I normally collect junk silver coins due to the relatively low premiums over silver price. But I was wondering about how much do premiums lose or gain over time? I.E. If I pay $10 over spot for a Morgan Silver a Dollar, does that premium over time stay pretty consistent? I know supply & demand effect a lot of that, but does anyone have a study or facts that could clear the air?
Great question, even though it comes up every so often. Premium is a handicap if you need to sell in a hurry.
My understanding is silver is like the Melbourne Cup. Back 10 horses and still lose. Back that 40/1 shot no one looks at and if it's your year it's your year. Unless you're Bart Cummings, low premium seems like a safe bet. Mugs game.
If spot is $20 then the going price for a bullion coin is say $22, and you pay $30 for a Morgan and then silver doubles, the following will probably happen. 1. A bullion coin will be say be $43 or $44. 2. A Morgan May hit $55 at best. 3. You have made 100% on your bullion coin. 4. You have made 83% at best on your Morgan. The reason for this is that the small premium on a bullion coin is prefabrication, manufacturing, and distribution, which stay constant, and a small profit percentage which goes up with spot. The premium on a Morgan at the $10 you suggested, either stays constant or may increase slightly with spot, but rarely at the same proportion. This means that there is a better return on bullion coins or rounds, compared to premium coins. Yes occasionally you may get a splendiferous premium coin that makes you a fortune, but these are few and far between. The best option is to buy bullion, and maybe only one Morgan for your personal pleasure. If you find a better Morgan, buy it and sell your earlier one. Don't fall for the trap of buying every year and every mint, and every finish etc for premium coins.
One significant element in the premium for new issues is the "because we can" thing. Bubble popularity things that cost 5x to 7x or more of spot (Dr Who, Harry Potter, Hobbits, Transformers, etc) have a pretty fair risk of not holding those price levels as the years roll on. If you stick with low-premium bullion (ASEs in the US, etc) you won't get hurt if you resell. If you stick with established "semi-numis" bullion that have a strong following (Perth Lunars, Kooks, etc) you similarly won't get hurt. Morgans are the second most-collected coin in the US (second only to the Lincoln penny), so if you don't overpay for Morgans you probably won't get hurt with them either. ASEs are one of the safest low-premium bullion coins in the US because they usually fetch the best price levels when resold. If you make conservative, prudent purchases and don't get caught up in the overpriced popularity queen of the day coins, you should be able to getting beat up too badly --- other than by what happens to spot.
Nah not really. Just got a thing for crowns right now. Bought like 40 in the last few of month. They r pretty hard to get
I love my Dr Who, but I haven't been swayed by those coins, especially at the price. Almost, though. If you haven't seen it, why not head over to iView and watch The Men Who Made us Spend (ep 3). That gives a good back story on all this merchandising, selling to adults as if they are kids. What a great way of doubling your returns on PMs, print a picture on it of teenage mutant ninja turtles (pun intended).
That's a tough call. but here's what I'm thinking: The world is moving faster with every passing year. Changes, technologically, culturally, politically, and virtually in every other way are apparently happening over a much shorter time span than they did 100, 50, 20, and even a few years ago. We don't know what uses for silver may decline or disappear or increase or appear over the next 40 years. Forty years ago, no normal person could have predicted the sharp decline in demand for industrial silver usage in the photography/videography sector. What impact on silver's uses will new materials like graphene and others not developed yet have in 40 years time? I don't know. We can surmise that if in 40 years the silver blobs (common, non-denom, bullion bars) you purchased this year needed to be sold and A: the silver bullion trading market is in the dumps (bear trend/consolidation) then your blobs will almost certainly not bring you any premium and in fact you may have lost a lot of value depending on the inflation adjusted price for silver in 40 years B: the silver market is strong (bull market) then your blobs may have increased significantly in value depending on the the inflation adjusted price for silver in 40 years. We can surmise that if in 40 years the modern silver collector (semi-numismatic) coins or medals or numismatic coins or medals you purchased this year needed to be sold and A: the silver bullion trading market is in the dumps (bear trend/consolidation) then your collector coins or medals may or may not have lost or gained value. There's no way to tell and U.S. Morgan dollars that are hot today may loose favor to some degree in the eyes of collectors and Chinese silver medals may be the hot ticket item in 40 years....no one knows for sure. Premiums on some coins in 40 years will likely be negatively affected by a depressed silver bullion trading market while others will not be affected at all. For example, I was watching this 18 year old coin on eBay a while back (still have it in my watch list): http://www.ebay.com/itm/1996-S-Silv...84?pt=Coins_US_Individual&hash=item4865f4fbd8 . We have been in a depressed silver bullion market for a couple of years now and yet a coin that cost a few dollars (let's say $15 since the issue price for a full silver proof set was $18 in 1996) in 1996 (average silver spot was $6-$7 USD in 1996) sold for $500. Similar quality coins have been sold recently on eBay for less this year but the point is, it turns out that you would have made a smarter buy back in 1996 to have purchased a collector coin like that than a blob of silver which would net you today (August 2014) about $6 USD for an equal weight of silver than the same amount of silver that's in a 1996 Kennedy half dollar. Sure, in 1996 you would likely have paid nearly triple the spot price as a premium for the proof Kennedy half dollar, but there's a good chance that you'd be making quardrupling the return on that premium today. Of course the example coin I gave is not a typical silver collector coin, but I use it to illustrate the potential of premiums on some coins. B: the silver market is strong (bull market) then your semi-numi silver coin's premium may have been outpaced (percentage-wise) by the hypothetical high silver spot price for an ounce of silver. To add further to the disparagement, it's possible that demand for collector coins in 40 years may be in decline making blobs a better buy today, in hindsight 40 years from now. Bottom line...no one really knows for sure the answer. Edit: chart on US Mint proof set issue prices vs AVERAGE value today: http://coins.about.com/library/US-coin-values/bl-US0000-Modern-US-Proof-set-Values.htm .
