Poor Man’s Gold
The government rationed food during World War II and gasoline in the 1970s. Now, it’s imposing quotas on another precious commodity: 2008 dollar coins known as silver eagles.
The coins, each containing about an ounce of silver, have become so popular among investors seeking alternatives to stocks and real estate that the U.S. Mint can’t make them fast enough.
In March, the mint stopped taking orders for the bullion coins. Late last month, it began limiting how many coins its 13 authorized buyers world-wide are allowed to purchase.
“This came out of nowhere,” says Mark Oliari, owner of Coins ‘N Things Inc. in Bridgewater, Mass., one of the big-gest buyers of silver eagles. With customers demanding twice as many as they did last year, Mr. Oliari would like to buy 500,000 a week. But the mint will sell him only around 100,000.
The coins have a face value of $1. But the mint sells them for the going price of silver, plus a small premium, to a handful of wholesalers, brokerage companies, precious-metals firms, coin dealers and banks. The dealers mark the coins up a bit more and sell them to the public. Currently, the coins are fetching about $19 apiece, with some sellers seeking more than $20.
But silver is growing in popularity, and some investors are betting that its value will surge as inventory shrinks. Big investors are loading up on silver eagles, which are the only American silver coins allowed in individual retire-ment plans. For small investors, they are an accessible way to get into the metal boom.
“Unlike gold, these coins can be bought by regular citizens,” says J.R. Roland, a Brownsville, Tenn., judge who re-cently began buying the coins — and trading them on eBay. “In these economic hard times, silver coins are a great way to invest.”
Photo by WSJ.
Angela on May 27th, 2008 2:48 pm
That’s an interesting trend. I wonder how long it will last before the buying surge dies down.
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