One-ounce silver American Eagle bullion coins went on sale Nov. 17 for the first time since the U.S. Mint said it had run out of the coins on Nov. 5.
The Mint had 1,525,000 to allocate (ration) among its Authorized Purchasers.
In two days, 1,310,500 were snapped up, leaving 214,500 left as of this morning, according to the U.S. Mint.
These will probably be gone before the day is over, in which case, the waiting game for additional coins will kick in again and silver investment advisors will say what a wonderful investment the metal is because of the shortage of coins.
This script has repeated over and over again for years. However, there really is no correlation between the shortage of coins and the market price of silver.
Silver has dropped from over $48 an ounce at the end of April 2011 to $16.25 as of this morning’s prices posted by www.kitco.com.
During most of that period, the Mint was rationing silver Eagle supply.
It would be far better for silver buyers to plan their purchases to occur when there is no perceived shortage of coins if they can.
Premiums, or the percentage over bullion melt value, simply rise during periods of shortage and buyers get less precious metal for their investment dollar.
This is not a smart way to invest if the intention is to maximize the amount of precious metal obtained for each dollar invested.
It will not be long before the Mint will announce when it will cease producing 2014-dated silver Eagle coins in order to strike a reasonable quantity of 2015 pieces for sale starting at some point in January 2015.
We are waiting for the announcement of that January date as well.
At each of these announcements, some will point out that Eagle coins are in short supply, therefore they must be a good investment.
Are they good enough to justify paying a 28 percent premium?
Put another way, if you spend $1 and get 78 cents’ worth of metal, is that a good deal?
That is what silver Eagle buyers are facing at the moment. It is a pretty steep hill to climb.
Buzz blogger Dave Harper is winner of the 2014 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."