Should I be happy or sad that sales of 2015 American Eagle silver one-ounce coins have set a record?
The current sales total of 44,850,000 exceeds last year’s record of 44,006,000.
This week the Mint has another 1,075,000 pieces to offer. When these are gone, the total will stand at 45,935,000. More will be offered next week, which will be the last coins offered this year.
So the Mint will exceed last year's record by at least 4.4 percent, with more added next week.
As a percentage gain, this is not particularly impressive, but it is a record.
However, my concern comes from another angle.
My concern focuses on the ultimate buyers of these coins.
In this case, I do not mean the limited number of Authorized Purchasers, who are the only entities that the Mint will deal with. In this case I am thinking of the average buyer out there who might be attracted to the idea of owning a large and impressive silver coin in the hopes that price gains in the future will reward this interest.
Silver is presently trading at $14.38 a troy ounce, according to my check of the Kitco website.
Basically, this is the lowest level of the year.
Everyone who has purchased any 2015 silver American Eagles have contributed to giving the Mint its new sales record. Good news.
However, they have also put themselves into a loss when these purchases are evaluated on the basis of investment performance. Bad news.
A collector who bought one of these coins in January probably doesn’t care that present melt value means he is under water by $6 or $7.
The collector simply wants the coin as part of his ongoing set.
Over time, by building a set, the collector can be assured that in some years silver is up and other years silver is down. On average, he will do fine.
So for collectors, it matters little that for much of the year silver Eagles have been priced with hugely inflated premiums over melt value because of a supply shortage.
The Mint ended rationing for the month of June, but during the other 11 months, it simply could not supply what was demanded by the market.
Some silver Eagle buyers have been egged on to make further purchases with the reasoning that if physical supply is limited, then this must be a good time to buy.
Nothing can be further from the truth.
The only thing that matters is price. The object of silver investment is to maximize the quantity of silver one gets for dollars invested. This simply means buying at the lowest price.
Paying high premiums in times of shortage simply throws away money.
Adding a down trend to the underlying value of the metal makes the loss all the greater.
If the investor is disciplined and buys similar quantities each year over many years, he will have the same benefits as the collector.
He will own an asset that helps diversify his other investments. He will also be dollar cost averaging.
Doing this is the opposite of piling into the market because headlines say there is a shortage.
How many buyers who made their purchases this year are disciplined?
How many buyers got over enthusiastic this year?
It is the buyers in this second category that make me a little bit sad about how this year’s silver Eagle sales record has been achieved.
Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."
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