By September 15, 2011 0 Comments Read More →

The Coin Analyst: Finding the Best Silver Values in Today’s Heated Metals Market

by Louis Golino for CoinWeek

Gold and silver have experienced a dramatic bull run this year that probably has more room to go, which is driving the cost of precious metal coins ever higher. But it is still possible to find good value in this supercharged market.

This column address silver bullion coins and a future article will discuss gold and other precious metal coins.

Silver Bullion CoinsBuying lower mintage bullion and relatively low premium collector coins provides some downside protection against major corrections in silver. If there is a major metals correction, don’t sell in a panic unless you absolutely have to raise funds. Instead, be patient and prices will be back up before long, as has happened twice with gold in the past month. Precious metals are best seen as a long-term investment, not something to trade in and out of.

Premiums for bullion coins have been rising because supplies, especially of silver, are getting tighter as demand continues to rise from investors. I recently came across an interesting comment somewhere which noted that there is not enough silver in the world for every person in China to own a one ounce coin or bar.

Five and ten ounce silver bars are a nice compact way to buy, but with current premiums, I would opt instead for relatively low premium coins, especially those with low mintages, which have the best long-term potential.

Silver eagles vs. ATB coins

In terms of American silver coins, there is no question that the best value in the current market is to be found among the five-ounce America the Beautiful bullion coins, specifically the 2011 issues.

In a recent column, I discussed the pros and cons of the numismatic versions, but investors should not overlook the bullion coins, which currently sell for about the same premium over melt as bars and rounds. Dealers are currently selling the 2011 bullion issues for about $2-$4 over spot per ounce depending on the issue, whereas American silver eagles are going for at least $5 over spot.

And yet the 2011 ATB bullion coins are made in much smaller numbers than silver eagles, providing a potential future price appreciation that silver eagles do not have.

The lowest mintage issues of the year are the Chicksaw and Vicksburg coins, which are shaping up as the keys to the bullion and perhaps the overall series.

These coins are an excellent example of a strategy that has worked in the past, which is to not buy what everyone else is buying, and you will reap the rewards later.

While sales of silver eagles continue to hit new records, interest in the ATB series has diminished. Some very low mintage issues are emerging that could well carry substantial premiums down the road. And if they do not, the rising price of silver will increase their value.

Canadian issues

Another approach is to look abroad to our Canadian neighbors and to our allies in Australia.

Within the realm of Canadian coins, most investors purchase maple leafs, which are not a bad choice and which are certainly made in smaller numbers than silver eagles. Some past issues with low mintages carry substantial premiums, and a record number of maple leafs were sold in the past year.

But the best-performing Canadian bullion coins in recent years are the wildlife series coins, which include wolves, grizzly bears, and beginning later this month, cougars. Two new issues are being released each year and each has a mintage limited to one million. The coins have seen strong demand, and the existing issues already carry significant premiums around 50% above melt value.

The wildlife coins have appealing designs and were quite difficult to obtain. They sold out from the Canadian Mint to wholesalers very quickly and retail prices have continued to outpace rising bullion. Canadian bullion is distributed basically the same way U.S. Mint bullion coins are, in other words, though a network of dealers.

The cougar was unveiled by Canadian mint officials at last month’s blockbuster ANA World’s Fair of Money in Rosement, IL, a Chicago suburb (http://www.coinweek.com/news/modern-coins/ana-world-mint-theater-royal-canadian-mint/)

The Perth Mint

The Australian mint is known for making high quality semi-numismatic bullion coins that have solid demand, especially the Kookaburra and the Lunar coins.

Each is made in many different sizes and versions, but within the bullion realm, the ounce versions have limited mintages, but other bullion sizes are made to demand. The one ounce Kookaburras, or Kooks, are limited to 500,000, and the lunar issues, which are based on the Chinese lunar calendar, are limited to 300,000.

The next year’s issues of these coins are always issued earlier than other bullion coins. They are released in September of the previous year. The 2012 lunar issue, the dragon, has been an absolute sensation. I do not recall any bullion or modern mint coin of any country that has seen the kind of demand the 2012 dragons are experiencing.

Within days of an early September release all sizes of silver dragons were sold out by the Perth Mint, although sizes other than the one ounce coins will be minted again later.

The coins are also issued in proof with a one ounce proof coin limited to 5,000 pieces, and a three-coin proof set containing a half-ounce, ounce, and two ounce coin with an amazing 1,000 mintage.

I will probably always regret not purchasing a three-coin proof set on Labor Day weekend. Secondary market values are skyrocketing beyond belief.

When first released the one ounce proofs could be purchased for $120-150. Every retailer in the world is now out of those coins, and e-Bay appears to be the only source for them. A couple days ago one sold for $450 in an auction but since then prices have continued to climb with some buy it now listings in the thousands of dollars. The three coin sets are bringing amazing prices as well.

The bullion uncirculated (actually reverse proof) coins are also doing very well. The one ounce bullion coin sold out right away as well and is currently selling for about $170-200 but was under $100 only a week ago. The larger size coins are also bringing high prices, but I wonder if they will hold when more coins are made available later.

Louis Golino - WriterLouis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for Coin Week, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

About the Author:

Louis Golino is a numismatic journalist and writer specializing in modern coin issues. He has been writing a weekly column for Coin Week since May 2011 called "The Coin Analyst," which focuses primarily on modern U.S. and world coins and developments at major world mints, and is also a contributor to two magazines, American Hard Assets and the Numismatist, the American Numismatic Association's monthly publication. His work has also appeared in Coin World, Numismatic News, and various coin web sites. He collects classic and modern U.S. coins and modern world coins from a number of different countries. He first joined the ANA in the 1970's. He has also worked for the Congressional Research Service of the Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of publications. He has been writing professionally since the early 1980's.

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