small bars, their "assay" or their possible use in a SHTF scenario.

ALL of this stuff went to become a COMEX acceptable form. That means that all of the .999, 90%, sterling and everything else was put in the pot and changed into 1000 ounce bars.

COMEX deliveries require this for storage... "Rare" Englehard bars, mint rolls of Franklins, BU Morgans and like new sets of Art Deco Sterling silverware all ended up in the pot together...

halfhunter · May 25, 2009 8:53AM

<< 

<< Well I think the question about melting .999 is a good one.

If you have a 1oz (or any other size) .999 silver bar, ingot, whatever, why melt it? It's already assayed and measured. Unless you want to consume it, dilute, or you absolutely must have it in a different size or shape, melting it makes no sense. >>

This was done because the large buyers couldn't have cared less about small bars, their "assay" or their possible use in a SHTF scenario.

ALL of this stuff went to become a COMEX acceptable form. That means that all of the .999, 90%, sterling and everything else was put in the pot and changed into 1000 ounce bars.

COMEX deliveries require this for storage... "Rare" Englehard bars, mint rolls of Franklins, BU Morgans and like new sets of Art Deco Sterling silverware all ended up in the pot together... >>

From what I can dig up that is my take also. Also, if you note, most of the small bars/rounds surviving now were produced AFTER Jan. 1980.

Regards,

John

halfhunter · May 25, 2009 9:52AM

<< When silver hit its high in '80, How long did it stay there before it dropped? How fast did it drop? >>

The price of silver went from $9 an ounce in September 1979 to $50 an ounce in January 1980 and back to $10 an ounce two months later.

samingeorgia · May 25, 2009 11:24AM

I well remember those days of 1979-80. I had just started my business in 1973. Everybody was paying astronomical increases in gas prices and the banks were not loaning money, except at very unfavorable rates and terms. I was paying 18% for a computer loan. In addition, we were at the tail-end of the Carter administration (what a fiasco that was) and people were more worried than at any time in my experience, until last fall.

The thought crossed my mind that I should empty my safe deposit box and sell it all. Well, I didn't because most of it was accumulated throwing newspapers in the 1960's, culled from change, and collected with my parents -- so I had a kind of sentimental attachment, I guess. At the same time, the thought on a lot of people's minds was that the money was going to be worthless, so I was thinking "why do I want a pile of paper money that's going into the crapper?"

In retrospect, of course, I could have sold for a big price and bought it all back much cheaper, but my crystal ball wasn't any better than it is now.

MoneyLA · May 26, 2009 5:20PM

I might have a different idea about premiums for gold and for silver.

My feeling is that when bullion prices go up, premiums will also increase. I consider premiums to be a measure of demand and supply. A rising bullion price would indicate rising demand, hence a rising premium.

But the real question is-- what will be the percentage value of the premium?

let's take silver at $20 an ounce and say the premium is $4 or 20% of the bullion value.

If silver goes to $40 an ounce (up 100%), and the premium rises to $6 then the premium only represents 15% of the bullion price even though the premium itself went up by 50%.

So a better question might be, will premiums keep pace with the rise in bullion on a percentage basis?

I dont know, frankly. But I am sure the dollar value of the premiums will rise but the premiums might not keep pace with the percentage increase in the underlying bullion.

Of course this is all guesswork. We won't know until silver shoots up to $50 again. but that's my idea about it.

jmski52 · May 28, 2009 1:11AM

MoneyLA, you pay for liquidity. Whether the market is going up or down, if there are lots of buyers and sellers there will be smaller premiums.

On the other hand, when there is volatility, i.e., when the price is jumping all over the place, then the spreads widen, which also implies that the premiums are increasing somewhat - but liquidity still rules in determining premiums.

Premiums have recently fallen as supplies of silver bullion have been re-established, and coincidentally - supply magically appeared when the prices went up. So, you're right about the supply vs. demand as an influence on premiums but I don't think you are right that higher prices drive premiums higher. Just the opposite, recently.

Premiums increase when supply is withheld or when demand overwhelms supply - whether that's due to low prices or not depends on the specific situation - but, it's when dealers need product to sell and can't find it that they start raising their premiums over spot.

Now, spot prices are a world unto their own. They simply respond to the latest recommendations from JP Morgan and Goldman Sachs. Or so it seems.

renman95 · May 28, 2009 1:41AM

...only $34.75 to go!

If Silver Spot Goes to $50 ozt . . .

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