Premiums On Bullion

I haven't been watching premiums at online shops but I have seen ebay auction prices go up since the latest drop. I've been watching 2007 US Mint Silver Quarter Proof Sets on ebay since the April drop and they seem to sell in the $25-$28 range with shipping included. The last one I was watching sold for $37.26, more than a 100% premium on the $18 of silver in that set! That bidding happened on the day of the last drop with days left to go on the auction. I guess someone thought they had to buy right then before all the 2007 Mint Sets get snapped up?

I also agree with you that as silver prices fall premiums will fall. When silver finally finds it's bottom and sits there for a few years, people will see the last 5 or so years as just another spike and silver will be left to coin collectors. There have been so many bullion ASE and CSM minted over the past few years that I can't see anyone paying much of a premium for them. Coins will numismatic premiums will do better but I also see those values falling as the boomer generation dies off and their families start liquidating collections. Coin collecting is a hobby in decline and with a high average age. The fewer collectors the less valuable the collections.

There's no doubt in my mind that common forms of bullion will always sell for a modest premium over spot.

I'm talking about bullion collectibles that sell for 2 or more times spot. Things like old pour bars that didn't have any significant premium over spot before the most recent rise in spot prices & mint products produced in small quantities that sell for 2-10 times spot value. I don't believe those type items will suddenly drop in value, but I do think there will be a gradual decline until virtually all of the premium is erased.

I think it depends on what type of "more rare forms of bullion" you are talking about. If you're talking about the recent proliferation of "limited edition" coins from island nations with colored fake glass gems inserted and the like, I expect the collectible market on them to eventually collapse and they will eventually be selling at or near spot.

If you're talking about old staples like BU Morgan dollars or St. Gaudens Gold Double Eagles, on the other hand, I expect those will always have huge premium regardless of what spot value is or just how common they actually are. At least, they will always have a huge premium when you try to buy them. Most of that premium will probably evaporate if you actually try to sell them to a dealer.

The premiums on silver will always exist. the volatility of silver is to high for it to maintain a stable price for 5 years and allow premiums to equal out. as long as the price is fluculating like it is there will always be a buyer and sellers will demand premiums.

I completely agree that well see premiums start to come down as people realize theres no shortage overall.

The one thing though that may not bode well for peace and Morgan dollars is that a lot of people who used to be buying eagles and maples may have switched to more numismatic things for some cushion. The price run up also brought in a lot of new pm buyers and it seems reasonable to assume that at least some have since become interested in numismatic collecting because of it.

Basically what I'm getting at is that the demand for peace and morgans could keep their prices inflated. Overtime that could fade especially with a low stable spot price when people dont think they need to rush out and buy now while they can, but their price normalization may take longer than other products.

After experience the last major bubble breakage in late 2008, I can say with some certainty that if spot stays lows for a couple of quarters, premiums come down on some things. When silver was selling at $9, ASEs were still averaging $14-15 and common Morgans, I think (since I wasn't collecting and just working from memory), were $17-19 or so. Dealers are probably still hesitant to sell at a loss right now. But new dealers will move into the void, eventually, and when that happens, the old dealers will either sell or go out of business. But I'm mainly speaking about ebay. LCS economics could be vastly different than competition at a national level.

Some of it probably is hesitation to get into gold right now with how far it could potentially fall.

One of the cons of the modern NGC 70 is they give out more of them than PCGS so they do have a lower premium on most things, the pro to it is you have something with more cushion that stands out from the raw coins.

The more important thing though is that the mint is destroying the modern gold 70 premiums just because they coins they make are so good. Before 2009 it was rare to get a ms70 buffalo in 2009 you had about a 50/50 shot, since then far more are getting 70s than 69s. When 70s are the norm the premium evaporates which is why those arent going for much more than spot and probably wont ever go for much more than spot unless interest in the series significantly picks up.