Folks Scurry to Cash in Gold, Silver

By Patrick A. Heller November 30, 2010

The Michigan State Numismatic Society (MSNS) Fall Convention was held in Dearborn this past weekend. My company occupied two booths, but we were so busy that customers had to wait almost all day long on Friday. Activity slowed down for Saturday and Sunday, but it was the busiest MSNS show we have enjoyed in several years.

Over the years my observation about the typical Michigan collector is that, relative to collectors nationwide, they are more price sensitive than quality-oriented. As the prices of gold and silver dipped on Friday from Wednesday’s closes, I anticipated that there would be limited liquidation of gold and silver bullion-priced items and more interest in buying from us.

My expectations were mostly off the mark. It turned out that the price of silver was high enough, about 60 percent higher than a year ago, that many people were there to cash in their holdings. We purchased a lot more silver and gold than expected.

On the demand side, our retail sales were much lower than anticipated. A surprising number of people stopped at our table to ask if we were selling any of our gold coins and ingots or silver ingots at “spot.” These bargain hunters were apparently not aware that all gold coins and ingots are trading above spot price between dealers as are all silver ingots. Consequently, we had to turn away these prospective buyers.

On the other hand, we sold large quantities of gold coins to other dealers at the show.

There does seem to be some sticker shock among potential small-time silver buyers who just cannot accept (and sometimes aren’t even aware) how much the spot price of silver has increased this year.

Professional traders and those contemplating larger transactions don’t seem to stuffer from sticker shock. On Monday, Nov. 29, my company enjoyed its highest daily volume of retail sales in our nearly 40 year history.

In early November, when the spot price of silver was about $23, I forecasted a more than 50 percent possibility that the price of silver would surpass $30 before the end of the month. Although it hasn’t reached that level, hitting a peak at $29.36 two weeks ago was more than 90 percent of the way from $23. Those who may have traded in early November on the basis of my projection that silver would rise significantly are still happy with the results.

Premiums are little changed in the past week, but I expect them to rise further in the near future. When the U.S. Mint stops accepting orders for 2010-dated gold and silver Eagles to start production of 2011-dated coins, this will almost certainly spark a premium jump on U.S. Mint products and probably other coins and ingots. That day is coming soon. Don’t wait until after premiums rise to make your purchases.

Patrick A. Heller owns Liberty Coin Service and Premier Coins & Collectibles in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at CoinUpdate (http://www.coinupdate.com). His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com).