Numismatic or Bullion Coins? Smart Investors Take Both
Bullion.Directory precious metals guest post 10 January, 2016
By Nick Adamo
President at Bullion Shark LLC
Coin collectors and bullion investors alike love to buy Silver Eagles. However, there different avenues by which someone can take to invest in these coins: graded or raw.
Graded and Raw? It’s time to compare and contrast.
Raw Silver Eagles
Raw or B.U. Silver Eagles are the designations given to coins in the state that they come from the United States Mint. These coins are not encapsulated, rather come in a large green Monster Box that holds 25 tubes of 20 Silver Eagles. When someone buys this kind of Silver Eagle, they are typically looking to buy silver bullion in bulk to add to his or her portfolio.
These coins are much cheaper than those that are certified by a reputable third-party grading service, however hold much less numismatic value. Some collectors like to buy raw silver eagles and put together a date run but are missing out on the more expansive collectible market that exists with graded coins.
However, not everyone is looking to buy for numismatic value. Many investors want to get the most silver for their dollar and that is done by buying raw Silver Eagles and not ones that are certified.
For example, a raw 2015 Silver Eagle trades at a few dollar premium, while MS69 and MS70 examples have tremendous premiums.
Buying B.U. Silver Eagles is definitely more cost effective and a better way to take full advantage of a price jump for silver.
Graded Silver Eagles
Graded Silver Eagles are one of the most popular rare coins on the market today. When these coins are certified by reputable grading companies in MS69 and MS70, the two highest grades a coin can achieve, they carry tremendous numismatic value.
Companies like NGC and PCGS have professional coin graders who examine these coins and guarantee that they are of the quality assigned. You get the same ounce of silver but pay a hefty premium that can be thousands of dollars for key date coins in MS70.
These coins can also be used for investment purposes. For example, certain coins have very low populations in high grades and may be very desirable for resale to another rare coin enthusiast in the future. Besides the numismatic value, these coins are also worth the price of silver which make them a multi-faceted investment.
2015 Silver (and Gold) Eagle Sales Soar
The U.S. Mint has finally announced its year end totals for Silver Eagle & Gold Eagle sales, and the numbers are very impressive.
The United States Mint sold 47,000,000 business-strike silver eagles and 626,500 business strike 1 oz Gold Eagles in 2015.
These numbers surpassed 2014 sales by a wide margin. Just to put it into perspective, in 2014 the United States Mint sold 44,006,000 silver eagles and 415,500 gold eagles. In one short year, the United States Mint sold 2,994,000 more silver eagles and 211,000 more gold eagles.
So with such tremendous demand, why have silver and gold prices fallen to new, multi-year lows? This has been the multi-million dollar question that everyone has been asking. There are many theories circling the news, a major one being that there is manipulation by major players, who have an interest in keeping the price down.
Even some major traders like Dennis Gartman, who is definitely not a gold or silver bug, has noted that the price action in gold and silver has not been explainable, and there indeed might be some other influencing factors driving the precious metal prices such as a “malevolent force” in his words.
Many times throughout the year, dealers like ourselves were faced with debilitating shortages of silver.
Every drop of the silver price caused a tremendous spike in demand. These fluctuations were so large at times that wholesalers could not catch up. This was further hurt by the United States Mint’s shut down of production multiple times throughout 2015. Additionally, throughout most of the year the mint limited allocation to major dealers in an effort to catch up with demand. The market supply was so tight at one point, that retail prices per ounce over spot for 90% junk silver were as high as $7 over spot.
That is almost 50% of the silver spot price. Silver Eagles saw major premium spikes as well with some dealers also charging $7 over spot for 2015 silver eagles.
It is truly amazing that such a small amount of buyers could push physical gold and silver bullion premiums through the roof. Some estimates are that only 1% of the United States population actually buys gold and silver. One could only imagine what the premiums for gold and silver would rise to if just an additional 1% of the United States population was to get involved. It will be interesting to see if a significant rise in price of silver and gold in 2016 will cause investors to hoard metals at alarming rates.
With confidence in gold and silver at all time lows, any positive change in precious metals sentiment should be bullish – but no matter what, one thing is certain – with silver being so cheap, it’s hardly surprising silver Eagles are continuing to sell in record quantities.
Conclusion
The moral of the story is that there is huge investment potential in both silver bullion and graded coins. These assets can help diversify your portfolio and when invested in simultaneously could tremendously help your portfolio’s perfomance.
Precious metals and rare coins often go hand in hand and are invested in by many prudent investors.
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