Your Questions About Silver Foreign Coins

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George asks…

Why is the price of pure Silver Coins so much higher than its scrap value?

I was looking at buying silver coins as an investment. I did some research and found that the price of the coins (like the eagle coin) is often more than double the price of its scrap value.
Does anyone know why this is ?
Thank you to Mark, very insightful answer
and also thank you to the others,
I will look into it some more

Justin answers:

The simple answer is supply and demand. It’s not so simple, however, because all silver coins are not created equally.

When you start looking at silver coins, you’re not looking at just the metal in them. There is a whole ‘nother thing called numismatic value, or the value to a coin collector. In many cases, this value far exceeds the value of the silver alone. In others, there is absolutely no collector value, and if you know where to look and how to buy it, you can buy these coins for less than the spot market price. I do it constantly.

Let me give you a few examples. Let’s take the silver Eagles. There are two kinds, the bullion investment coins and the proof collector coins. Proof Eagles are not silver bullion coins. You can buy them directly from the US Mint, and for significant premiums over the value of the silver. Why? Well, for starters, you can’t sell something for cost. The Mint has to buy the silver at market prices, and produce, package and market the collector coins. The bullion coins are sold by the Mint to authorized distributors only, the average person cannot get them except from dealers who get them from the distributors. The Mint sells these coins for a small premium over metal cost to cover production costs and the distributors tack on their mark-up to dealers, who tack on their mark-up to you. So you will not find even the bullion coins without paying some premium.

There is another factor as well, the quantity produced. Proofs are made in smaller numbers than bullion coins. And in some years, the numbers are smaller than others. The proof coins from these years will easily bring prices double or more than the average proof. The most famous example is the 1995 West Point proof Eagle. There were only 30,125 made (as opposed to many hundreds of thousands for other dates). This coin sells in the neighborhood of $3,000. The average proof Eagle sells for $50 – $60. Rare coins have nothing to do with the value of the metal in them, and everything to do with how rare they are and what the demand is. There are coins that are much more rare then the 1995 W Eagle that sell for less money, because fewer collectors are interested, while the Eagles are very, very popular and in demand.

Now, as for examples of how you can buy silver for investment for near, or in some cases, below spot silver. To do this, you need to know exactly how much silver is in any given coin. This can be researched. You want to know the actual silver weight (ASW) in a coin. Just knowing that a coin is 90% silver, 40% silver, sterling (92.5%) or whatever %, is not enough. You need to know the exact amount of pure silver in a coin to be able to figure out its spot market or ‘melt’ value. Very often, the people selling these things, especially on eBay, do not know the right numbers, or intentionally overstate it to mislead the unknowing. If you know, you can make smart buying decisions, and in the case of those who don’t know what they have, you can get great deals.

A lot of people are into buying the silver ETF. I’m not. I do not trust paper investments. If something big happens and people decide they want their silver, these paper-pushers do NOT have the physical silver to deliver. It will be like the run on the banks at the start of the Great Depression. Many banks were wiped out and so were those who had their money in these banks. ETFs are not insured. I want the silver in my hands.

I buy US and foreign silver coins, only when I can get them below spot, and I buy private-issue silver medals like Franklin Mint and others. A lot of times people aren’t sure what they have and what’s in them and I get good deals. You can, too, but first you have to read and research, and teach yourself.

David asks…

How can I find out how much my coins are worth?

I’ve got a small collection of silver coins from various countries, all from the 20th century. I’ve no idea if they’re worth anything or not, but it would be good to find out.

I tried searching on Google for coin prices, but I just got the same few sites over and over, which were pretty useless.

Is there a catalogue or something out there with guideline prices for coins?

Justin answers:

Hi. I am a coin dealer in the Midwestern US. Here’s the correct answer. The value guide you are searching for is called the Standard Catalog of World Coins. It comes out annually, and lists coins from around the world A-Z, from 1901 to the present. (There are also volumes that cover 1801-1900, 1701-1800, and 1601-1700, available separately.) This book is about the size of a big city phone directory and will list all the coins you have, assuming they are all 20th century as you stated. You could likely find a copy at the local library, or if you want to buy one, coin dealers sell it for around $60. Bear in mind that the values listed are retail values, and not necessarily what you could sell the items for.

PS. The guy above who was ripping on coin dealers has no clue what he’s talking about. You don’t have any longevity in this business if you hose people. Ebay isn’t an accurate indication of the market either, especially at this time of year. I’ve seen foreign issues go stupidly cheap and stupidly high on Ebay.

Hope this helped.

William asks…

Where to sell some old coins from foreign countries?

I live in Ohio in a small town I went to our local coin dealer about some foreign coins I have for sale. They couldn’t help me because they knew nothing about foreign coins. Is there someplace online besides eBay where I could sell them?

Justin answers:

Try your local Craigslist. The more you know about them, the better you will do. Most Craigslist people are looking for silver or something rare, and most small accumulations of foreign coins have neither, but at least you might get an offer. The majority of foreign coins are low value, they would be pocket change in their countries (if even still good), just like most US coins are pocket change for you.

The typical foreign coin, when coin dealers get them, go into their ‘junk box’, where they are offered for 25 cents each. Most sit unsold. That is why you will see mixed foreign coins with no silver in them being sold in coin magazines by weight, not by the coin. So many pounds for X amount per pound.

Daniel asks…

How can I buy silver investment coins below spot price?

Is there a legitimate way to purchase silver investment coins like American Silver Eagles cheaper than the spot price?

Thank you!

Justin answers:

Dealers in my area are paying one dollar above spot for American Silver Eagles. On eBay, they sell for one to several dollars above spot. They sell at a premium. You will not find them below spot unless you stumble upon a seller who doesn’t know the current value – who doesn’t know what they have.

You may be able to get 90%, 40% or 35% (war nickels) silver coins on eBay for right around spot, plus whatever the shipping costs. At most estate auctions I’ve been to, people go crazy-nuts and pay too much. I buy the ‘sleepers’, the things most folks know little or nothing about. Not knowing what they have in front of them, they shy away from it. For example, I recently picked up a lot of mixed world coins that had a ’60s Canada silver dollar (what they were all bidding on), but it also had an 1895 Mexico 8 reales that several people were positive was fake because of the dark patina (it’s genuine) and a 1.25 ounce .999 silver commemorative that everyone thought was pewter because of the antique finish (that does look like pewter). That one piece alone was worth more than what I paid for the lot. I took home over $100 worth of silver for $33, and the other foreign coins were a bonus.

So that’s what I recommend. Be an informed bidder at the estate auctions and you’ll get some bargains.

Donald asks…

About how much could i expect to get from different coin collectors for all these coins?

the oldest penny i have is from 1911, i have a dime from 1945, and a little book of penny’s from 1941-1975 with s and d pennies in there and 3 steel ones..i also have vietnamese, canadian, japanese, and other foreign coins…would it be better to show a coin collector all of them at once or try to get different amounts of money by first showing the foreign ones than the old u.s than the pennies?

Justin answers:

I seriously doubt that your coins are worth very much so it wouldn’t matter which coins are show in any particular order. Your foreign coins are probably common and have very low value. Many coin shops have “bargain boxes” with these kind of coins being sold at a nominal price like 6 for a dollar.

Your 1945 dime is made from silver and has a value around $2.50. All your Lincoln pennies that have the “wheat” backs are worth about 3 cents each. Earlier ones before 1930 could be worth more if they are in better condition. Any Lincoln penny made after 1958 is only worth face value.

You probably don’t have a collection worth more than $5.

Robert asks…

Which silver coin is best for investment?

I would like to get out of US Dollars and invest my cash into some “real money” like silver. However I do not know what is best for investment purposes.

1) Silver American Eagles .999
2) Morgan Dollar
3) Peace Dollar

Also, I hear that in times of an economic crisis, there is the possibility of bullion to be confiscated. With that in mind do you prefer the Morgan or Peace dollar?

Justin answers:

Silver is a roller-coaster ride on steroids. The price can soar and plummet – 10% in a day, 40% in less than a month (as in its drop from near $15 to around $9.50 per Troy ounce in May-June 2006). Be aware of this and make sure that you understand that the silver price has frequently moved in parabolic waves, both up and down. See the “Real Silver and Silver 1970-2008” chart in this article for the breathtaking recent history of this metal:

http://www.321gold.com/editorials/hamilton/hamilton011808.html

If you’re still sure you want to plunge in, and understand the volatility you’re taking on, there are pros and coins to all sorts of silver investments. A few quick highlights of the options:

Physical silver options

* 90% US silver coins, dimes, quarters, and half dollars minted in 1964 and earlier.
* US Morgan and Peace silver dollars.
* Foreign bulk silver coins, such as Canadian 80% silver dimes, quarters, halves, and dollars from 1966 and earlier.
* Bullion coins from the US and foreign countries, such as US Silver Eagles, Canadian Maple Leafs, Mexican Onzas, and others. These are generally .999 fine (and some older coins .925 fine) coins containing 1 Troy ounce of silver.
* Silver rounds and bars, containing 1 Troy ounce (or multiples or fractions thereof), usually of .999 fine silver.

“Paper” silver options

* Exchange Traded Funds, like that traded under ticker symbol SLV, which trade like stocks and give you a share of silver held on deposit.
* Certificates or electronic holdings in silver held on deposit with companies based outside the US, like Goldmoney.com or the Perth Mint.
* Shares in companies that explore for, build resources of, and/or mine silver.

To be blunt, if you’re starting out, you might simply want to start with the most highly recognizable: American Silver Eagles, even though the premium over spot you’ll pay is likely higher than many of the other physical silver options. Over time, as you research this area, you may discover that some of the other options (such as circulated 90% US or 80% Canadian silver coins, or silver bars/rounds) occasionally offer more silver for your money, at the cost of somewhat more variability around demand and pricing. Further on, you might wish to later diversify your holdings with one or more of the categories of ‘paper’ silver listed above, which may give you some protection against confiscation, however theoretical that possibility might be.

Also, before buying any silver coins, educate yourself as to their silver content and values. Learn the silver content and silver metal value of older US silver coins; one starting place is:

http://www.coinflation.com

When buying coins, try to pay below spot silver price (possible via some eBay auctions of US 90% and Canadian 80% silver coins, for instance), or if above spot, as little as possible above that price. (Silver Eagles generally sell at a premium over spot.) You might start with reputable Internet dealers like Monex or Kitco, or find a local dealer you trust, then branch out into other dealers or eBay, from sellers with high feedback.

Finally, with respect to the first answer here, when buying coins strictly for bullion purposes, rather than for coin collecting (numismatic) purposes, condition doesn’t matter – much, at any rate. If you’re buying worn (circulated) silver coins, it’s best to buy more recent and/or less worn coins, since wear can have a material impact on silver weight. Well-worn 90% “junk” US silver coins – often found in the case of coins from the 1930s and 1940s – for instance, can weigh several percent less than they did in as-minted, uncirculated conditinon.

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