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Due to the overwhelming demand for silver, premiums on silver coins have risen sharply. The U.S. Mint is temporarily not accepting new orders for the Silver Eagle Coins, which means that suppliers who still have a stock can charge a higher price for their product.
The following chart from Sharelynx shows that the premium on these popular silver coins in the US has risen from 15.5% to almost 18.5% in the last few days. We last saw that level in November and December of last year, when there was also a Stampede on silver coins wax. The premium for other silver coins, such as the old American coinage with a silver content of 90%, also went up. Whereas the premium fluctuated around ten percent for months, people now pay an average of more than 14% above spot to obtain these coins. The last time we saw this premium was in the spring of 2014.
Premium on Silver Eagle coins increases
Also, the 90% silver coins in the U.S. have become relatively more expensive
In recent years, it has been more common for the demand for coins to rise suddenly, and the mints have been unable to take on new orders as a result. But this always turned out to be a temporary problem that was solved by an increase in production. Silver bars are first melted down into slices (the so-called 'blanks'), which are used by mints to mint investment coins.
The greater the difference between production capacity and demand, the more the premiums can rise relative to the silver price. At the beginning of 2009, when uncertainty about the economy was high, at one point a premium of more than 70% was paid on top of the Silver Price for the Silver Eagle coins. Since then, the premium has not been this high.
After the large drop in the price of silver in the spring and summer of 2013, the premium remained at an increased level of about 15% in percentage terms. This is not surprising, because at a lower silver price, the overhead costs are higher in percentage terms.
Premium on Silver Eagle coins was much higher in 2009
When the shortages persist for a few weeks, suppliers and mints raise prices, which we also pass on to our customers. We believe that higher premiums are a temporary phenomenon, as there is no structural shortage of silver. It only takes time for silver bars to be processed into discs that the mints can use to make investment coins.
