Coins vs. bars and rounds

Discussion in 'Silver' started by dccpa, Mar 6, 2011.

  1. dccpa

    dccpa Active Member

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    The current market environment seems like a good time to revisit this issue. As most know, I also have a lot of my money invested in stocks, but that is an entirely separate debate.

    I have only purchased coins. Since I collected coins as a child, I probably have a natural affinity for coins over other forms of physical pms. However, my goal is to make money and that overrides any personal preference based upon how silver looks. My theory was that the those buying bars and rounds would start out with more silver, but that the premium increases in coins would more than make up for the lower number of ounces. AELSteve has confirmed that the premium on gold coins is a percentage (4%?), but he stated that the percentage on silver coins is a fixed amount. So, possibly gold coins may end up being the better investment, but both forms of physical gold should do well. And since gold coins have the advantage of being easier to move in and out of countries, I am comfortable with buying gold coins vs. gold bars. But I need to reanalyze my silver investing. To keep from branching out to endless possibilities and comparison, I would prefer to keep the topic focused on .99 or finer silver.

    Because bars and rounds have never interested me, I have not followed them closely enough. As the physical market for silver tightens, premiums are going to expand. The head of the RCM was recently quoted on King World News as saying that he expects premiums on silver to increase. Has anyone been tracking the premiums on coins vs. bars and rounds for the last year? Even with bars, you have the debate of buying 1, 10, 100 or 1000oz bars. My question is directed towards investing for long-term net wealth creation/preservation vs. immediate barter needs. If bars are a better investment than coins, would it be better to own thousand oz bars vs. 10oz bars? If you are expecting to sell to a industrial user, I believe they use the 1000oz bars and they might not pay any extra premium/oz for the smaller bars. Who we think will be the buyer for our silver should have an impact on what form of silver we invest in.


    The information below is for those who will be buying coins and myself, if I remain convinced that coins are the better form of physical silver investment:

    Back in early September was my last significant silver purchase. That purchase included 2010 lunar tigers and Pandas, and 2011 kooks and Canadian Timber Wolf coins. The premiums were approximately as follows:

    Timber Wolves - $2
    Tigers and Kooks - $4
    Pandas - $7

    Using US ebay pricing, I have been tracking the coins. The pricing for Pandas varies too much to get an accurate reading, but the Timber Wolf coins appear to have been by far the best investment. The selling prices for the Timber Wolf coins appear to be as high or higher than for the other coins, yet they had the lowest premium. So, while I don't like the striations on RCM coins, any future purchases of coins will be heavily weighted towards the RCM Canadian Wildlife Series Coins. The second Wildlife coin, announced in early February, is the grizzly bear. Personally, I don't care for the Grizzly design, but I would like to get everyone else's opinions on the coin. The Grizzly coin should be issued later this month. The third coin is due out in September around the time the Lunar Dragon coin is issued. Unless I change my mind about buying coins, those 3 coins are my planned purchases for 2011. Depending upon fiat availability, I may swap out ASE to buy the new coins.

    Below is a link to the new Grizzly coin:

    http://www.coinnews.net/2011/02/28/2011-canadian-grizzly-silver-bullion-coin-available/
     
  2. Photonaware

    Photonaware Active Member

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    Not sure why you believe the Timber Wolf has been such a great investment outperforming other coins.
    You say you used e-Bay USA for your study - well that sums it up - people out there are paying crazy prices on e-Bay , here in the UK also.

    I was able to buy gold and silver most of last year on e-Bay but prices have gone through the roof and there are cheaper places to buy.

    I just checked the ( USA ) APMEX website today and they sell Timber Wolves only $1 above the standard Maple, which is to me the benchmark coin, as more often than not, the cheapest one ounce fine silver coin available. There was a period before Christmas when it was impossible to buy the Wolf and dealers were claiming all the inventory had been sold. I have had no problem buying the Wolf at decent prices, well below Perth Mint coins and sometimes below ASEs. The majority of e-Bayers are not doing their homework.
     
  3. dccpa

    dccpa Active Member

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    Your UK perspective does not match that of the US dealer pricing. I use the best available price for my comparisons of US dealers. Apmex has had the best price on Timber Wolf coins (once Tulving ran out) and Gainesville usually has the best price on Lunars. I check Tulving daily for pricing and purchased my Timber Wolf coins from them, but they have been out them for some time. Many of my recent purchases for clients have been through Provident Metals, but I have only followed the pricing at Provident for 2-3 months. The premiums on the Wolves at Apmex are $4.19. The premium on current year PM coins at Gainesville is $4.10. So, US dealer premiums on PM coins has not changed since September, but the US dealer premiums on Timber Wolf coins have more than doubled and now equal the PM coins. If I sell the Timber Wolf coins back to a US dealer, I will receive a premium of $1.50-$2.00, for a max premium loss of $.50. If I sell a PM coin back to a US dealer, I will receive a premium of $2.00 for a premium loss of about $2.00.

    I use US ebay pricing to track sentiment and to understand what I could possibly sell the coins for even after subtracting 16% in ebay and paypal fees. For my investments, I will sell to whomever will give me the overall best deal whether that is a dealer, a friend, an ebay buyer or a message board member. I admit it, I will be a selling slut when it comes to disposing of my pms. It is possible that the answer to which coin is a better investment will vary by country. But for the coins I purchased in September, the Timber Wolf coins have been the better investment for me. At this time, I do not plan any more significant purchases of Panda coins. I did buy 1 2011 Panda because I really liked the design, but the premiums on Pandas are too high from my perspective.

    I may not respond to further comments regarding the Timber Wolf coins vs. PM coins. The more important debate is about what form of physical silver to purchase and I don't want to get sidetracked from that debate.
     
  4. wes hightower

    wes hightower New Member

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    i think part of the reason the ebay prices are higher is because some folks are looking to pick up smaller amounts and pay 2-3 dollars shipping rather than the minimum shipping of 10-15 from a place like gainesvillecoins or nwmint. for people just looking to pick up a couple ounces at a time, ebay will still come out cheaper after shipping despite the higher premium over spot. not everyone has a local shop they can just walk into.
     
  5. Matthew 26:14

    Matthew 26:14 New Member

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    I'm the same. I own no silver bars at all, none, ziltch, zero. I only own bullions coins and some proofs. My main reason for buying coins has been to give me some measure of price protection in a falling market.

    If you buy bars they are worth 1 and 1 thing only - the metal value. ie. spot or there abouts. A bullion coins gives you 2 things its worth, the metal value + a collectors premium.

    If silver drops my bullion coins will also drop but not to the extent that bars do. Silver at say $20 an oz will still allow me to sell my Lunars for example north of $30 a coin whereas bars will be worth $20.

    Yes there is a premium on buying bullion coins today but overtime that premium or collectors value rises giving me downside protection and the bullion coins also maintain premium over bars in a rising market.
     
  6. dccpa

    dccpa Active Member

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    That is a good point Matthew. I talked about the premium expansion on ASE last year in a similar discussion. When silver crashed to $9 in 2008-2009, ASE premiums went to about $4-6 from below $2. I know Mahoney has claimed the premiums were a lot more, but that is false and easily disproven. If premiums on ASE had been 2-3 times the price of silver, I would have dumped my ASE and purchased a form of silver that was selling for near spot.

    However, I was not watching bars and rounds closely during that time period. So, I do not know if the premiums expanded on bars and rounds too. From what I remember, they did not, but that memory is just a vague recollection vs. specific price memory. In reality though, I am not too concerned with downside protection.

    Because of premium expansion and ease of portability, my gold will stay in coins, but I am willing to dump a lot of my silver coins if I feel the bars and rounds will make me more money. I could sell the ASE and other coins to clients instead of them buying from the dealer, so I have a market for a lot of my silver. So far, I haven't seen anyone write about the premiums on bars for the last few years. After tax season, I will try to research that subject. However, I was hoping some of you stackers had followed the pricing of bars closely enough to remember what happened to premiums during the up and down swings in silver prices.
     
  7. Agauholic

    Agauholic New Member

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    Well in UTAH, since gold/silver coins may/have returned at currency.

    COINS will *NOT* attract CGT.

    I'd suspect bars and bullion products may not yet be part of this.... so it kinda gets you thinking about holding local coins in your sovereign state for the CGT benefits... (ie tax free)
     
  8. Bulawan pilak

    Bulawan pilak New Member

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    I think it comes down to how much you enjoy what you are doing....If you enjoy buying interesting and nice coins you will make the money back as other people with have that same interest, even if the price goes into the 100's.

    However, if Phase 3 plays out and more investors wish to purchase silver, I do not think they will care if the silver you have is a Kook, or a Timber Wolf or a Silver Buffalo, so the quick buck will be made with bars of silver at 1 oz or 10 oz lots etc. The important thing is knowing who you are selling to and remembering what coins you have are of interest to collectors.

    It is the artists way of collecting silver....some will want the rarest and some will just want it because everyone else is getting into it.
    Buy coins for the sport and the long term enjoyment....if you want to make quick money then bars would be a way of doing this.

    Solution: Buy both, coins to maintain your interest and that extra quality and bars to get the quick sale from new investors during the popular anticipated Phase 3 moment. And stick with Silverstackers to maintain the professionalism in stacking Ag and Au.....

    PS, I did not receive any Ag or Au from promoting Silverstackers.....but I would like to.... :D
     
  9. Kasanga

    Kasanga Member

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    I agree with bulawan buy both and have more of the one you think will perform best then your risk is spread for both rise and fall in the market
     

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