An Insider’s View of the U.S. Silver Coin Market’s Size and Scope

Large transactions are not unusual in gold and silver, yet, when this article was originally published, a reported purchase of $50 million drew attention from industry participants and the broader public to how limited the U.S. silver coin market could be.

Readers who had not heard of the transaction were originally invited to learn its details.

At publication, Miles Franklin, a recognized gold and silver coin & bullion dealer within the industry, brokered the transaction. When originally published, this article outlined details of the order, the investor’s apparent interest in additional transactions, and marketplace inventory then available to accommodate purchases of that size.

The buyer was believed to be a Wal-Mart heiress. The trade appeared deliberately timed before a long holiday weekend. Historically, holiday weekends have coincided with bank holidays, stock-market closures, and currency resets, among other events; the article therefore interpreted the purchaser as seeking to protect assets from such possible circumstances.

The original order was intended to include American silver eagles, described as the industry’s most popular 1 oz silver coins. The broker, however, secured only 650,000 silver eagles. Although that volume was substantial, it represented less than half of the customer’s requested amount. At the time of publication, it was reported to be the full quantity of silver eagles Miles Franklin could obtain through the wholesale market.

Because that likely represented only about $20 million of the $50 million order, other products were needed to supplement it. The report also described another approximately $7 million in junk silver half dollars and silver dollars, presumably Morgan and Peace dollars, plus $4 million of pre-1933 U.S. gold coins.

Even then, the reported purchases covered only $31 million of the $50 million order. At the time of publication, word was that Franklin had committed the next $19 million in silver eagles from the U.S. Mint, which was expected to complete the order.

What did this situation mean for an average investor or collector?

Although the order was notable, the article did not portray it as a single disruption to the industry. It was rumored to be the first among several purchases under consideration by the customer, with later orders possibly larger. The buyer also reportedly wanted only U.S. coins, which she regarded as the preferable choice.

Accordingly, if she stayed focused solely on U.S. coins, the article expected her to encounter the same sourcing difficulties seen with this order, perhaps to an even greater degree.

The Scale of the U.S. Silver Coin Market

This account matters because it offers perspective on the overall scale of the U.S. silver coin marketplace.

Other U.S. silver coins existed in the marketplace at publication, including 90% silver dimes and quarters, along with more Morgan and Peace silver dollars, considered lightly numismatic coins. Still, the article viewed it as revealing that one $50 million purchase could affect the nationwide physical silver-coin market so dramatically.

Atlanta Gold & Coin recognized that the order did not acquire every U.S. silver coin then on the market and that its reach was confined to the market’s largest wholesalers.

Even so, those wholesalers represented a meaningful share of the physical silver trade. The exact figure was difficult to establish, but the article considered it reasonable to estimate they held at least 25% of physical U.S. silver coin holdings nationwide. Given the order’s size, the transaction likely involved only wholesalers capable of filling purchases of $1 million or more.

For illustration, suppose Miles Franklin had approached the entire U.S. market and obtained another $75 million in silver eagles plus 90% half dollars. That process plainly could have required months. The article did not know what share of the total purchase was restricted to semi-numismatic pieces, including Morgan and Peace silver dollars. Nor did it know the exact supply of 90% silver dimes and quarters then in the marketplace, but it used a conservative estimate of $250 – $300 million for the entire U.S. silver coin market, excluding numismatics.

That estimate may have leaned somewhat high. Still, viewed alongside the overall value of other industries, the article characterized it as a comparatively modest total.

The article speculated that a later order from this wealthy customer could place an even greater burden on the U.S. silver coin market, creating supply shortages and sharply raising premiums.

At the time of publication, Atlanta Gold & Coin reported observing higher wholesale bid prices from companies restocking after they had sold significant inventory to help fill this order. The article speculated that another comparable or larger order could double premiums. It did not advise readers to buy everything immediately, but historically suggested that beginning or continuing silver investing merited consideration sooner rather than later.

Overall Size of the Silver Coin and Bullion Market

It is important to note that this order did not exhaust the physical silver market. It excluded foreign silver coins, often called “foreign sovereigns”, as well as silver bullion, meaning privately produced silver bars and rounds.

Bill Holter, a precious-metals broker who worked with Miles Franklin and participated in placing the order, estimated that the full U.S. silver market had a value of about $1 billion.

Although $1 billion was a considerable sum, the article argued that the physical silver market appeared very small when compared with the market capitalization of stocks, bonds, and cryptocurrencies.

The article’s striking point was that, based on the information above, a billionaire might find it relatively easy to corner the physical silver market, much like the Hunt Brothers did in 1980. Some people speculated that silver rose from $5 an ounce to $50 an ounce because of that episode. When this article was originally published, the actual cause of the sudden increase remained debated, while many investors were known to have benefited.

At publication, Atlanta Gold & Coin described a customer who sold silver near the market’s peak. The proceeds reportedly covered a house in New York and an engagement ring for his future wife. According to the account, he achieved this after making a modest weekly investment of $1 in silver coins, beginning in 1965 and continuing until the dramatic rise in 1980. The article characterized that outcome as a favorable investment return.

COMEX, or Commodity Exchange Inc., is the primary futures and options market serving as the main exchange for silver and gold futures. Those futures trade in the stock market through paper contracts. At the time of publication, CME Group, which manages derivative contracts, stated that more than 400,000 futures and options contracts were executed on COMEX each day, making it the world’s most liquid metals exchange.

Readers might reasonably have wondered why the COMEX market seemed so large when only $1 billion of physical silver was reported available in the United States.

The article attributed that apparent contrast to the speculative character of contracts, also called derivatives, and to leverage. In simple terms, insufficient physical silver was on hand to meet all silver futures contracts if they were all “cashed in” simultaneously. It further argued that a few large futures holders requesting physical-silver settlement instead of dollars could cause the whole market to collapse. Such an event, it suggested, would rapidly produce a major, or parabolic, increase in silver’s price.

The article used this point to underscore how little physical silver was readily accessible at publication.

Silver Mining Costs and Availability

Another consideration in any discussion of silver availability is All-in Sustaining Cost, or AISC.

At publication, AISC includes the various expenses incurred in producing gold or silver throughout a mine’s life cycle. When originally published, an article from Seeking Alpha reported that the AISC for the top 15 silver miners comprising the Global X Silver Miners ETF, ticker SIL, was $15.08 in the first quarter of 2022.

In other words, miners were spending $15.08 per ounce just to extract silver from the ground. At the time of publication, that production cost was not far below the then-current silver spot price.

At publication, Mining costs were also expected to rise because the inflation rate then reported exceeded 9%. That pressure could increase total mining expenses, including land acquisition, permits, labor, fuel, and equipment, among other items. If inflation affected mining in the same way it had affected other industries, the article projected an AISC approaching $17 an ounce by the same point in the following year.

At publication, some people believed silver’s price could decline as far as $7.

At publication, Given the reported cost of bringing silver out of the ground, the article considered that outcome not merely unrealistic but unlikely ever to occur. Its explanation follows.

First, if silver miners cannot operate profitably, they may halt production and close mines, at least on a temporary basis.

Second, at the time of publication, investor demand was exceptionally strong, while silver’s spot price remained near $20.

Third, even if investment demand declined, silver’s broad industrial use was expected to remain widespread. Finally, governments worldwide, including the U.S. administration at publication, were promoting renewable-energy priorities. The article anticipated greater solar-panel production and use, an area that relies heavily on silver.

Given all of those factors and the limited physical silver reported as available at publication, the article suggested beginning to acquire silver, or adding to existing holdings until an investor felt comfortable with the total investment. It cautioned that someone waiting for a sharp price drop before investing could find no physical silver available for purchase.

Atlanta Gold & Coin had seen this situation occur several times over the years. In nearly every instance, it had been entirely out of stock of silver coins and bullion and could not obtain more at any price because none was available within the industry.

At publication, Returning to the original account, the investor discussed earlier was expected to make at least one additional large purchase of U.S. silver coins that year. The article anticipated that the timing of her next purchase would again be strategic, as with the first, and would occur before a holiday weekend. It characterized transactions like these as highly visible signals that change may be approaching and that even the top 1% were reallocating investments.

The article identified several possible reasons, including concerns about a bank bail-in, as occurred in Cyprus a few years earlier, or converting holdings into a central bank digital currency (CBDC). At publication, many Atlanta Gold & Coin customers expressed concern about the latter. They worried about possible limits on where and how money could be spent, including potential spending caps. The article added that keeping some money outside the system, even as physical cash, might be worthwhile alongside precious metals.

Take Action

Rather than closing with a standard summary, the original article aimed to provide readers with practical steps for securing their own physical-silver investment.

The article stated that coins or bullion could both work, provided they were held outside derivative investments such as ETFs or mutual funds. It emphasized purchasing physical silver that the owner could access readily and without difficulty.

For people living in the United States and intending to remain there, the article said investing in U.S. silver coins made sense. It described them as the industry’s most liquid and most actively traded coins. Popular U.S. silver choices listed were 1 oz American silver eagles, 90% silver dimes, quarters, and half dollars issued in 1964 and earlier, plus U.S. silver dollars issued in 1935 and earlier. Other options named included Canadian silver maples, Austrian silver philharmonics, and bullion from recognized makers such as Johnson Matthey.

At the time of publication, Atlanta Gold & Coin reported that it did not have $50 million of silver in inventory, we do have a decent stock of various U.S., foreign, and privately produced silver coins and bullion.

At the time of publication, Atlanta Gold & Coin described itself as a leading silver coin and bullion dealer and stated that its knowledge and experience could help discuss options and determine what might suit an individual situation.

At publication, Atlanta Gold & Coin stated that it looked forward to hearing from readers and earning their business.

At the time of publication, readers were invited to call 678-515-5763!

Happy Treasure Hunting!