What $41/ounce silver means for collectors

By Steve Roach - http://www.steveroachonline.com
First published in the May 2, 2011, issue of Coin World - http://www.coinworld.com/

With silver now hovering at $41 an ounce as of April 14, many segments of the market are affected. These include obvious bullion-sensitive issues, such as Morgan and Peace dollars, American Eagle silver bullion coins and common 90 percent silver pre-1965 U.S. coins.

However, silver's ascent impacts other collecting areas.

Many Proof sets have experienced substantial gains in the last month including Prestige Proof sets that include a 90 percent silver commemorative dollar, Proof sets from 1959 to 1964, as well as the 1992 and later Silver Proof sets, and State Quarter Silver Proof sets. The prices of all of these have gone up substantially with silver's rise, many trading for little more than their silver value.

With silver at $41 an ounce, 90 percent silver coins trade at 30 times face value, meaning that a 90 percent silver half dollar is valued at around $15 for its silver alone.

This bullion premium nearly eliminates any collector premium that 1892 and 1893 World's Columbian Exposition as well as Booker T. Washington Memorial half dollars of 1946 to 1951 and Washington Carver commemorative half dollars of 1951 to 1954 have enjoyed.

Many modern commemorative dollars are now trading for melt value, as are examples of the 1982 George Washington 250th Anniversary of Birth commemorative half dollar.

The 1959 to 1964 Uncirculated Mint sets, containing $1.70 face value in silver coins, are worth $51 for their silver content alone.

One wonders how many original sets are now destined to go to the melting pot and how many will be left after the market for silver cools down.

It goes without saying that collector opportunities are plentiful, as dealers right now don't have time to sort out many silver coins to search for better dates.

Dealers who are buying and selling bullion coins have to move fast, as profit margins are low and the risk for a market correction looms.

Simply put, most dealers don't have time to carefully sort what comes in because they are in such a rush to get the coins out of the store to cash in on profits.

With people continuing to open up grandpa's piggy bank and take advantage of the 31-year-high price for silver, who knows what may turn up with some careful looking.

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