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Silver drops again

This article was originally printed in Numismatic News.
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Silver resumed its slide May 11, closing at $35.51 a troy ounce in COMEX trading in New York City.

The new decline eliminated a $3 bounce achieved May 9 and May 10 that took silver from its May 6 close of $35.28 to $37.11 on May 9 and $38.48 on May 10.

Gold followed a similar pattern, though it enjoyed a three-day bounce that allowed it to surpass $1,500 a troy ounce, reaching a high of $1,516.60 on May 10. Then on May 11 it slipped back to $1,501.40.

Only two weeks earlier silver had closed just below its 1980 high at $48.58 on April 29 and gold closed at $1,556.70 on May 2 after trading as high as $1,576.60.

After the bounce higher had started, Pat Heller, a Lansing, Mich., coin dealer and a writer for Krause Publications Tuesday weekly numismatic e-newsletter, said that “there was decidedly more demand from the public to purchase precious metals, silver in particular, than liquidation of what they already owned.”

Silver demand was running high enough that several forms of physical silver were not readily available in quantity for prompt delivery, he explained.

Buyers were sometimes asked to wait for delivery of silver American Eagles, Canadian silver Maple Leaves and 1 and 10-ounce silver ingots, Heller said.

The day the silver downtrend resumed, Greencastle, Ind., dealer Julian Jarvis said, “It’s pretty dead here. They’re not beating my door down today.”

He said the public is selling, but he had not had a whole lot of that.

“Investors, they’re kind of waiting,” he said.

The tightness in physical supplies he had also experienced.

“I sold stuff this morning at over $40 an ounce when silver was over $38. Now it’s $35.”

So with not much to do over the counter, Jarvis said he was busy on the phone, as other firms scrounge for .999 fine product. He said these buyers were looking for “silver Eagles, silver Maples and smaller 1 ounce stuff.” He said nobody seemed to be much interested in 100-ounce bars.

When he spoke with Numismatic News he said any date of American Eagle silver coins are commanding a premium from these buyers of $3.50 a coin over the spot price in lots of 500 to 1,000 coins.
Usually premiums decline as quantities increase.

“I’ve sold quite a bit,” Jarvis said despite the fact that he did not really want to. Some of his inventory was underwater because of the extreme price volatility.

But he said he would do what dealers always do and use the proceeds to buy more.

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