Well, got to hand it to you, Joe. You've certainly done your homework. It's just like trading stocks, isn't it. Ya gotta find someone willing to sell to you too cheap, and someone to buy from you too expensive, LOL.
*** The Story on Silver Coin Melts & Premiums...***
Hi Joe, Judging by the post I'm responding to, I know this is a subject near to your heart and wallet. <g.
What's the Story on Silver Coin Melts & Coin Premiums?
By: Charleston Voice -- Posted 12 November, 2006
From what I can gather the best informed and collective opinion is that $500 million (face value) in pre-1964 90% US silver coins remain in existence. They have not gone into the previous silver melts. I believe those remaining to be in very 'safe hands'. This best guestimate is outside of the number of silver dollars remaining. I say this because those that held back in the 1980 melt have since 'camouflaged the pre-1964 coins with bullion eagles, bars and other bullion-related silver. It is those latter categories that will go into a future melt before the "junk" pre-1964 coins. I don't plan to ever sell my "junk" silver coins for fear I could never buy them back! I don't trade the G/S ratio with them; I sit tight. Plus, the halves I could never replenish w/o paying a premium over dimes & quarters today. Talk about a core portfolio! The irony is that today's silver bullion items are probably fabricated in large part from re-cycled pre-1964 coins melted in the 1980s!
With silver currently at $13.03, Tulving (just to use an example benchmark) is buying junk silver coins @$8,838 per $1,000 face circulated bag ($8.84/oz.). The silver melt value with silver at $13.03/oz. would be $9,316 (.715 X $13.03). Tulving is selling those same circulated bags @$9,188.
When silver certificates were being redeemed by the Fed they were being exchanged at $1.29 per dollar. What occurred, was that typically you had a "market maker" in your community who was paying, say $1.15 per dollar, and then would make the trip down to the nearest Federal Reserve Bank and redeem them in bulk @$1.29, but were not redeemed in silver coin, but in FRN's! Today they are just another FRN backed by nothing. This is what will occur, in my opinion, when the silver and gold ETFs blow up, or the government confiscates the ETF's metals - - your ETF shares, never being redeemable for the metal in the first place, will then even lose their supposed backing, and FRNs will be your only choice of weapons. You will be happy because you received the gold or silver paper dollar price equivalent, but not the real thing. But, then, unless you have a physical stash of silver, you'll have to just be a spectator as the silver price continues on into the next galaxy. Bye-bye.
Putting the $500 million pre-1964 silver coins in perspective to today:
The 2002 State Quarter production for the five states and both Philadelphia & Denver mints was 3,313,704,000 billion quarters. Just that one year's production of quarters only was more than $800 million. And that's not counting the additional dimes. Half dollar production has not been considerable. Subsequent years' productions have run apace of that. State quarters are being hoarded by the bag lot indicating Americans' ignorance of sound money vs. clad sandwich coins. These present day hoarders are to get a rude lesson in sound money vs. counterfeit when their quarters not only don't appreciate in numismatic terms, but actually buy less and less at their corner 9-11 store. These slugs will be plentiful for decades to come.
I don't know the total market capitalization for the silver mining stocks, but SSRI alone is about $1.2 billion with resources indicated to be 850M/ozs. PAAS is $1.5 billion with measured and indicated to be 242.3M/ozs. Silver mine production in 2005 was 641M/ozs. and demand was 912M/ozs, the difference being made up from "above ground stocks". Now, with nearly 70% of new silver coming from copper, zinc, nickel and other mining operations, the beauty in all this is that weaker copper and other industrial metal prices (recession?) will result in less silver being mined. You can do the math. You can add up the official US Mint numbers to determine the precise silver eagle production since 1986, but I'm gonna make a wild guess of 7M/year; so, for ten years a round-house number 70 million have been minted. All are Uncirculated, and aside from selected issues like the 1996, have no numismatic value which enables the 'collector urge' in some of us to be satisfied by putting together a date set.
The 1900 US census tells us the population was 76,212,168. This year we crossed 300 million, about a fourfold increase. In 1902 when we were still on the bimetallic standard, US quarter production was 18.5 million for the year. That's about one silver quarter for every fourth person. A hundred years later we're minting over five counterfeit quarters for every person. And, this in an age of credit cards! Now, I don't know where this exercise has lead us, except to point out two things: If we are to restore our freedoms and lost liberties, one element is essential for our survival and that is freely circulating specie. The second necessity is the full restoration of our 10th Amendment, ensuring a state's sovereignty with reserved powers not delegated to the federal government. A Constitutional Convention is not required nor desired, only recognition and adherence to same by our state legislatures is necessary. Our slide into socialism and total government has gone on longer than most of us would have imagined.
So, if sound money should circulate once again in our land, silver and gold coins will be saved (not hoarded) for the honest money characteristic. Their purchasing power will increase and not be inflated away with ever increasing issues. We will again be an honest people and vigilantly enforcing an honest government. I cannot say I am optimistic we will return to that culture in any of our lifetimes - a culture that would prefer one honest quarter for one in four than today's people who will take five dishonest ones for every man, woman and child. The 1902 quarter has no debt, whereas the 2002 quarters are all debt tokens which must be paid.
Colin collecting has taken a big hit these past thirty years, brought on by the "big melt" of 1980. Youngsters no longer have a circulating pool to which they can defer and find their starter coins. The number of retail coin dealers has shrunk. Even in Charleston there is no major retail coin dealer. When gold and silver prices roar it will be the pawn shops who will 'make the market' and folks are going to get ripped off.
In summary, it's taken me a lengthy dissertation to get to why "junk silver" (pre-1964) might offer you, or your descendents the best deal for generations to come. An uncirculated (brand new) 1902 Philadelphia quarter goes for $200, one from New Orleans will run you somewhere under $500, and a San Francisco will cost $500. Higher uncirculated grades will go for several thousands. Spend a minute checking prices here. Keep in mind that there was nothing unusual in the mintages of 1902, in that period it was just a routine production year.
Dump your state quarter slugs, and as part of your silver accumulation program, convert to "junk silver" coins. How many rolls of uncirculated quarters from the 1960s do you have? Ben Franklin halves? Too bad, because due to the high mintages of the period many went into the Big Melt, and today are at stiff premiums.
Right now the 90% silver coins are at about a 1 1/2% discount to melt (see above Tulving prices).
Watch the large refiners for backlogging silver to be refined. Three months seems to be their tolerance. How one does that, I don't know, but when they get backed-up look for silver to correct sharply.
I know one thing: I sure wish my Dad had set aside a bag or two of 1962-D quarters that I could sort thru and pull out some MS-67 grade coins that today sell for $9,000 EACH! Heck, I'd settle for MS-65's at $40 each; that's $1,600 a roll!
Those melts are nasty, but also an opportunity for the initiated.
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