Premiums on Fractional Silver

[iluc]

It makes sense to me that, ounce for ounce, gold costs more in fractional weights (1/10th, 1/25th, 1/2 oz).

What isn't as clear is why fractional silver, in the form of half dollars, quarters, dimes, and War Nickels do not carry similar premiums. Especially when they are so hard to counterfeit as a result of their distinctive appearance from age/handling. Is it because an ounce of pure silver is still readily affordable to most buyers? Would you expect that a similar premium will develop if/when silver appreciates into the hundreds of dollars per ounce?

If we can reasonably expect such a premium to accrue in the future, then that, in itself, would be a significant source of return.

Thoughts? Explanations?

-Ian

[68Camaro]

There is no solid consensus pricing, yet. Everyone is working on a guess, and the only guide at this point is spot silver, which isn't even real - it's a manipulated theoretical paper price, but it's what people have so they use it, even if it is "wrong".

There were billions in US silver minted alone. A lot has been melted, but there is still hundreds of miilions left, at least. And a small number of people interested in it. Compared even to modern ASEs there isn't the same level of interest or appreciation.

It is just a fact, and one to be exploited, that for a time certain coins are premium free, or low premium, and while (if I had any at all) I would say I had a supply of the popular ones, it is these others that I have spent much of my attention on. The modern gold commemoratives, which have been noted here a few times, are another coin - though gold - which have little attention, and with some looking, can (or could recently - I can't speak to the instantaneous market) be had at no premium, and even below melt. What a deal! (IMHO)

But, again, I don't own any gold or silver. This is all speculation.

[Hawkeye]

My 2 (copper) cents:

I have bought a few fractional silver rounds (1/4oz and 1/10oz) from Provident and APMEX just to see what they looked like, and the premiums on those were very large. I personally think that 90% US or 80% Canadian coins are not going to demand as high of a premium for two reasons. 1. Purity. .999 pure silver is probably going to always bring a higher premium than 90% pure. (unless there is some numismatic value) 2. Oddball silver amounts. If I buy a 1/10 oz silver coin, it will have 1/10 oz .999 silver stamped right on it. A 1964 dime, by contrast, has .0723 oz of silver in it and you can't tell that by just looking at it. I think that, if silver ever goes over $100/oz, we will start to see more fractional stuff minted and we will see the premiums go up.

[68Camaro]

Bullion silver (and gold) is just that. It is wealth retention. It's not intended for significant circulation - daily trade.

Keep in mind that the circulating silver (and gold) is/was not pure because pure alloys are soft, and wear badly. They were chosen to be alloyed on purpose! This does not debase them, it makes them useful!

ASEs and bullion rounds, for all their desirablity of purity, are useless for anything but storage, and exchange in bulk. In that, they have their principal, and important, use, but they will quickly become trashed if they went to common daily usage.

[beauanderos]

It makes sense to me that, ounce for ounce, gold costs more in fractional weights (1/10th, 1/25th, 1/2 oz).

What isn't as clear is why fractional silver, in the form of half dollars, quarters, dimes, and War Nickels do not carry similar premiums. Especially when they are so hard to counterfeit as a result of their distinctive appearance from age/handling. Is it because an ounce of pure silver is still readily affordable to most buyers? Would you expect that a similar premium will develop if/when silver appreciates into the hundreds of dollars per ounce?If we can reasonably expect such a premium to accrue in the future, then that, in itself, would be a significant source of return.

Thoughts? Explanations?

-Ian

Yes, beyond all doubt. In fact, I'm betting on it

[Mossy]

With coins, the "premium" to cover manufacture was already charged ("Seigniorage"), long ago. I'd be a little skeptical about people adding a fixed overhead for fractional silver, and I'd expect premiums to vanish if things got really nasty. Who would accept nine and a half tenth ounce round in change for a one ounce round?

[beauanderos]

With coins, the "premium" to cover manufacture was already charged ("Seigniorage"), long ago. I'd be a little skeptical about people adding a fixed overhead for fractional silver, and I'd expect premiums to vanish if things got really nasty. Who would accept nine and a half tenth ounce round in change for a one ounce round?

First of all, I'll take as many fractionals at 9.5:1 as you can provide... ie, one 1/2 oz, one 1/4 oz, and two 1/10 oz. in trade for a one ounce silver round. Any day. But I don't think that was the question he was alluding to. I think he's wondering if a premium will ever be seen for silver dimes over quarters, quarters over halves, etc. As in spot times 1.1 for dimes, spot times 1.075 for quarters, spot times 1.05 for halves. I am convicted that that day will arrive, and it will be market driven, given a few caveats. First, we're talking about silver at MUCH higher prices, maybe in excess of $200 an ounce... which would predicate that buyers of limited means would, by needs, bid up the prices of the smallest increments of silver coins that they could afford. Second, we would have to be talking about uncirculated coins, as wear factors would alter the equation. Third... at some point sellers will no longer be willing to part with their stash for increasingly worthless currency, of any global fiat. At that point, sellers will trickle single coins into the market, perhaps just to pay bills... and that is when you''ll see such premiums develop for the smaller-sized coins. With everything else being the same, anyone who stockpiles BU dimes right now (or takes the time to sort and save only the 1964's) will benefit to a greater extent than those who are picking up quarters and halves.

[Copper Catcher]

It makes sense to me that, ounce for ounce, gold costs more in fractional weights (1/10th, 1/25th, 1/2 oz).

What isn't as clear is why fractional silver, in the form of half dollars, quarters, dimes, and War Nickels do not carry similar premiums. Especially when they are so hard to counterfeit as a result of their distinctive appearance from age/handling. Is it because an ounce of pure silver is still readily affordable to most buyers? Would you expect that a similar premium will develop if/when silver appreciates into the hundreds of dollars per ounce?

If we can reasonably expect such a premium to accrue in the future, then that, in itself, would be a significant source of return.

Thoughts? Explanations?

-Ian

The term "junk silver" comes to mind...generally people do not pay a premium for junk that is unless you are talking Storage Wars.

[Cu Penny Hoarder]

If you don't have it, you should buy all the junk silver you can right now. I like dimes and quarters better than halves. The premiums will go up as spot price goes up. When silver gets to the $200-300/oz level, premiums will be through the roof, even on junk. As someone said earlier, "spot" price is nonsense because it based on CME paper.

It now takes about 30 clad dimes to equal one 1964 dime. The currency debasement over the last couple years has been horrifing.

It's good to diversify by having both ASE's and junk silver. I am 99% convinced that junk silver will be the money of choice when the SHTF. It's not "if" it happens, it's "when" it happens.