Recent collapsing stock prices did not result in significantly higher metals prices, primarily because investors fled stocks not just in the US but around the world. Following conventional thinking, investors plowed into dollars via short-term US treasuries, which made the dollar stronger versus other currencies.
In the US, gold and silver trade against the dollar, and, therefore, the monies flowing into dollars offset the huge buying of physical gold and silver, keeping the metals prices from exploding as one would expect when stock prices decline more than 10 percent in six days.
Many buyers are surprised by the increased premiums on the physical metals. For example, 2015-dated American Silver Eagles are carrying premiums in excess of 23 percent, whereas only three months ago SE premiums were 16 percent over spot.
Premiums on ALL basic silver bullion products, 100-oz. silver bars, 10-oz. and 1-oz. silver rounds, have climbed as well, as demand has outstripped the industry’s production capacity. Circulated pre-1965 US 90% silver coins (junk silver coins) are carrying premiums of $6.00/oz. over spot. Worse yet, junk silver coins are next to impossible to find.
Twenty years ago, I could have purchased 100 bags ($1,000 face) of junk silver coins from any one of five wholesalers. Today, I would be hard-pressed to obtain ten bags from five wholesalers total. Whereas .999 fine bullion products are being produced almost daily, junk 90% silver coins have not been minted since 1964, more than a half-century ago.
Nowadays, the only sources of 90% coins are private investors, and few of them are selling at these levels. We do not expect the premium on 90% coins to come down until silver recovers to the $25-$30 level. Even then, 90% coins may still carry $3/oz. premiums. However, if the metals’ prices stay in this range, premiums will ease on all products, but probably not significantly.