Month: September 2015

The Growing Price Markup on Junk Silver

Over the last couple of months the premiums on Junk Silver have exploded.

Using the Wayback Machine website I went back in time to see what prices were historically on $100 bags of 90% Junk Silver from Apmex:

Prices for $100 Bag of 90% Junk Silver from Apmex:

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There are some interesting facts here:

  • It is more expensive now  with spot at $15.24 than in August 2014 when spot was at $20.49.
  • The current markup price is a staggering 42.59% over spot.
  • Apmex’s purchase price (that is what they will pay people to buy Junk Silver), previously was right at or very close to spot.   Currently the advertised purchase price is 15.75% over spot.
  • However, their current sale price ($1,553.70) is marked up 23.19% over their purchase price ($1,261.26).
  • Compare to August 2014 when the sale price ($1,535.82) was only marked up 4.83% over their purchase price ($1,465.03)

What is interesting is that even with these high premiums many businesses are still sold out of Junk Silver frequently.  This indicates that either people are still purchasing in high volume and/or businesses are having a hard time purchasing Junk Silver to resale.   But based on the very large difference between their advertised purchase price and sale price it is clear that they are making a healthy profit.

The markup on other premium silver products like American Silver Eagles is also very high currently, especially when purchasing small quantities.

It is hard to say if the price markups on Junk Silver will ever return to how low it used to be.   It used to be fairly easy to purchase Junk Silver at or even a little below spot.

One advantage of purchasing Junk Silver historically when the price markups were low was the fact that it is a scarce product, and there was the possibility that a larger premium price would develop.   The amount of Junk Silver coins in existence is what it is , and since no more are being minted, the amount of coins in existence will never increase.  Compare this to things like American Silver Eagles which have millions of new coins minted every year.

It seems like the best option right now, to avoid paying extreme markups, is to buy generic rounds and bars, and hope that once the price of silver stabilizes that markups on Junk silver and ASE’s will come back down to more reasonable levels.

 

The Purchasing Power of Junk Silver

In 1964 a Ford Mustang started at $2,368, and at that time all dimes, quarters, and half dollars were made of 90% silver.

If you had $2,368 of 1964 or earlier silver dimes, quarters, and half dollars, they would be worth around $25,000 in their intrinsic silver value, and you could still purchase a brand new 2015 Ford Mustang with them (a 2015 Mustang starts at around $23,800 now).

These silver coins literally have at least as much purchasing power as they did 50 years ago.   And this is even with silver at a current 5 year low in pricing.

Compare this to regular cash which every year loses its purchasing power due to inflation.

 

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