Silver hits 31-year high!

By Steve Roach - http://www.steveroachonline.com
First published in the March 14, 2011, issue of Coin World - http://www.coinworld.com

It was a "wow" week for silver as the metal hit a 31-year high, breaking $34 an ounce on Feb. 21 during unofficial trading in New York as the markets were closed for President's Day.

Silver reached $34.33 an ounce during the day on Feb. 21, before closing at $33.91.

The recent price levels mark a 12 percent increase for silver since the start of the year.

The next day silver gave back some of its recent gains, closing at $33.06 on Feb. 22 in New York, after reaching a high of $33.48.

Silver's topping $30 an ounce renders useless many books that provide silver values for coins, because they stop at $25 to $30 an ounce.

When $1,000 face value 90 percent silver coin bags are trading at about $23,500, melt value alone means that 90 percent silver coins are worth 23.5 times face value. Even 40 percent silver coins (silver-copper clad) are now worth nearly 10 times face value.

As silver moved up so did the price of crude oil, with futures for March delivery closing at $93.57 a barrel on Feb. 22 – oil's highest price since October 2008 – as continued revolt in

Libya, the world's 12th largest oil exporter, rocked the energy markets.

Oil futures rose as high as $94.49 on Feb. 22, before falling back after the Organization of the Petroleum Exporting Countries said that "there is absolutely no shortage of supply."

Gold is also approaching record highs again, peaking at $1,407.60 an ounce on Feb. 22.

Gold hit an all-time-high price of $1,434.10 an ounce in December 2010.

With the current high prices, the silver/gold ratio has fallen to 41:5, the lowest level since February 1998. This means that it takes around 42 ounces of silver to buy one ounce of gold.

Silver has many industrial uses in addition to its reputation as a safe-haven and hedge against inflation.

Of course, coin prices are moving up with the price of silver. Generic certified 1878 to 1904 Mint State Morgan dollars are one of the main beneficiaries, with MS-63 Morgan dollars jumping from $45 last week to $50 this week and MS-64 examples moving from $65 to $70.

Even cull Morgan dollars are trading at $26. "Cull" is a term used to describe coins that are heavily worn or have severe problems (excluding holes).

***
Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world's most widely read rare coin market analysis each week in the pages of Coin World.  He is also a lawyer and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve