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By Al Doyle for CoinWeek …….

The situation in the silver bullion market is interesting, to say the least. Many voices are saying this is the time to buy with low spot prices, but those who expect to pay something close to a paper (not real) value get a rude awakening when they discover that the cost of the real thing currently has little relation to the manipulated spot price.

Even those who are willing to adjust their thinking and deal with the new reality in pricing often find themselves unsatisfied. That’s because much of the silver sold in recent weeks has been on a future delivery basis. Dealers often have little or no inventory, and they aren’t about to sell from their personal holdings when they can’t readily replace what’s on hand. In such circumstances, buyers can place an order and lock in a price for future delivery of newly minted silver Eagles, Maple Leafs or privately struck rounds and bars. Any estimates of delivery dates are educated guesses at best, and more than a few buyers are grumbling about long waits for their silver.

silver_dollars_groupIn the vast majority of cases, the delays are because of demand outpacing supply rather than any games being played by bullion dealers. Supplies really are that tight, and many merchants say they could turn a greater volume in silver if there was a way to get their hands on more product.

One old favorite of hard-money investors has held firm despite the recent slump in the commodities exchanges. Circulated Morgan and Peace dollars have dropped to a second-tier bullion play since silver Eagles and Maple Leafs debuted in the 1980s, but the old coins have done quite well compared to other silver options.

Silver’s post-1980 peak of $48.50 an ounce came during the Central States convention in April 2011. Anyone in the market for circulated 1878 to 1904 Morgans in the Fine to Very Fine range could shop the bourse and choose from a large selection at $38.50 each, which was just a little above melt at the time. Those who remember prices from two years ago might expect to pay somewhat less for “circ” dollars with the current spot price of $22.50, but that’s not the case.

Web sites for major dealers are offering pre-1921 Morgans in Very Good to Very Fine for $32 and up depending on the quantity purchased. Silver shoppers who want 100 pieces or less are going to pay $33 or so. That’s a modest 14.3 percent price decline during a period when spot fell by 53.6 percent.

Those figures say a great deal about the current value of circulated Morgans. Even allowing for promotions that can cause short-lived price hikes, demand clearly exceeds supply, and it didn’t happen because collecting circ dollars by date suddenly became trendy. Investors large and small are scrounging for every piece of silver they can acquire, and old cartwheels have benefited from that trend.

With a current melt value of approximately $17.30, a common-date “used” Morgan currently goes for nearly twice melt value. If you’re sitting on a stash of these coins, it would be an excellent time to swap for Eagles, Maple Leafs or 90 percent and end up with more ounces of silver. Even common as dirt 1922 to 1925 Peace dollars are priced in the $29 to $30 range. 1921-dated Morgans used to sell for the same price as circulated Peace dollars, but values have changed in recent years. Expect to pay $31 for typically worn 1921s from any of the three mints.

Moving up the grading scale, raw uncirculated common-date Morgans of 1878 to 1904 are retailing for around $50. These are the coins that aren’t attractive enough to be sent to PCGS, NGC or ANACS. Basic MS-60 and MS-61 Peace dollars and 1921 Morgans (not the 1921-D or -S) are $40 items. While ti’s just one component of the U.S. silver market, current values for lower-end silver dollars are an indicator of the growing chasm between spot and real world prices for physical, hold it in your hand product.

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