Tuesday, January 04, 2011

Big Discounts on Rare Silver Coins

Now is the time to buy silver coins it seems. The US Mint recently reported record sales on the first day of January 2011 of American Eagle Silver bullion coins. Almost 1.7 million one ounce silver bullion coins were sold on the first day of the year which is something of a record.
Meanwhile the business of rare silver coins continues to flourish and prosper.

The rare silver coin business took off when Then Van Simmons came along in 1986, and co-founded a business called the Professional Coin Grading Service (PCGS). This service revolutionized the coin industry. It made coin prices transparent and provided a standard by which coins could be measured and upon which everyone could agree upon.

Van hired rare-coin experts to grade billions of dollars worth of coins. After the coins had been graded then were then sealed in airtight plastic wallets. The wallets enabled novice investors to trade coins without having to know anything about coin grading and acted like sort of guarantee of authenticity. Consequently PCGS became a very successful business and is still considered the top grading service in the world.

In a recent interview with Van he was asked for a coin recommendation. "That's easy," said Van. "Morgan Dollars are a great deal." He went on, "I just bought another 100 myself. I love them. But they are getting hard to find."

The Morgan Dollar is a one dollar silver coin and was minted by the US Government between 1878 and 1904… and in 1921 for one year. The coin contains 0.77 ounces of silver.

By way of example of the value attached to the Morgan Dollar, In 2003, when silver was $4 an ounce, you could have bought a common-date Morgan Dollar for $125 in mint condition (MS65).

Today, silver is around $30 an ounce (a 650% increase in just eight years) yet you can still buy the same mint-condition Morgan Dollar relatively cheaply for only $170. To give you some idea of the potential value of these coins in the future, in 1985 Van Simmons paid $1,000 for one of these. Now, it is possible to buy Morgan Dollars at a 83 percent discount to that price.

Rare coins do not keep step with gold and silver prices. In 1980 when the silver price peaked the Morgan Dollar did not follow until 1985. The same is happening today. People are focusing strongly on silver bullion but tending to overlook silver coins. Hence now would probably be a good time to buy silver coins.

Maybe that’s why the US Mint had such record sales on the first day of the year.

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