Did you know that American Silver Eagles can command extraordinary premiums, in certain situations? Read and find out about the time when these coins were fetching premiums up to 400% more than other silver bullion coins...
I recently published an article on Ezinearticles entitled, "2011 American Silver Eagle: 5 Reasons Why You Should Buy This Silver Coin! " extolling the virtues of this lovely silver bullion coin. One of the five reasons I listed as a good reason to buy was the excellent profit potential, even with the price of silver trading over $30 an ounce (the price of silver has since pulled back a bit).
I was in my local coin shop recently, browsing through their trays of various silver rounds. With the price of silver off its recent highs, I thought this would be the perfect time to add to my silver stock!
I happened to overhear a conversation between the coin shop owner and another customer. It went something like this:
Owner: "Hey, Bill, you ordered any 2011 Silver Eagles yet?"
Bill: "Hadn't thought about it. They're a bit pricey. Thought I'd just stick with buying a bag or two of junk silver when I have some extra cash."
Owner: "Junk is always good but I like Eagles, too. Some folks I know made some serious money on them back in '99.
Owner: "Yeah, back during that whole Y2K scare period. When everyone thought the world was going to end at the stroke of midnight on January 1st. " (He laughed). "People were paying crazy prices for those coins - double the spot price of silver!"
Owner: "I'm serious! It was crazy, man! I guess people figured if the whole banking system shut down or something, those silver eagles would come in handy."
Bill: "Yeah, but why the Eagles?"
Owner: "Guess it was because Silver Eagles are so well-recognized. And they have that U.S. government guarantee."
Bill: "Man! I had no idea! I thought silver was silver..."
A this point in the conversation, I moved away (lest they think I was eavesdropping, LOL!). When I got home that day, I did a little research on Silver Eagles and it turns out what the shop owner told the customer was true.
At the end of 1999, at the height of the Y2K scare American Silver Eagles were fetching HUGE premiums. The spot price of silver at that time was around $6.50. But Silver Eagles were commanding prices up to $12.50 an ounce!
Meanwhile, the Canadian Silver Maple leaf coin, an equally lovely silver bullion coin with a higher silver purity, was only commanding prices of $7.50 on the market.
Like the coin shop owner said, the reason investors were more than willing to pay the huge premium for the American Silver Eagle and not the Silver Maple leaf coin was because they believed in the event the banking system was unable to function, the silver Eagle coin would be more readily accepted for bartering purposes!
And the reason investors felt the Silver Eagle would be more readily accepted was because of their United States government guarantee and worldwide recognition! Of course, after the Y2K scare passed, premiums on the coins quickly returned to normal but anyone who would have sold during this period would have done fabulously!
Could a situation like this happen again?
Yes, the economy appears to be on the mend but the risks are still out there. In the event of a widespread financial panic, would the American Silver Eagle once again be the go-to silver bullion coin? And possibly command a huge premium over other silver coins? Who knows? But, as Mark Twain once said: "The past doesn't repeat itself - it rhymes!"