If you’re an investor in silver bullion or a collector of silver coins, you’re no doubt aware that the price of gold and silver have seen a pullback in recent weeks. Most recently, the price of silver has dropped roughly 6% – 7% over the past week. A number of potential factors are at play, including China’s surprisingly low reported gold holdings, a global economic slowdown, which affects the price of all commodities (including gold and silver) and lastly an apparent coordinated effort to drive down the price of gold, which indirectly affects the price of silver. Demand for physical silver bullion and coins was already strong prior to the recent sell off, with many dealers reporting little to no inventory, such as this one, while others are reporting delays as long as two months before live inventory is available. While no silver coin investor is happy in the midst of tumbling silver prices, fortunately it’s not all bad news. Due to high demand and limited supply, three types of silver coins have held up remarkably well during this recent downturn, which we’ll discuss in further detail below.
90% Silver Coins
When premiums have risen like they have recently on 90% silver coins, it may be time to stop calling 90% silver coins “junk silver.” 90% silver dimes, quarters and half dollars minted in 1964 and earlier are a particularly hot commodity at the moment. Most coin dealers, including ourselves, have had a difficult time keeping these coins in stock. While the price of silver has steadily dropped over the past week, the price of 90% silver coins has remained relatively constant. This has resulted in larger than normal premiums being charged for these coins. You may recall that we experienced a similar situation early last year when the price of silver in the commodities market decoupled from the price of physical silver. In time, premiums will subside, but it may not be until the price of silver increases, when sellers are more likely to sell some of their holdings. Since pricing is based on supply and demand, additional supply will help to offset demand, which in turn should drive premiums lower.
Morgan & Peace Dollars
Morgan and Peace silver dollars have probably been the most resilient silver coins in this down market, with the possible exception of high end certified silver coins. In fact, if you relied solely on the price of Morgan and silver dollars to gauge the price of silver, you would probably come to the conclusion that the price of silver has been flat this year. As has been the case for some time, Morgan silver dollars minted in 1904 and earlier are bringing the largest premiums followed by 1921 Morgan dollars and Peace dollars. The recent uncertainty in Greece may be one reason why we’re seeing strong pricing in the silver dollar market, as more and more individuals are interested in holding hard assets outside of the banking system. Recent events in Greece have shown that money in the bank may not be quite as secure as many individuals initially believed; especially considering that a bail-in is still possible in Greece, which would cause depositors to take a haircut.
American Silver Eagles
As you may be aware, the U.S. Mint sold out of their inventory of silver eagles earlier this month. This shortage, in conjunction with falling silver prices have increased the demand for American silver eagles. The increased demand and limited supply have pushed up premiums above standard levels; although, we’re beginning to see some moderation in premiums at the time of this writing. We personally have received numerous requests for silver eagles, but have purchased very little inventory over the counter in recent weeks. While we always have some silver eagles in stock, we have been unable to fill larger orders. Additionally, supply in the wholesale market has been limited, and those dealers that have had inventory in stock have been demanding strong pricing for these items. We expect for premiums to further subside once the U.S. Mint resumes production of silver eagles.
In conclusion, while the price of silver has been falling in the commodities futures market, demand for select silver coins remains strong. We have identified three types of silver coins that fit the bill. Commonly referred to as junk silver coins, demand and pricing for 90% silver dimes, quarters and half dollars has been particularly strong. Additionally, pricing for Morgan and Peace silver dollars has been stable despite falling silver prices. Lastly, demand for American silver eagles remains strong while supplies are limited, which has pushed premiums above standard levels.