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.

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.

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,
1989 5,203,327, 1990 5,840,210, 1991 7,191,066,
1992 5,540,068, 1993 6,763,762, 1994 4,227,319,
1995 4,672,051, 1996 3,603,386, 1997 4,295,004,
1998 4,847,549, 1999 7,408,640, 2000 9,239,132
2001 9,001,711, 2002 10,539,026, 2003 8,495,008,
2004 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.

Silver Investing - Cleaning Silver Coins (Or Not)

For some time I have been meaning to write an article about cleaning silver coins. It wasn't high on my list because, in general, I don't recommend it except in a few special cases. Most dealers will tell you never to clean your silver coins (referred to as whizzing) as you may destroy any value it/they may have over and above the intrinsic value. Even if it doesn't have great value, you won't get a better price for a whizzed coin and, if you do it wrong, you may get less than if you just brought it in as is.

Another reason I have taken so long in writing this article is because I didn't have good pictures of coins before and after the cleaning process (actually I describe two different cleaning procedures in the article). I was able to find two good examples to work with which you can see in great detail along with an example of a really bad whizzed coin. You can read about it at Cleaning Silver Coins.

It appears that November's Silver Eagle totals are headed for the lowest amount so far of all months in 2011. There for a while it looked like the U.S. Mint wouldn't even reach 1,000,000 but as of today (11/28) the number stands at 1,284,000 with just two more days to go. Compare this with the next two lowest months of March (2,767,000) and April (2,819,000) versus January's 6,422,000 and September's 4,460,500 and you can see the numbers are all over the board. We'll have to see where December's total comes in at but I would be very surprised to see it go higher than 2,500,000.

Spot silver stands at $31.93 and can't seem to break the $32 mark for any length of time. That's down $3.36 in the last 30 days but still up $5.23 over the last year which is +19.59%. Time is running out for the rosy projections of a much higher silver price by year-end. But keep the faith since 2012 appears to be shaping up as a most interesting year.

Thanks for reading.

Silver Investing - I'm Going To Stop Puting Things Off, Starting Tomorrow

My last few silver purchases have been with a small dealer in my area. When I say small dealer, I mean small in that he is a one-man show. He travels around to local and regional coin shows, rents a booth and conducts business. Maybe I could get better deals elsewhere but Artie the dealer is as honest as the day is long and we trust each other.

Artie and I have a mutual friend that believes he missed the boat on profiting in silver and refuses to invest. The trouble is he has been saying that since silver was in the mid-teens. So he really did miss the boat then and he is still missing it. He has to stop puting things off. One thing our friend does like to do is spend time at the casino in our area. If he would take just half of his gambling funds and invest in some silver, he could be accumulating some real assets. I mean $40 will maybe get him 5-10 minutes of "fun" on a tight slot machine. With that same $40 (or less) our friend could become a full-fledged silver investor. It's all a matter of priorities and a little future planning.

My most recent purchase from Artie was a small amount of Brilliant Uncirculated (BU) Ben Franklin half-dollars (1948-1963). These are beautiful coins and, since they are uncirculated, each coin contains .3617 troy ounces of silver. With spot silver hovering around $35 per ounce, the intrinsic value (the value of the silver content only) of each coin is about $12.66. These coins would be worth a little more because they are uncirculated and in beautiful condition. Silver half-dollars that have been in circulation are considered to contain .3575 ounces of silver due to the wear factor. Based on the current spot price of silver, I paid a healthy premium for these half-dollars. But based on where I think silver is going, I won't be losing money on them. You can find out more about different silver coins at Silver Investing Guide and Silver Investing Simplified.

It can be confusing and frustrating trying to decide what to invest in these days. There are lots of conflicting stories on what is a safe investment. If you decide not to invest in precious metals and stay in other markets, I respect your decision. Just use good judgement and some good old common sense. Those that don't can expect the following...

When a person with money meets a person with experience,
the person with the experience gets the money and
the person with the money gets the experience.

Thanks for reading.

Silver Investing - Buying Silver From Classified Ads

Before I discuss the mauling silver prices have been taking lately, I want to share a couple of classified ads that recently appeared in my local paper offering silver coins for sale.

Ad #1: 250 Silver Dimes, $750. How good of a deal is this? Circulated silver dimes (I'm assuming they are circulated) are considered to contain .0715 troy ounces of silver. So 250 x .0715 = 17.875 ounces of silver. Divide $750 by 17.875 for a cost per ounce of $41.958. The seller probably placed the ad when silver was going for $39-$40 an ounce (just last week). Spot silver at the time of this post is at $31.05 so the current worth of each silver dime is $2.22 (31.05 x .0715). Paying the asking price of $3.00 per coin, or a premium of $.78 per coin, is a little steep. I'd pass on this one.

Ad #2: 6 Silver Dollars, 5 Walker 1/2, 5 Silver Eagles $575. let's look at this offer a little closer. Circulated silver dollars are considered to contain .7650 troy ounces of silver, Walking Liberty half-dollars .3575 ounces of silver and Silver Eagles a full-ounce of silver. So total them all up (6 x .7650, 5 x .3575 and 6 x 1) and you have 12.3775 ounces of silver. Divide $575 by 12.3775 and you get an asking price of $46.455 per ounce. Ouch!

To take advantage of either "deal" would require great faith that 1) silver will one day surpass $50 per ounce and, 2) the buyer is willing to buy and hold despite the volatility of silver. I think it will go above that price sometime in the future but there are probably better deals to be had with silver presently in the $30-$31 range.

Now on to the shellacking the price of silver has taken lately. I've discussed this before but there is a world of difference between the silver paper traders and those dealing with physical silver. From all accounts I have read, this drop in prices has U. S. precious metals dealers scrambling to fill the huge demand their customers see as a fantastic buying opportunity. Silver buyers in Canada are of the same mind. In an article titled "Maple Leaf silver coins seeing record demand" a spokesman for the Royal Canadian Mint stated they are on track to raise sales of its silver bullion coins by around 30 percent to 25 million ounces this year. The article is here.

You would never know that physical silver demand continues to be strong by watching the downward action - a probable result of technical paper trading in the futures market. The anti- higher-silver-price crowd certainly flexed their muscles last week - silver had its biggest single-day decline in two decades. More downward pressure came after the CME again increased margins on Friday. How many does that make now?

The U.S. Mint is starting to crank out Silver Eagles again after a slow September start. The total so far for the month is 3,425,500 (year-to-date 32,376,500) with a few more days to go. Still far from January 2011's total of 6,422,000.

Be sure to visit my web sites on silver to read helpful information on common U.S. and Canadian silver coins. Again, they are Silver Investing Simplified and Silver Investing Guide.

Thanks for reading. Keep the faith.

Silver Investing - Smart Phone Apps for Silver Coins

If you find yourself in a position to buy or sell silver coins (flea markets, private buyers/sellers, etc.) but are unsure of what they are worth at the moment, just take out your smart phone and find out. Here are a few smart phone apps that could save the day.

The first is called RRBI Silver Coins and is compatible with iPhone, iPod touch, and iPad. Requires iOS 3.0 or later. It's free and can be found at iTunes. Check it out here. The second is an Android app that essentially does the same and is also free. It can be found here. Hope you find this useful.

I just posted an entry on my Gold Investing Blog where I discussed gold and silver prices on September 11, 2001. Silver was at $4.18 and gold at $271.00. At the time of this post, spot silver is at $41.16 which is the strongest showing by far of other assets. You can see the article titled "Market Performance Since 9/11" here. It covers a number of asset classes and is interesting.

Silver eagle totals for August came in at 3,679,500. That is 3,679,500 ounces of silver used in support of that program but the U.S. Mint actually used quite a bit more in support of other programs - namely: 1) the 5-ounce 'America the Beautiful' coin series which used 175,065 ounces of silver in August and 1,902,000 ounces year-to-date; and 2) the proof U.S. Silver Eagle program which had sales of 133,460 in August and a year-to-date total of 726,921. So far in September 651,000 silver eagles have been produced with a year-to-date total of 29,602,000. Now that's a lot of silver. I hope they can keep it up.

I came across an interesting YouTube video titled "How are Silver Coins Minted?". Produced by Endeavour Silver Corp. (a mid-cap silver mining company headquartered in Vancouver B.C.), you will see the process from the melting of raw silver to the production of silver blanks (planchets) to the stamping out of silver rounds. The video runs just over six minutes and you can see it here.

My posts to this blog have been sporadic and will remain so for a little while longer. Once I get my scheduled surgery out of the way on 9/15, I hope to do better. Thanks for reading.