1 Year Silver Price Chart - Image Courtesy of www.kitco.com
In the last few days the authors of this blog have been talking about the surging silver price and the effect it is having on our hobby. On Friday (the 8th of April 2011) the silver price hit the highest price it has seen since the Hunt Brothers drove a silver price bubble to just under USD$50 per troy ounce in 1980. The silver price has improved over 70% in the last 6 months and nearly 130% in the last year. Of course, these sorts of returns have caused a huge demand for silver from speculators and collectors. We've heard first hand of dealers here in Australia advertising to purchase round 1966 80% silver 50c coins and being simply inundated with offers of sale. On the other side of the coin (excuse the pun) we've heard of other dealers who simply cannot buy enough silver to satisfy the demands of silver hoarders. It's obvious that this isn't just an Australian phenomenon as indicated by this news story from the Ocala Newspaper in Florida, USA.
Our very own website has experienced a growth in traffic on the silver bullion related calculators like the Australian Silver Coin Calculator and the United States Silver Coin Calculator. Both of these calculators have had 30% more visitors in the last 3 months compared with the preceding 3 months, which is double the growth we've experienced on the rest of the site. As a result of this we've also recently spun off a Scrap Silver Value Calculator and Scrap Gold Value Calculator onto new sites. We're hoping that accumulators of silver and gold bullion find these as useful as many others have found our coin calculators.
Increasing silver values do have an effect on the price and availability of collectable coins. For example, 50% silver florins from 1957 to 1963 are now worth more as melt silver than their catalogue value as collectable coins in grades of EF or less. Australian 1937 crowns, a low mintage coin, are now worth more as bullion in what I'd call a quite collectable grade of Very Fine. The upshot of coins like these being worth more as bullion than as collectables is that the supply of them is likely to dwindle as they are put into the melt bucket and are no longer available to the collector. Longer term you'd imagine that this will lead to higher catalogue values for lower grade items and the coins being less obtainable to new collectors. There is a positive to this though. If your collection is mostly low grade then suddenly common date worn 92.5% florins are worth $13 just in melt value, while previously you might have been lucky to get 25% or 50% of catalogue value when selling such low grade coins to a dealer.
There's ups and downs to the rising silver price. Opinions are mixed as to whether the price will continue to rise or not. Either way, there's both opportunities and risks in the coin collecting field right now. A careful collector should weigh these up before making any purchases, especially if the collector value of a coin is at or near what it's bullion value might be.
Posted by mnemtsas at April 10, 2011 7:28 PM
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