Silver Eagle Coin Premiums

Exactly one month ago I published the article Silver Investors Have Money To Burn. In it, I called attention to the ridiculously high premiums that small retail investors have been paying to own silver bullion physical products in coin form...

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"...a review of current market premiums for both silver and gold products. It shouldn't be a surprise as to what particular product heads the list for the most expensive premiums. Investors are having a torrid love affair with U.S. Silver Eagles." 

At the time, the price of silver was $21.61 and the ask price for a one ounce Silver Eagle bullion coin was $36.00. The ask price included a premium of sixty-seven percent, or more than $14 per coin.

Today, one month later, silver is more than two dollars higher at $23.84 oz. The ask price for one ounce Silver Eagle coins is the same - $36 per coin.

Earlier this year, in April, with silver two dollars higher (at $25.82) than it is now, the ask price for Silver Eagle coins was - $36.

Going back almost a year before that, in May 2021, the silver price peaked at more than $28 oz. The Silver Eagle ask price at the time was - you guessed it - $36 per coin.

Finally, in August 2020, when the silver price peaked at $30 oz., the ask price for Silver Eagle coins was - no way! - $36 per coin.

Observations And Questions

Since the summer of 2020, the ask price for Silver Eagle coins has stayed mostly (little or no variance) in a range between $30 and $36. The actual silver price, however, has been as low as $18 oz. and as high as $30 oz. - a range twice as wide on a per ounce or per coin basis.

The premium paid by investors at recent lows of $18-19 oz. was almost $14 per coin. The ask price for Silver Eagle coins was fairly consistent throughout the month of October at $32 per coin. That is a premium of seventy-three percent ($32-$18.50 = $13.50; $13.50 divided by $18.50 = 72.97 percent).

Why should someone pay the same price for Silver Eagle coins at $21 oz. as paid by those who purchased them when silver was at $30 oz.?

Do investors realize that they are being fleeced?

Conclusion

This past February when silver was the same price ($23.88) as it is now, the ask price for Silver Eagle coins was $31-32. So, the privilege of ownership is now higher by as much as $5 per coin/ounce. That is an increase of fifty percent in the premium from thirty-three percent to fifty percent. Why?!

The premium for Silver Eagle coins has dropped somewhat from almost seventy percent to   fifty percent currently, but it remains unjustifiably high.

For silver investors, the risk associated with ownership of Silver Eagle coins is two-fold: 1) the stability/evaporation of currently high premiums and 2) the downside price potential for silver.

Earlier this year some laughed at the suggestion that silver could drop back below $20 oz. Nevertheless, silver dropped to a low of $17.83 oz. in October. That is a decline of forty percent from its high of close to $30 oz. in 2021.

The risk from exaggerated premium exposure applies whether silver goes up or down. (see Silver Coin Premiums - Another Collapse?)

Those who keep predicting much higher prices for silver, along with much higher inflation, seem to have missed the fact that as inflation has continued to worsen, silver prices continue to suffer. (see Inflation Is Killing Silver and Silver - Dead In The Water For Forty Years)

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Gold, Inflation, And The Federal Reserve
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