Modern Legal Tender Silver Bullion Coins – The Big Three

By Richard Schwary – Ask The Expert about silver bullion coins – www.golddealer.com ……
 

The Big Three when it comes to legal tender silver bullion coins are of course the American Silver Eagle 1 oz, the Canadian Silver Maple Leaf 1 oz, and the Austrian Silver Philharmonic 1 oz. From a weight standpoint they are the same and all three are struck in pure silver.

And from a consumer viewpoint all are very popular and all three silver bullion coins are accepted and traded worldwide. But there are differences between the three which are not obvious and unfortunately not understanding these differences can create a hole in your investment plan.

So let’s study a bit more carefully before deciding which one is best.

The distribution of the American Silver Eagle 1 oz is controlled through official distributors and production slowdowns by the United States Mint can lead to wild premium changes throughout the year. In 2013 the premium on American Silver Eagle 1 oz coins increased dramatically when vendor production of raw coin blanks slowed. This low-to-high premium swing also happens at the end of each calendar year as the US Mint retools for the normal date change.

Most of the year the premium on the US Silver Eagle Monster Box is steady but if production hits a rough patch premiums could double. And when Mint production resumes, premiums decrease. So if you bought at the wrong time you may not be able to recover a very high premium when you sell.

Such premium swings are not seen with the other two silver bullion coins, the Canadian Silver Maple 1 oz and the Austrian Silver Philharmonic 1 oz.

But all of this is really minor compared to the real consumer abuse, which regularly happens when the American Silver Eagle 1 oz, a common bullion coin, is graded by both PCGS (Professional Coin Grading Service) and NGC (Numismatic Guarantee Corporation). Not that the grading services are at fault for what follows, but they certainly should not be held harmless as the coin telemarketing industry then sells these ticking time bombs to newcomers for ridiculous premiums.

The uninitiated bullion buyer is told by the telemarketing robbers that their certified American Silver Eagle 1 oz is rare and worth considerably more than a similar coin that is not certified – but this is fabrication.

And when the uneducated silver bullion coin buyer decides to sell his certified American Silver Eagle he can’t figure out why he paid so much for the coins going in and is now looking at a substantial loss coming out – even if the price of silver is basically the same.

This story has a darker side because the newbie now associates all silver bullion dealers with used car dealers or ambulance chasing attorneys. And it gets worse if you really want to do your homework. If the consumer placed these high-priced certified examples in their IRA (Individual Retirement Account) the losses might be even worse. And this might bring in the Feds because selling certified silver bullion for ridiculous premiums is against the law.

Now I know some might take offense to this broad statement concerning the rights of free enterprise but none the less it is against the law. When the selling dealer holds himself out as an “expert” to a novice buyer and further suggests an investment, he cannot materially alter the facts because the novice relies on his expertise to make a decision.

Calling any American Silver Eagle 1 oz bullion coin rare because of certification is not just retail puffing, it is hiding the truth. The US Mint produces millions of these coins year in and year out and they are all basically the same so the term “rare” does not apply. And the fact that any particular coin is “certified” makes no difference.

So why aren’t the Canadian Silver Maple Leaf 1 oz and the Austrian Silver Philharmonic subject to the same telemarketing abuse? Because neither has the patriotic affiliation which comes with the American Silver Eagle 1 oz and the affiliation to the US Mint that always holds sway. This abuse makes the sale of certified American Silver Eagle 1 oz coins for high premiums particularly disgusting.

So should the American consumer avoid the beautiful American Silver Eagle 1 oz? Of course not – it’s one of the most popular of all silver bullion investments. But that same consumer would do well in calculating the premium over spot before writing the check.

A fair premium on the American Silver Eagle 1 oz will run between $2.00 and $3.00 over spot per coin. The premium on both the Canadian Silver Maple Leaf 1 oz and the Austrian Silver Philharmonic 1 oz is roughly a dollar less – coming in at around $2.00 over spot per coin.

So the silver bullion coin investment lesson here is to get a calculator and do the math. Most legitimate bullion dealers clearly post premiums before sale but most telemarketers stay up at night trying to hide the differences between certified bullion coins and what you thought you were buying – low-premium bullion that moves directly with the market.