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Metal swings rattle sellers

This article was originally printed in the latest issue of Numismatic News.
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Gold broke the $1,400 barrier Nov. 8 when it closed COMEX trading at $1,402.80 a troy ounce.

The nice round number made headlines, but silver the next day rose by $1.474 to close at $28.902 a troy ounce enriching many a collector with a stash of pre-1965 junk silver coins, which briefly became worth 20.66 times face value.

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A standard silver dollar had a silver value of $22.35.

Both gold and silver backed off somewhat in trading Nov. 10, closing at $1,399.10 and $26.861, respectively.

The heightened volatility with silver, up strongly one day, down sharply the next, had an impact on investor behavior.

Lansing, Mich., coin dealer Pat Heller, said, “They are afraid of the volatility right now,” said Lansing, Mich., coin dealer Pat Heller.

There were “a lot fewer people calling about purchasing,” he told Numismatic News on Nov. 10.

“In terms of selling to us,” Heller continued, “there are as many calls, but they are not doing anything right now.”

The new behavior had set in less than 24 hours before.

“It started late yesterday afternoon. Until then we had a number of people coming in and their attitude  was ‘I want to spend $5,000 or $50,000, just what can I get?’ They were ready to take action,” Heller said.

The increased volatility had little impact on the premiums paid over the bullion melt values of popularly traded bullion coins.
“They’ve been pretty stable,” Heller said.

In the past, rising premiums had indicated a supply shortage or some other disruption.

Aside from a somewhat slower delivery for some silver ingots, Heller said, virtually everything was “so far still available close to immediately.”

He expected the next event to affect bullion coin premiums to be when the U.S. Mint stops producing 2010-dated American Eagles and switches to producing 2011 coins with a usual year-end gap in availability.

“In the next few weeks I expect the Mint to stop selling the 2010 Eagles. When that happens, I wouldn’t be surprised to see premiums go up until January,” Heller said.

Julian Jarvis of Greencastle, Ind., noticed similar behavior among people who were considering selling their silver.

“They lost interest in selling,” he said. “That was a rather significant drop, almost a $3 spread yesterday (between the daily trading high and low points).”

“I’ve still got people buying,” Jarvis said.

Jarvis also pointed out some of the impact bullion prices were having on coin values.

“(With) silver dollars, the premiums are disappearing. The VG silver dollar is hardly worth a dollar more than a junker. Nicer coins will still bring a little more money.”

Jarvis also is seeing more of the silver commemorative dollars that have been struck since 1983 coming his way for silver value.

“I buy them, but I’m not actively seeking them. I just hold onto them. I’d rather have them than junkers.”

He said he couldn’t believe there were still so many of the 1942-1945 silver wartime nickels out there. He said at the peak he was paying $1.05-$1.10 each.

The 40 percent silver coins traded as high as 7.5 times face value and he said in addition to the usual Kennedy half dollars, significant numbers of the collectible 40 percent silver Ike dollars were coming to him.

Originally, in 1971-1974, the uncirculated ones sold for $3 and the proofs for $10.

Jarvis said he expected silver to begin moving higher.

“I’d be surprised if it doesn’t move on up in the next day or so,” he said.

Hikes in the margin requirement on the commodity exchange meant some people had to get out, pointed out.

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