Silver, Part 3

In March, I wrote about gold and wound up buying a couple of gold bullion coins and some shares in a silver exchange traded fund. Then in April I wrote about silver and bought a few silver bullion coins. In May I wrote about buying some more and maybe buying more than I should including on auctions on eBay, to the point that it was kind of hard to justify. After that I continued to buy substantially more, though just 2-5 ounces at a time when I would win an eBay auction at a reasonably favorable price. The way I see it, if the spot price of silver is $20 an ounce, then any silver I buy is worth at least the spot price, and the amount over that is the true price I am paying. So at a spot price of $20, 5 one-ounce coins would be worth $100, and if I paid $120, then I am really only paying $20 and the rest is safely invested in the value of the silver. So while the difference between paying $120 and $125 may not seem like much, it is sort of like paying 25% more ($25 is 25% more than $20). My point is that small differences in price can be pretty significant when buying silver.

Five Ounce coins from Fiji and the US

Five Ounce coins from Fiji and the US


SAMSUNG CSCIn May I was starting to buy some Australian coins that have some collector value since they are limited in production and the design changes every year. United States Silver Eagle coins have the same design every year and are produced in unlimited quantities based on demand. They sell for a premium over the spot price of silver, but older ones sell for about the same premium as newer ones: they don’t really go up in value unless the price of silver goes up. On one of the forums someone said if you can get the limited edition America the Beautiful silver bullion coins for about the same price as Silver Eagles, why not buy the one that is more likely to go up in value faster (the limited edition ATB)? The US Mint has kind of struggled with these coins. First I’m not crazy about series since they let each state pick one park rather than pick the most famous parks (Georgia has no national parks, so Georgia’s quarter will be the Cumberland National Seashore which most people have probably never heard of and far fewer have visited). The actual quarters are minted based on demand for quarters by banks I guess, but the mint is also making giant 5-ounce silver bullion coins for investors and collectors. They started by minting 33,000 silver editions of each quarter in the series back in 2010. Some of these started going for substantial premiums and there was a big spike in silver prices and demand the next year, so they started minting over 100,000 of each coin in 2011. They started tapering off production and were down to 20,000 in 2012. Then interest in the coins started up again and now they are back to about 30,000 of each edition. They mint millions of Silver Eagles, so the Eagles are still way more popular. But some of the ATB coins are selling for $200, well above the silver cost of about $100.

ArchesI wound up winning an auction for a 2013 Great Basin coin for $112.50. Then a 2013 Perry’s Victory for $111.10, after putting in a number of bids each night and getting outbid, but I was patient, knowing there would be several available every night. I even wound up getting another Perry’s Victory for $110.25. Hopefully it will go up. I put in bids on some others and never won, including 2013 coins Fort McHenry and White Mountain as well as 2014’s Smoky Mountains. I really wanted a 2014 Shenandoah, since that is one of the few national parks I have actually been to, so I wound up paying a little more for that one at $115.85 after never coming close to winning with lower bids. Arches just came out and I paid $124 for that one, but the 2013 Mount Rushmore goes for $145 and I thought Arches had a chance of being just as popular, so I pre-ordered Arches instead of trying to win an auction.

Shenandoah 5 oz coinAt the same time I was putting in bids on other silver coins. I used a sniping website called gixen.com to enter bids at the last second on some coins. This didn’t work that well because usually on batches of 5 coins or 5-ounce coins you want to get parked at a certain price. Then someone else has to bid $2.50 over that price to knock you off (anything over $100 has a $2.50 bid increment). Waiting till the last second usually just meant you missed the price you wanted because someone else had already bid over that amount, equal to it, or even $2.49 below that price. But you don’t want to bid too early either because that seems to drive the price up. I was able to use gixen to win some 1-ounce coins, getting Somalia Elephant coins for a decent price of about $24 (the bid increment is only 50 cents for items less than $25). I don’t think these are necessarily limited edition, but they still may not make that many and the design changes each year. The 2013’s are about $5 more than the 2014’s. I also somehow bought a 5-ounce coin from Fiji with a really cool sea turtle on it. It is a 2013 coin, but they may still be producing them. A private mint had the contract to make the coins and Fiji didn’t renew it for 2014, so the mint just kept making 2013’s.

Somalia Elephants

Somalia Elephants

Eric made fun of me and said I needed to stop buying silver. He was right, but it was fun checking the prices on eBay and entering bids, figuring I wouldn’t win at that price, but getting a good deal if I did win, even though it might only be a couple of dollars less than what I would consider not a good deal. I bought 5 coins from the Pacific island nation of Tokelau (minted by a private mint in the USA) for pretty cheap, but I’m not crazy about those coins. And I got a good price on some Armenian Noah’s Ark coins when silver dipped below $19 per ounce.

Silver Eagle Proof

Silver Eagle Proof

Right after that, maybe because silver was cheap, the eBay prices started going up. I think the low price of silver was bringing people in and driving prices up on eBay but not the worldwide market. My bids didn’t have a chance and I would lose every night. I did go ahead and buy a proof Silver Eagle directly from the US Mint, just because it is very pretty. And then JM Bullion had a sale on Eagles for $2.29 over spot when the spot price was $19.11, so I bought a few of those for way cheaper than I could get Eagles on eBay. Now for the last 3 weeks, I haven’t bought anything else. Last week the prices really started going up, past $19, then past $20, and now almost $21. Some of the America the Beautiful coins that were going for around $112 are now going for $120 every night.That’s not enough for me to make money selling, but it is keeping me out of the market for buying. I’m up to 84 ounces of silver altogether, maybe 85 if I include the Eagle proof. One problem with these coins is they don’t have serial numbers and are completely untraceable if they were stolen. Even if they had serial numbers, they could easily be melted down and sold for scrap. My checking account qualifies me for a free safe deposit box at my local branch, but I had never really needed it. With all my orders delivered and none on the way I went ahead and dropped everything off at my bank for safe keeping.

Tokelau Year of the Horse

Tokelau Year of the Horse

One thought on “Silver, Part 3

  1. Well, I thought I was done. I have been browsing on eBay, but not bidding much and never winning since the price I’m willing to pay is below the prevailing rates. I think eBay must have noticed that I had been spending a lot of money and suddenly stopped, so they wanted to encourage me to come back. Even though I can’t find a notice by email, my account on eBay showed a 10% off coupon that I could use on pretty much any purchase. 10% isn’t a huge amount, but it can make a big difference when buying precious metals. I didn’t realize the coupon was available until yesterday and only noticed today that this was the last day to use it. So I kind of panicked and wound up bidding an amount I thought might win on a 5-ounce silver Fiji Taku since the bidding was ending soon. Even though silver has gone up, with the 10% discount the net price was less than I paid for the first one, so I got a good deal. But I think I could have gotten a better deal on something else, possibly getting silver or gold below the market price, by studying things further. The 10% off coupons are pretty rare, so I don’t know if I will ever get another one.

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