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Record highs bring out silver sellers

This article was originally printed in the latest issue of Numismatic News.
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Gold set a new record of $1,290.20 a troy ounce Sept. 22 and silver was trading at $21.036, a level not seen since 1980.

Of the two metals, silver generated the most dealer activity and much of this was buying it from the public.

When Greencastle, Ind., dealer Julian Jarvis was asked whether the high prices were impacting his business, he laughed as he replied, “Yeah, definitely.”

Trading volume in $1,000 face value bags of U.S. 90 percent silver coins is up by a factor of five for him.

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He said people who have been waiting for $20 silver particularly have been sellers.

“They have held on for years,” Jarvis explained, “so they are selling.”

“The investor business has picked up a little bit. The thing that has really picked up is the 90 percent silver coins,” he said. “That’s what the people who have held it over the years have to sell; there is little triple ‘9’ to sell (.999 fine bars).

Silver coin is being melted big time now, Jarvis said. For a while, silver bags were commanding such a premium that there was little melting, but the huge increase in volume coming onto the market has brought the premium down to a discount to silver value and the coins are heading to the refineries, Jarvis said.

The most unusual thing about his gold business, he said, is that he now has two people who like to buy one-ounce gold bars.

“I rarely have anybody wanting bars,” he said.

“Most new buyers are satisfied with Krugerrands, Maples; I’ve seen a drop off in demand for American Eagles.”

Jarvis said he thought the reason for the drop in demand for the popular American gold bullion coin was that the U.S. Mint had caught up with demand.

Premiums over bullion gold value have fallen below the 3 percent that the Mint charges for the one ounce American Eagle. Jarvis said the coins are trading in quantity on the wholesale market now for $33 to $35 per coin.

It is even worse for Krugerrand premiums. The premium for them has fallen to $12-$15 per coin.

Scott Thomas, founder of American Precious Metals Exchange in Oklahoma City, also had good things to say about silver.

He said the newly introduced Wolf coin from Canada was doing well.

“Oh, yeah, that’s a no brainer. It’s going to be a hot item,” Thomas said. “Basically, you’re paying bullion for a numismatic coin.”

Two designs will be issued each year for the next three years by Canada in a new Wildlife series of .9999 fine bullion coins with $5 face value. Mintage will be one million of each design.
He said he expects a sellout.

With gold at a record, Thomas said, gold Eagles and gold Maple Leaves are the most popular right now. He also said silver American Eagles were moving.

“Rising gold, it’s kind of a double-edged sword,” said APMEX CEO Mike Haynes. “Some people want to sell. Some people want to buy. It nets out to a generally positive number for us.”

Thomas also pointed out that with gold’s move higher, platinum might be a little undervalued now.

Pat Heller of Liberty Coin Service in Lansing, Mich., also put silver first in his observations of business.

“We have seen some pick up in both directions, both people selling to us and buying from us,” he explained. “We have seen more of a pick up in selling silver to us, though.”

As to what forms silver is trading in, Heller said, “it runs the gamut.”

“We sold an awful lot of 90 percent lately,” he said. “We probably bought as much or more than we have sold.”

There was less to say about the gold market.

“Gold seems to be about balanced. Both (buying and selling) are up a bit. It is not exploding,” Heller said.

So gold may be making the headlines, but it is silver that is making more of the market for coin dealers.

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