American Silver Eagles have already broken through annual sales records.
The U.S. Mint is expected to see total sales of 47 million one-ounce American Silver Eagles for 2015 — a 6.8% increase in sales over last year.
Meanwhile, the demand for silver coins remains strong around the rest of the world as well.
Global silver coin demand is forecast to increase over 20% this year to a record total nearing 130 million ounces.
It’s expected that coin demand will account for about 12% of total physical silver demand this year — up from 10% in 2014 and a big jump from just 4% a decade ago.
Everyone seems to be jumping into physical silver coins. But before you make the plunge, there’s something you should know about…
Silver Coin Premiums
All silver bullion coins carry a premium — an additional cost over spot prices. This premium is generally the end result of a series of price mark-ups to cover costs and realize profits that runs through the distribution chain from mint to retail dealer.
But premiums for silver coins are higher than they have been in recent years.
Right now, the average premium for a one-ounce American Silver Eagle is about 25% — compared to a year ago, when the average premium for the same coin was about 15%.
The high premium for American Silver Eagles currently, however, is a bit of an anomaly. Back in July 2015, the U.S. Mint suspended sales of American Silver Eagles after what the Mint called a “significant increase in demand” depleted inventories.
Bloomberg reported a 70% increase in the premium for American Silver Eagles as a result.
Junk silver coins (most commonly pre-1965 quarters, dimes, and half-dollars) used to be among the most affordable ways to own silver.
However, the premium for junk silver has also increased over the past few years as the interest in numismatics has ticked up quite a bit.
Some dealers are currently charging up to a 25% premium for junk silver.
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Silver coin investors looking to get the most bang for their buck should take a look at privately minted bullion coins, which are often referred to as “silver rounds.”
With generally little to no numismatic value to speak of, silver rounds offer the best metal-to-cost ratio right now. Depending on how much is purchased at once, premiums for silver rounds can be as low as 5%.
There are several privately minted bullion bars and coins. Some of the most recognizable include:
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Privately minted silver rounds can be purchased through local coin and bullion dealers as well as online. Two of the larger and more reputable online bullion dealers that carry silver rounds include APMEX.com and NWTMint.com.
The most affordable way to own physical silver, however, is as large bullion bars. The current premiums for 100- and 1,000-ounce silver bars are lower than any of the coins we’ve talked about today.
I think 2016 will be a great year for silver, with an increase in investment and industrial demand coupled with potential supply issues from global mining. And physical silver bullion is the purest play.
Good Investing,
Luke Burgess
Energy and Capital
