One year ago I published the article Silver Coin Premiums – Another Collapse?. In it, I expressed concern about the high premiums being paid by stackers and others for the privilege of owning silver in coin form, particularly Silver Eagles…
“Today, retail investors are paying premiums of 40% on junk US silver coins. They have paid higher premiums recently, too, and they seem to be willing to pay pretty much any premium asked in order to own the coins.
The saving grace of buying pre-1965 US silver coins at 40-50% premiums right now is that they seem like a bargain compared to buying freshly-minted US Silver Eagles at a 70% premium. (Shouldn’t it be the other way around?)” August 8, 2022
I followed that with another article a few months later Two-Fold Risk For Silver Eagle Coins…
“the risk associated with ownership of Silver Eagle coins is two-fold: 1) the stability/evaporation of excessively high premiums and 2) the downside price potential for silver.”
Both articles have historical information that buyers of silver bullion in coin form need to be familiar with before they assume the unnecessary risk associated with Silver Eagle coins.
Since those articles were written, and dating back as far as last summer, the premiums generally have declined. Nevertheless, they are still too high.
CURRENT PREMIUMS
GOOD NEWS… As of this writing, I was able to find quotes online for Silver Eagle coins at $29.35. The per coin premium ($6.70) amounts to approximately thirty (29.5) percent. That is less than half of what investors were shelling out last year even as silver approached it highs near $25 oz.
BAD NEWS… Silver dropped as low as $18 oz. in late summer last year and, after moving back to $25 again earlier this year, is now at $22.60. In the meantime, the premium has fallen from seventy percent last year down to thirty percent. That is not good news if you paid $40 per coin or more recently and want to sell some of your holdings. Sellback price estimate: $25-26 per coin – if you are lucky.
The most fervent and extreme buyers of Silver Eagle Coins since 2020 are likely underwater by as much as $15-$20 per coin right now; and are still waiting for the big upside move in silver that has not yet materialized.
WHAT TO DO NOW
The best buy right now for those who want to buy some physical silver in coin form is 90% junk silver Washington quarters.
A $100 face value purchase (four hundred quarters; 71.5 ounces of silver) is quoted online at $1887 vs $2935 for one hundred Silver Eagles.
The per ounce cost for the silver is $3 cheaper for the quarters and you get the same $100 face value as with one hundred Silver Eagles.
Or, you could buy six hundred quarters ($150 face value) for $2830. That’s still cheaper than the Silver Eagles and you end up more silver (107 ounces) spread over $150 face value.
If push comes to shove and you actually need to spend the silver coins you are accumulating because of a breakdown of the system (why else would you want to own them?), then it is reasonable to expect that $1 face value of silver quarters will trade comparably with a $1 face value Silver Eagle.
Even if that is not the case, the quarters are a better alternative at a cheaper cost.
CONCLUSION
Silver coin premiums are coming down, but they are still too high. This is especially true for Silver Eagles.
If you already own them, prepare yourself for more price erosion. If you don’t own them, then wait; or, find a better alternative, like junk silver coins or Kennedy clad half-dollars.
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