Silver Coins "are just" Bullion?

[Foolssilver]

Hi All,

Been a member for a week and really enjoying the forum.  A font of knowledge here.

I've been reading a few old forum threads which have been very useful in improving my understanding on certain topics.

One thing that i've seen raised a few times is that Silver Coins "Are just" Bullion.  Typically this will come up when one poster mentions disappointment at milk spotting and another poster says, never mind, coins should just be considered bullion. 

Now i appreciate that one a coin is badly spotted it may just be bullion but i also think that had it not spotted it may have carried a premium.  Here is what i don't understand .......  It seems clear to me, even as a new member, that certain coins have gone up in value and carry a hefty premium over spot.  If chosen carefully a stacker can make some decent cash not just from changes in spot but also in the value of their coins increasing due to collectors etc.

So why is it that some just consider coins as bullion?  Is there a split in opinion amongst the silver stacking community?  Maybe im missing something.

 

Cheers all,

Tom

[tbone]

There's stacking for weight, collecting for numismatic value, and everything in between.  I tend to lean towards gold (or sometimes silver) that is reasonably close to spot, but I feel will gain in value above spot over time.  I also have a core position in bullion and some purely numismatic coins as well.  I don't think there's a single best approach really.

[tbone]

 Also, @Numistacker did an excellent video on this, but can't find the exact one.  Check out his Youtube channel:  https://www.youtube.com/channel/UCw_KDG0xJX-iHSYZY2Tgkbg

 

[Pete]

Don't forget that coins can fall in value as well.
Some old-timers on this forum ( I fall in to this category  ) have experience of buying bullion Kookaburras at £30 - £35 each but could buy the same coins today for under £20.

Don't get over excited about premiums on some coins - for example take a look at the historic prices of the Australian Lunar Dragon 2012 which sold out super fast and the price rocketed only to collapse more recently as the dust settled. There are many examples of buying frenzies with glum faces a few years later. Check eBay for the Britannia Horse Mules. Early prices were around £1,000 and some chancers are still hoping for a windfall. I've got a full tube of these and would probably be lucky to get £60 each ( not selling of course ) but imagine the excitement at the time !

[coinnewbie]

I asked a friend in the precious metals business about this at dinner about a month ago. I asked about American Silver Eagles. And I asked him, "Putting aside proofs, and coins that are rated MS70 -- just good old BU American Silver Eagles. When someone comes to you wanting to sell a huge lot of them, do you care if they are all in an individual airtight and only handled with gloves or all in a burlap bag, clanging around, rubbing on each other?" And he said, it was just weight. He said as a dealer his best premium would be for unopened mint-sealed in the original tubes.  Beyond that, once those were opened, he really didn't care if they were handled or tossed around or used as poker chips or put in individual cases with gaskets, that was for the collectors enjoyment. He wasn't going to eyeball every one looking for scratches, he was going to put them on a scale. When he buys 1,000 silver eagles from a customer, it is just weight. 

So, then I asked him, what about if instead of the American Silver Eagles, they were just 1,000 Kookaburras, Koalas, Lunars. And before I could say anything about years, he just interrupted me and said "it's just weight. if you want to find someone who will pay you more, go find them on ebay or put an ad in the paper."

It was a very brutally honest response, but I thought about it. Price out the packing supplies, the time with photography, the marketplace commissions, the competition when everyone wants to sell their collection if silver jumps in price. If you want to convert to cash, it's just bullion. Now there are other reasons to collect, or speculate on prices, or trade for more ounces, etc. But if you want to build a stack and so that one day when the price of silver is higher, you can get it off your hands in exchange for cash... it's just bullion.

Here is a great video that I think explains the difference in a less harsh-business minded way: 

 

[metallica73]

I think if someone is buying bulk Kooks & Lunars and paying the premium to get them, they'll know full well not to go to a walk-in store and try to sell them tbh.

Just because one place deems those coins simply 'bullion' doesn't mean they are as there are plenty of options to get a premium elsewhere. And if you have that many lunars, you'll be selling them off to an online dealer for sure.

[vand]

Stacking for weight is low risk, but also low reward. That is absolutely fine, as the primary role of PMs over history has been to preserve wealth.

The further up the premium ladder you climb the more work you must do to make sure your investment in premium is a sound one. 

Best way to tackle it is build a solid base of bullion, then a pyramid of increasingly exotic stuff if you are that way inclined. All silver is worth spot; premiums can wax and wane depending on the fashions of the time.

[vand]

22 hours ago, coinnewbie said:

I asked a friend in the precious metals business about this at dinner about a month ago. I asked about American Silver Eagles. And I asked him, "Putting aside proofs, and coins that are rated MS70 -- just good old BU American Silver Eagles. When someone comes to you wanting to sell a huge lot of them, do you care if they are all in an individual airtight and only handled with gloves or all in a burlap bag, clanging around, rubbing on each other?" And he said, it was just weight. He said as a dealer his best premium would be for unopened mint-sealed in the original tubes.  Beyond that, once those were opened, he really didn't care if they were handled or tossed around or used as poker chips or put in individual cases with gaskets, that was for the collectors enjoyment. He wasn't going to eyeball every one looking for scratches, he was going to put them on a scale. When he buys 1,000 silver eagles from a customer, it is just weight. 

So, then I asked him, what about if instead of the American Silver Eagles, they were just 1,000 Kookaburras, Koalas, Lunars. And before I could say anything about years, he just interrupted me and said "it's just weight. if you want to find someone who will pay you more, go find them on ebay or put an ad in the paper."

It was a very brutally honest response, but I thought about it. Price out the packing supplies, the time with photography, the marketplace commissions, the competition when everyone wants to sell their collection if silver jumps in price. If you want to convert to cash, it's just bullion. Now there are other reasons to collect, or speculate on prices, or trade for more ounces, etc. But if you want to build a stack and so that one day when the price of silver is higher, you can get it off your hands in exchange for cash... it's just bullion.

Here is a great video that I think explains the difference in a less harsh-business minded way: 

 

This is a great anecdote.

However I would also say that this is the sort of response that is typical when an asset is out of fashion as PMs currently are. In the frothy phase of a bull market the sentiment will be why we should all be buying high premium and why silver is worth more than just its premium etc.

[999magnum]

"It's around and not a coin."

 

In a more serious note, the LCS I frequent will sell semi numis for a super premium, but like this guy will not pay premium for them. I think all LCS share the same view except when there's an abnormal case where he needs a certain coin(or round ). But yea, I would never walk in there with a bunch of pandas. 

[HawkHybrid]

I see it as, can you justify the premiums?

each coin tells it's story as part of history but some tell

more interesting stories than others. this then needs to

be valued against those interested in listening to those

stories. silver panda's tell a nice story to 8 million+

listeners. coin collecting is an art. it's the combination of

it's parts and not the sum of it's parts.

 

HH