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Buyers, sellers flock to silver

This article was originally printed in Numismatic News.
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For precious metals dealer Julian Jarvis of Greencastle, Ind., these are busy times. Such is the impact of soaring silver prices on his business.

“We almost have to have somebody with a baseball bat at the door,” he said April 26.

Now he does his business by appointment only.

“We have so many people looking to buy,” he said. “And sell,” he added after a pause.

However the numbers of sellers, though larger than the number of buyers, are offering up lesser quantities of silver coins than he needs to fulfill the needs of his buyers.

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“Buyers are doing much bigger transactions,” he said.

Sellers are selling because they need the money, or they have held so long and the price has gone up so much that they decide it is time to cash in, Jarvis said.

Investors, on the other hand, are motivated more by current economic factors. They are just “wanting some silver or gold because of what’s happening to the U.S. dollar,” Jarvis said. “No investors are taking profits right now.”

With buying on investor minds, he cited a telephone call the day before where the would-be buyer was looking to spend $20,000 with him. Another called after the market had closed wanting to spend $160,000, but Jarvis had to put him off until the exchanges opened again and he could get a solid price. Another caller with $60,000 to spend decided to wait a day or two because he telephoned April 25 when silver shot up at the opening to nearly $50, before backing off.

Unlike in 1980 when the refineries backed up and silver coins traded at larger and larger discounts as the silver price soared, this time – so far – it is different.

If someone walked into his office at the moment of his conversation with Numismatic News, Jarvis said he would sell a $1,000 face amount of pre-1965 circulated dimes, quarters or halves for $33,000, which was roughly the silver spot price at that moment of $46 an ounce times the 715 ounces in a bag, or $33,000.

You want to sell the same bag back to him? He would pay $31,500.

Average Morgan dollars are active. He said for any coin that graded less than a solid VG he would pay $35, which basically is the $46 price of silver times the .77-ounce silver content. Remember dollars are heavier proportionally than dimes, quarters or halves.

For higher circulated grade Peace dollars and 1921 Morgans he was paying $37 each. For pre-1921 Morgans in higher circulated grades he was paying $39 each.

Relative to these prices, he said silver American Eagle prices are high.

“To me, they are grossly overpriced,” he declared.

To buy silver Eagles presently from a wholesaler, Jarvis said he would have to pay $3 over spot or $49 per coin for the 2011 coins.

Jarvis said he would sell the same coins for $50 each.

Just $1 more?

“That’s the reason I’m not handling 2011 silver Eagles,” Jarvis replied.

He prefers handling older dates, which contain just as much silver.

“I can sell a BU perfect coin for $2.50-$2.75 (over spot) – in quantity $2.50,” Jarvis said.

For what he called seconds, or mishandled coins with spots, he asks $1.50 over spot and for coins that he called circulated his price was 75 cents over spot.

Some months ago in another conversation, he mentioned that he was buying the common older commemorative silver dollars that have been struck since 1983 at bullion market prices.

What was he paying now?

“I would pay the same price as junk (Morgan) dollars, $35 each.”

He would sell them for $1.50 more each – that is, if he chooses to sell.

“So far, I haven’t sold any.”

It doesn’t matter if the commemorative silver dollars are loose, in the capsule or in the full packaging, though he said storing these coins in their full packages takes a lot of warehouse space.

Volume is the word with the present market and he took steps keep it from getting ahead of him.

“We closed Friday and didn’t answer the phone so we could organize and have it ready to sell,” he said of his inventory on hand.

Does this frantic activity with silver at $46 an ounce mean we are near the top?

As a reply, Jarvis said just one word: “Nope.”

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