Monday, November 26, 2012

The Last US 90 Percent Silver Coins

Before focusing on the main subject of this post, I want to mention a nice silver coin found at a garage sale. I attend a fair number of garage sales but very few that have silver coins. After seeing the ad in our local paper with a mention of silver coins, it was worth it to me to drive a little distance. Seeing that item listed in a garage sale is always taking a chance since there are a number of situations you can run into. The ideal situation is when you can find some really nice silver coins and get them at a bargain price because the sellers don't understand what they have. There are other times you may find silver coins but they are way over priced and you may break even if (when?) silver hits $100 per ounce. The worst case is when the seller thinks they are silver and valuable but you find out they are neither silver nor valuable.

What I ran into was some nice silver coins that the seller knew the value of and had them priced a little over their true value based on the current spot silver price. There were some Roosevelt dimes and Standing Liberty quarters in fair condition but what caught my eye was the coin you see at left - the first U.S. commemorative coin. Officially called the World's Columbian Exposition Half Dollar, this coin features the bust of Christopher Columbus on the obverse with the image of his flagship, the Santa Maria above two
hemispheres, on the reverse. A total of 950,000 were minted with a 1892 date and 1,550,405 were minted with the 1893 date so they are not especially valuable. This 90% silver coin is considered to contain .3575 troy ounces of silver if circulated and is worth approximately one and a half times it's intrinsic (silver melt) value if the wear marks are minimal. If uncirculated, this coin contains .3617 troy ounces of silver and can be worth several hundred dollars in the higher Mint state grades of MS65 or higher. I didn't get a deal on it but paid less than $20 and am happy to get the first commemorative coin that the U.S. issued.

Now onto the subject of The Last US 90 Percent Silver Coins...

Back when I was selling gold and silver for a large precious metals dealer in the midwest, it was not unusal to receive calls from individuals who had inherited a number of coins for which they hadn't the slightest idea of their worth and wanted help. With the large variety of old US gold and silver coins, it is no wonder the average person is confused as to their value.

And again, I am aware of more than one situation where finders of old silver coins took them to their local bank to convert them into the only money they were familiar with - paper (fiat) money, thereby allowing the bank to cash in on the silver profits that should have rightfully been theirs. Too many people don't understand the true value of pre-1965 US silver coins.

Finally, in my last encounter with a traveling buyer of gold and silver (who had set up shop at a local motel for 2 days), he mentioned that he was buying Morgan and Peace silver dollars for $15 apiece. The average person bringing in some silver dollars were probably thrilled with that price. The problem is who ever brought in silver dollars to this buyer should have been getting more like $21 or $22 each based on the spot silver price at the time. He was screwing them out of about $7 per coin.

So I decided to write a quick reference book to counter the lack of knowledge about pre-1965 silver coins. Titled "The Last US 90 Percent Silver Coins" it is now available on as an eBook for the various flavors of Kindle plus iPad, iPhone, PC, Mac, Android, BlackBerry or Windows Phone 7 with a free Kindle Reading App.

Priced at under $4 it has in-depth information on the Roosevelt Dime (1946-1964), Mercury Dime (1916-1945), Washington Quarter (1932-1964), Standing Liberty Quarter (1916-1930), 1964 Kennedy Half Dollar, Franklin Half Dollar (1948-1963), Walking Liberty Half Dollar (1916-1947), Peace Dollar (1921-1933) and Morgan Dollar (1878-1921). You will find it at The Last US 90 Percent Silver Coins if you want to take a free look at the table of contents plus the first chapter to see if it is right for you. I plan on expanding it in 2013.

At the time of this post spot silver is at $34.24. up $2.08 (6.48%) in the last 30 days and $3.19 (10.30%) in the last year. So far in November the U.S. Mint has produced 3,059,500 Silver Eagles which is 32,007,500 year-to-date. They should be able to top the 2010 total of 34,662,500 but it will take some doing to top the Silver Eagle total for 2011 of 39,868,500.

Silver has made some nice moves up since the election and it would be nice to see that continue.

Thanks for reading - keep the faith.

Saturday, June 23, 2012

A Lesson In Silver Investing

In a recent episode of Pawn Stars, a client brought in an impressive amount of silver to sell. This segment of the show provided some insights into why investing in silver can be a smart move.

If you are not familiar with Pawn Stars, it is one of the top cable TV reality shows currently being aired. The scenes take place at a small pawn shop located in Las Vegas between downtown and the start of the Las Vegas Strip (I have driven past the shop on a few occasions but never stopped - there was always too long a line of people waiting to get in). As with all pawn shops, the public is free to walk in to pawn or sell their valuables with some leaving highly satisfied and others having their hopes of quick riches dashed. 

On this particular day, this young man brought in a cart containing 3,372 ounces of silver. He had taken his father's advice to invest in silver about 12 years ago when it was cheap to buy. In studying the scenes, it appears this silver "pile" consisted of 1) one bag of circulated 90 percent silver dimes (715 ounces of silver), 2) one bag of circulated 90 percent silver quarters (715 ounces of silver), 3) ten 100 ounce silver bars (1000 ounces of silver), and one 1000 ounce silver bar (942 ounces of silver) for a total of 3372 ounces of silver.

Just a few comments on the above list. 1000 ounce silver bars are rarely (if ever) exactly 1000 ounces. They are somewhat roughly cast so the refiners stamp the actual weight of each bar along with a unique serial number, purity and the hallmark of the refiner. Because of their weight (just under 70 lbs), investors usually don't take delivery of their 1000 silver bars but pay a reliable financial organization to store the bars for them for a fee. And if they are wise, they only invest in 1000 ounce bars that are allocated or assigned to them by serial number. One last note, if the hallmark or identity of the refiner is well recognized, the silver bars are accepted as good with no testing necessary. If not, the buyer may and should require testing. The hallmark I saw on the 100 ounce bars was Engelhard which is rock solid. The hallmark on the 1000 ounce bar was not clearly shown and evidently required testing by drilling into the bar and testing the shavings with nitric acid. It was good (more info on silver bars can be found at Silver Bullion Bars).

Over what period of time this silver was accumulated was not discussed. But if the majority was purchased about 12 years ago, the seller may have paid about $5 per ounce (a good average for all 12 months of 2000). Let's do the math working with that figure...

$5 times 3,372 ounces of silver = $16,860 initial investment.
Spot price of silver at time of sale was in the low $30's.
Buyer offered close to the spot price, total of $110,901.00.
Final offer was $111,000 which the seller accepted.
$111,000 minus initial investment of 16,860 = $94,140 profit.

This is a nice profit of course but the IRS probably watches this show too and the seller has taxes that must be paid. I believe the $94,140 is treated as a Long Term Capital Gain and taxed as such. And if the seller didn't keep his 12 year old receipts, $111,000 may be the taxable gain (this is my take on it and is not to be considered legal or financial advice).

The burning question is did the seller sell too soon? The current spot price of silver is $26.90. If the price stays under $30 and in a narrow trading range for the next few years, he will look like a genius. On the flip side, if silver goes to $50 per ounce or higher in the next year or two (as many experts predict), he will have lost a bundle. My questions to him would be why now and why didn't he keep some back.

Whenever silver experiences a significant price drop (it is almost half of what it was in April 2011), physical silver becomes a hot commodity. You will have to decide if this price low in silver represents a final buying opportunity before the price takes off to unimaginable heights. As for me, I would not be selling at this time but looking to invest in more. That would include low premium silver bullion and leaving the higher priced, higher grades to others.

By the way, if you are interested in viewing the Pawn Star episode discussed above, you can find it here.

Thanks for reading. 

Thursday, April 26, 2012

Silver Investing - The Other One-Ounce Silver Coins

When it comes to one-ounce silver coins, the American Silver Eagle and Silver Canadian Maple Leaf seem to take center stage. But there are several other one-ounce silver coins that are worth investing in if you come across them and the price is right.  Although not quite as popular as the above two, the coins I list below are well recognized and their liquidity tends to be very good.

Other one-ounce silver coins (not in any particular order) include the Silver Koala, Mexican Silver Libertad, Silver Kookaburra, Silver Panda, Silver Britannica and Silver Philharmonic (pictured below).

The Silver Philharmonic was first minted in 2008 by the Austrian Mint in Vienna. It closely matches its counterpart - the Gold Philharmonic first introduced in 1989. This .999 fine silver bullion coin features the image of the "Great Organ" found in the concert hall where the Vienna Philharmonic Orchestra performs with the flip side featuring a variety of musical instruments.  You can't go wrong investing in this coin. 

Another silver item I want to mention is this Silver Krugerrand. When I first spotted this Krugerrand, I assumed it was produced by the South African Mint as a silver version of the famous Gold Krugerrand. Come to find out this is not a legal tender coin produced by the SA Mint (they do not produce a Silver Krugerrand) but is considered a silver round produced by a private mint. This silver round is commemorating the continuous production of the Gold Krugerrand from 1967 until 1983. I purchased it because it closely duplicates the gold version and is more appealing to me than many of the other silver rounds I see advertised. The Silver Krugerrand isn't that rare so you shouldn't be stuck with a high premium if you decide to purchase. I would think the liquidity would be good because of the familiar images on both sides.

If you were to have purchased either the Silver Philharmonic or the Silver Krugerrand one year ago, they would have cost you over $50 each as the spot price of silver peaked at just under $50 on 4/24/2011. Today you should be able to purchase each for somewhere in the low $30's (spot silver is at $30.66 at the time of this post). If the price of silver goes back up (as many predict it will), you will find yourself with a nice profit. 

Stop by the Silver Investing Simplified and Silver Investing Guide for more info on silver investments.

Thanks for reading.

Sunday, March 11, 2012

Beware Of These Morgan Silver Dollar "Deals"

Let me first say that the Morgan Silver Dollar is one of my favorite silver coins. But I want to clear up some of the dis-information and half-truths in some of the ads I have seen for these historic coins. There is no shortage of Morgan dollars despite the fact that 270,232,722 were melted down in 1918 by the U.S. Government to replenish their silver stockpile. Every coin show I have been to, including the latest one mentioned in my Gold Blog, has had a surplus of Morgans for sale in many different grades. So if you are shopping around for some Morgan dollars beware of misleading ads such as these...

One ad was promoting 1921 Morgans, stating this was the last year they were struck (true) and implied they had special value because of it (false). The truth is Morgan dollars were minted for the first 11 months of 1921 - a total of 86,730,000 between the three U.S. Mints. Not exactly a small number and far from scarce (the 1921 Peace dollar has a higher value as only 1,000,473 were minted). So don't go paying a high premium for circulated or uncirculated 1921 Morgans. And be VERY careful if you are interested in Mint State 1921 Morgans that are graded and slabbed. Even some of the higher grades are not that scarce and counterfeit Morgans in these grades are not unheard of. If you want truly special Morgan Silver Dollars, look for Carson City Morgans in the higher uncirculated grades and shop around.

Another ad states you can buy Morgan (or Peace) Silver Dollars at a very low premium over the spot silver price. So if spot silver is at $30 and you can get each silver dollar for $32 it sounds like an okay deal. They are hoping the buyer doesn't know the actual silver content or just assumes that these 90% silver dollars contain an ounce of silver. They DON'T. An uncirculated Morgan and Peace silver dollar contain .7734 troy ounces of silver and at $30 spot their intrinsic or melt value is $23.20. A very good deal for the seller but a very bad deal for the buyer. The silver price would have to go up another $11 just to break even on this deal. And if the silver dollar is lightly circulated, it is considered to contain .7650 taking in account the wear factor. If you are not sure of how good some of these deals are, ask any reputable dealer and they will tell you.

After a strong showing for Silver Eagles in January, the numbers kind of dropped off a cliff in February - from 6,107,000 to 1,490,000. So far in March the number is at 1,065,000. Gold Eagles are down in numbers too. After going through 127,000 ounces of gold for all the Gold Eagles produced in January, only 21,000 ounces of gold were used for February's Gold Eagles and 21,000 so far in March. Let's hope they "spring ahead" in numbers in the coming months.

Thanks for reading.

Saturday, February 11, 2012

Silver Eagles - Missed It By That Much

Although entirely possible, I really didn't think that the January 2012 final number of Silver Eagles minted would top the January 2011 number of 6,422,000. And it didn't. The 2012 number came in at 6,107,000. Missed it by 315,000 but it was/is still an impressive number. In February of 2011, that number was cut in half (3,240,000) and with only 710,000 Silver Eagles minted so far in February 2012, they will be lucky to make it to the half way mark of January's total.

I want to talk a little about bags of junk silver. When I first started selling precious metals in 2003, spot silver was hovering around $6.00 an ounce. With a full bag of junk silver dimes, quarters or half-dollars considered to contain 715 ounces of silver, a full bag ($1000 face value) could be had for approximately $4300.00. The old-timers (the sales staff that had been around for 20+ years) talked about how the company was buying back bags of silver for $35k when silver hit $50 an ounce. I was impressed by that talk. Back then I didn't think it was possible again in my lifetime. Now I do.

I just visited a site that is offering for sale: a full bag of 90% junk silver dimes, quarters or half-dollars for $24,700 with spot silver at $33.65. That works out to be about $.90 cent premium over spot. That might be a little steep for many budgets BUT they are also offering half-bags for $12,405. That is 357.5 ounces of silver at $1.05 premium over spot. BUT WAIT! You can also get a quarter-bag for $6265. That's 178.75 ounces of silver at $1.40 premium over spot silver. THERE'S MORE! They offer a tenth of a bag ($100 face value) for $2531. That's 71.5 ounces of silver with a premium of $1.75 over spot. Still too much? Finally you can buy one- twentieth of a bag ($50 face value) from this company for $1276.50. That is 35.75 ounces of silver at $2.05 premium over spot.

I really like junk silver and if you are shopping for bags or partial bags of junk silver, this should give you a good idea of competitive prices. Some dealers also offer junk silver bags of silver dollars (Peace or Morgan) but a full bag of those contain 765 ounces of silver. You can find out more about junk silver bags at Junk Silver Bags.

Thanks for reading.

Wednesday, January 11, 2012

Should Physical Silver Have It's Own Spot Price?

Silver had a great start in 2011, climbing the chart steadily until the great silver price "take-down" in early May. After flirting with $50 per ounce (high of $48.48), spot silver drifted in a lower range and hit a low of $26.87 around year-end. Officially, silver lost about 9% for the year (it's first loss in three years). If only there were two prices quoted for silver, one for the paper traders and the other for the physical market, we would see quite a different story.

The physical silver market is booming and don't let anyone tell you different. Total 2011 Silver Eagles were reported at 39,868,500 (most likely they topped 40,000,000 but weren't reported that way). Here are the totals for Silver Eagles beginning in 1986 (their first year)...

1986 5,393,005, 1987 11,442,335, 1988 5,004,646,
5,203,327, 1990 5,840,210, 1991 7,191,066,
5,540,068, 1993 6,763,762, 1994 4,227,319,
4,672,051, 1996 3,603,386, 1997 4,295,004,
4,847,549, 1999 7,408,640, 2000 9,239,132
2001 9,001,711, 2002 10,539,026, 2003 8,495,008,
8,882,754, 2005 8,891,025, 2006 10,676,522,
2007 9,028,036, 2008 20,583,000, 2009 30,459,000,
2010 34,764,500

On January 3, the first working day of 2012, the US Mint received orders for a whopping 3,197,000 Silver Eagles. That is about 8% of 2011's total figure. It should be noted that the Mint doesn't sell Silver Eagle coins directly to the public but rather through its network of authorized purchasers. So it isn't actual sales to the other coin dealers and investing public. But this huge number seems to indicate the Mint's authorized resellers expect strong demand.

I want to call your attention to this article "For the first time in history, Silver Eagle & Maple Leaf sales will surpass domestic silver production in the U.S. and Canada in 2011". Although it points out that silver production has fallen in both countries, the demand for Silver Eagles and Silver Maple Leafs is on the rise. This interesting article with multiple charts can be found here. Lest you fear you won't get your fair share, at the end of 2011 the U. S. Mint stated "it has enough American Eagle gold and silver bullion coins to meet demand and does not expect to allocate them in early 2012". This Reuters article can be read here.

That's it for now. Thanks for reading.