by Tony Davis – Atlanta Gold & Coin Buyers ……….
It goes without saying that 2013 was one of the most challenging years in recent memory for silver coin investors. Silver has experienced year to date losses of 34% and is on pace for its worst performance in 31 years. The steep sell off in silver earlier in the year resulted in extremely high demand, with shortages nearly everywhere and premiums not seen since 2000. Demand, prices and premiums have waned as the year has progressed, and while demand for physical silver remains strong, overall sentiment toward precious metals appears to be lackluster at the moment. This has been further exacerbated by the Fed’s recent taper announcement and numerous articles published by the mainstream financial media claiming that gold and silver are no longer needed as a hedge. However, the current situation isn’t necessarily indicative of some of the activity that we saw earlier in the year, so we thought we would take a moment to recap three particular types of silver coins that moved the meter in 2013.
Demand and premiums for Morgan and Peace silver dollars were nearly at all-time highs earlier this year, but have since moderated. In particular, pre-1921 Morgan silver dollars were selling at premiums of upwards of $15 or more, which is more than double their historical average. Generally speaking, Morgan silver dollars sell for a few dollars over the melt value of the coins. Even at these significant premiums, Morgan silver dollars were nearly impossible to keep in stock earlier in the year. As the year progressed, we started to see a larger disparity in price between Morgan and Peace dollars, and within the Morgan silver dollar coins, between 1921 and pre-1921 coins. While pre-1921 Morgan silver dollars are still selling at a premium above their historical average, they’re a relative bargain compared to prices seen earlier in the year. Since these coins are condition sensitive, you should expect to pay higher premiums for better condition coins.
90% Silver Coins
When do you stop calling 90% silver coins junk silver coins? It’s when premiums rise as high as 25% over the melt value of the coins! This is exactly what we saw earlier in the year with 90% silver half dollars, and in particular, Walking Liberty half dollars. Even less popular silver dimes and quarters were selling at premiums of upwards of 18% - 20%. While you would expect for nearly record high premiums to keep many long term silver investors on the sidelines, this was anything but the case. A decrease in the price of silver from $30 an ounce to the low to mid $20 range was seen as a tremendous buying opportunity, and from a coin dealer’s perspective, felt almost like a mania. While we would have been happy to sell coins at these levels, supply remained in tight hands and was difficult to come by. Even today premiums are above their historical average, but junk silver can be acquired at reasonable premiums above the melt value of the coins; especially when buying in bulk.
American Silver Eagles
While final American silver eagle sales have yet to be published, sales of American silver eagles through the first week of November shattered the previous all-time sales record established in 2011 of over 39 million coins. The rate at which these coins were selling in 2013 should have surpassed the 45 million coin mark; however, shortages of silver eagles will likely prevent this from occurring. Not only was demand for American silver eagles unprecedented, but so were the premiums for these coins. Common date American silver eagles were selling for as high as $10 over spot, while lower mintage and more popular dates, such as those from 1986, 1994 and 1996 were selling for $15 - $40 over spot. Demand for 1996 silver eagles has remained strong all year long, while premiums for 1986 and 1994 have dropped to more reasonable levels. Common date American silver eagles are now available at prices more in line with the historical average, but are still in high demand and can be somewhat difficult to come by.
In summary, we have experienced the full spectrum this year with respect to silver prices, demand and premiums. Silver shortages earlier in the year pushed premiums to nearly historical high levels, but have since moderated, likely in part to an improving economy (at least as measured by the stock market) and consistently lower silver prices. The three silver coin types highlighted above, in particular, were in greatest demand during the year, and still remain in fairly high demand as we close out the year. Considering that the all-in cost to mine silver is at or above current prices, we believe that we’ve reached a bottom in the market and anticipate that we’ll see a much improved market in 2014 and beyond.
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Visit his website at www.atlantagoldandcoin.com for additional information on the products, services and educational resources offered by his company. Tony can be reached at firstname.lastname@example.org or at 404-236-9744.