An interesting dynamic is taking place in the precious metals bullion market. While the premiums for Gold Eagles have fallen back to near-normal levels since the global pandemic hit during mid-March, Silver Eagle premiums are still close to their highs.
According to GoldChartsRUs.com, using Monex’s prices for Gold and Silver Eagles, the premium for the coins jumped in April due to the surge in bullion demand and the shutdown of the U.S. Mint. However, as the world’s largest gold refineries came back online and as the U.S. Mint was able to resume production, the premiums for Gold Eagles fell considerably at the end of June and beginning of July.
However, even though Silver Eagle premiums have come off their highs in April and May, they are still quite elevated:
In using Monex’s price data, the premium for Gold Eagles is 3.8%, while Silver Eagles are at a whopping 27%. Now, here are a few interesting points about Monex’s price data. Monex provides very low premiums versus the typical leading online competitors. However, there is a catch when dealing with Monex. First, the premiums quoted are not for 2020 coins, even though one may receive that year. Secondly, they try to get people to use their service that offers even cheaper premiums if you don’t take delivery and store it at their facility. This seems suspicious to me that they can offer such low premiums compared to the market. So, buyer beware.
For example, I looked at the 2020 1 oz Gold Eagle premiums (based on buying 1-9 coins), and I found they ranged between 5.7%-6.6%, with a simple average at 6%. So, you can see that the leading online dealers are charging about a 6% premium for 2020 1 oz Gold Eagles vs. 3.8% for Monex. Moreover, when Monex’s Gold Eagle premiums were much higher in April-May, so were the leading online dealers.
Regardless, Gold Eagle premiums have come off their highs while Silver Eagle premiums are still elevated. If we look at the following chart, using Monex’s price data from the charts above (approximations), Silver Eagle premiums are only $0.44 less than what they were from their peak.
Monex’s Silver Eagle premiums peaked at $5.75 and are now at $5.31. So, we haven’t yet seen Silver Eagle premiums return to their normal $2-$2.10 per coin. Again, when Monex’s Silver Eagle premium peaked at $5.75 per coin, the average leading online dealers were charging an average $10.97 over spot in mid-May. I have set up a spreadsheet that shows the prices and premiums for the four leading online dealers versus CLOUD HARD ASSETS, which I sponsor on this website.
Here is a chart showing the 2020 Silver Eagle premiums for June, and including July 17th:
As you can see, the four leading online dealers’ average 2020 Silver Eagle premium was 59% on June 1st or $10.81 per coin versus 37% premium offered by CLOUD HARD ASSETS or $6.70 per coin. What a difference in premiums… eh? Investors could have saved one heck of a lot of money if they SHOPPED AROUND.
Towards the end of June, the average 2020 Silver Eagle premium from the four leading online dealers fell to 42% on the 30th of the month versus 30% for CLOUD HARD ASSETS. And, at the close on Friday, July 17th, the leading four online dealers’ average 2020 premium fell to 41% ($8.03 per coin) versus 27% ($5.25 per coin) from CLOUD HARD ASSETS. These prices are based on buying 1-19 coins.
Due to high demand and still limited supplies, the premiums on Silver Eagle coins remain elevated. I contacted Dan at CLOUD HARD ASSETS this week, and he told me they continued to be very busy with 60% of sales in silver bullion and 40% in gold bullion. These percentages are based on sales volume, not on troy ounces.
The South African Mint Sold A Lot Of Silver Krugerrands Since Mid-March
Since its initial release in 2017, investors have been able to acquire 1 oz Silver Krugerrands; however, the mintages were low. But, since the global pandemic caused bottlenecks and shutdowns, there were a lot of Silver Krugerrands available for wholesalers and dealers. Thus, we may see the production and sales of Silver Krugerrands in 2020 jump versus 2019. According to the 2020 World Silver Survey, the South African Mint produced 3.6 million oz of Silver bullion, mostly Silver Krugerrands. It will be interesting to see their sales figures this year.
I put together this chart showing the four leading online dealers 2020 Silver Krugerrand prices vs. CLOUD HARD ASSETS. These prices are based on purchasing between 20-99 coins.
As you can see, CLOUD HARD ASSETS is still offering the best prices for 2020 Silver Krugerrands. Surprisingly, one of the largest online precious metals dealers in the industry continues to charge the highest premiums on its silver bullion coins. I find this quite interesting because the notion that high volume sales translate to lower prices doesn’t seem to be the business model here.
CLOUD HARD ASSETS is a smaller operation and runs a very tight ship, which is why they try to offer the best deals for investors.
You can contact Tom or Dan at CLOUD HARD ASSETS here: PRECIOUS METALS INVESTING.
Tom Cloud has been in the precious metals business for 46 years, since 1973. He has a lot of experience in the precious metals industry and understands the gold and silver market better than most dealers in the industry.
If you are new to the precious metals market and had questions, Tom Cloud and Dan would be happy to answer any questions.
DISCLAIMER: While Tom offers information about precious metals, you should not take this as investment advice. You should contact a professional advisor and or do your due diligence before making investment decisions.
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When I first started reading about silver/gold back in 2002, I read a lot from Ted Butler. He had an old friend who got him into the metals….. Izzy was his first name…don’t recall his last name. But Izzy always said that one day(in not too distant future) one would not be able to buy a silver eagle for less than $1000, as the mint would stop making them when they could not get any more silver for the program. Who knows about anything down the road…..we all have our own opinions. But, I have been seeing that $1000 value in my head, more and more as these crazy money creations continue(fake money that is). I’m hoping these premiums stay low for another few weeks…… closing on some real estate next week, and all the profit is going into silver eagles……. probably my last purchase…… just hard to pay so much for gold when silver can go up 4 times much easier than gold can…. in my opinion that is. Thanks for another good article Steve. Hope you all have a good week of life.
Ronald Ray,
The main reason the Gold-Silver Ratio is so high has to do with the high cost of producing gold. It cost about 80 times more to produce an ounce of Gold than Silver… thus, the basis for the high Gold-Silver Ratio.
But, as Gold & Silver return to be valued as STORES OF VALUE, rather than commodities, then we are truly going to see some very high prices, especially for silver.
steve
I have always wondered why does it cost 80 times as much to mine an oz of Gold compared to Silver if the economical mining ratio is 8:1 or naturally occurring geological ratio is around 12:1. Any idea?
Gold Bug,
I will answer your question, but may I ask how long have you been following my work?
As for your answer, Here is the estimated Production Cost per ounce for each:
1) Top Primary Gold Miners: $1,200 per oz
2) Top Primary Silver Miners: $15 per oz.
If we divide $1,200 by $15 it equals 80. Thus, the typical 80/1 +/- Gold-Silver price ratio.
I have posted many articles over the years that show the TOTAL COST to produce GOLD is about $1,200 and $15 for SILVER.
This has nothing to do with the ratio of gold and silver in the ground. What matters is that the Gold Mining Industry average ore grade is 1-2 grams per ton compared to the Primary Silver Mining Industry 193 grams per ton.
So… what that means is that the Gold Mining Industry has to move about 80-100 times more ore to produce an ounce of gold compared to silver.
That takes one hell of a lot more ENERGY, CAPITAL, LABOR, & MONEY.
Does that clear it up?
steve
That’s a great explanation Steve. I know I’ve read that many times on this site, but could not remember myself the exact reason(69 years old yesterday, and for you young ones, that memory lapse is real). Also, with the scarcity that you talk about, as far as silver being used up so quickly, that should make the price go up also down the road…..hopefully. Will be signing up again later today for your premium news….. will be interesting to see your favorite mining stocks. I’m fortunate to have been buying my stocks way back(and not so far back) for less than a dollar. I’m keeping some cash in my brokerage account so it is there when there is a large market correction. I believe all will go down, but the metals will pop way up quickly. Fingers crossed for us all.
Great article as usual, and a
timely topic for my curiousity. I really don’t know the reasons ASE premiums haven’t gone down yet…but I’m not buying them when other countries’ coins are so much cheaper…including .9999 coins.
Can you say CLOUD HARD ASSETS one more time
Yes keep saying CLOUD HARD ASSETS, where else can you pay almost half the premium of anywhere else on the market??? I wondered myself if it was a scam, but have now made two large orders through DAN at CLOUD. And they are believers in Jesus to boot.
For readers that didn’t know, the U.S. Mint only (officially) sells these bullion ASE’s and AGE’s to about 12 primary dealers.
Some of then in turn sell to the rest of the other retail dealers, as well as their own retail sales.
It would be interesting to know the premium the U.S. Mint currently charges on American Silver Eagles to these primary dealers.
If the U.S. Mint could produce more ASE’s they could sell them…all they have to do is lower their premium.
I guess they are happy with their current sales volume, or they can’t source silver to produce more.
I suppose we will never know what premiums the mints charge the “Volume Dealers”. Does anyone know the inside story? Apparently, the volume dealers order from the mints just at the moment they receive retail orders or how could they survive the minute by minute swings in bullion values up and down, especially in gold and platinum.
It looks as if the dealers are getting the same premium cost from the mints as before the Covid because they are now charging less and less premium. In other words, they have made a killing on bullion, jacking the premium costs as high as possible, taking advantage of the situation. Oh well, that’s business.
Brant Lee,
Here is what the U.S. Mint charges the Authorized Dealers:
American Eagle Silver Bullion
United States Mint Authorized Purchasers are charged the LBMA Silver Price plus a $2.00 per coin premium.
Minimum ordering requirement: 25,000 ounces
American Eagle Gold Bullion
United States Mint Authorized Purchasers are charged the LBMA PM Gold Price plus a percentage premium as follows:
1-ounce: 3%
1/2-ounce: 5%
1/4-ounce: 7%
1/10-ounce: 9%
Minimum ordering requirement: 1,000 ounces
————————–
We also have to remember the Wholesalers also charge the Dealers a commission-premium.
steve
If the U.S. Mint hasn’t gone up on their premiums to the Authorized Purchasers, then the mint must not be able to fill orders for 25,000+ anytime those Authorized Dealers want them, i.e. demand is high enough for them and the compnies they sell to, to keep the premiums high.
I guess a lot of retail buyers only consider buying (or are aware of) ASE’s.
It has a cult-like following.
Kangaroos (.9999) are available right now for $2.55 over spot from an online dealer for quantities of as few as one. That could end at anytime as that price has been in place for days.
Can’t see paying those ASE premiums.
Thanks, Steve. I have never known this information before, so, another FIRST from your site.
Off topic, but I’d like to draw your attention to what’s currently going on in China that’s NOT being reported by any regular news sources for some reason. This is becoming serious! Presently, Shanghai is being massively flooded. If the 3G dam ever breaks, the results would be catastrophic. The irony would be that Wuhan – the supposed origin of this Corona virus pandemic – would be one of the downstream cities destroyed in the pathway of the deadly deluge.
This situation seems critical to keep watch on, as the magnitude of such a potential disaster of this kind will have immense ramifications to the global economy and supply chain lines, not to mention the untold loss of life, both immediate and in the aftermath.
BLACK SWAN EVENT IN CHINA: Three Gorges Dam and Mega Floods
https://www.winterwatch.net/2020/07/black-swan-event-in-china-three-gorges-dam-and-mega-floods/
Ben,
Actually, I have been looking into that. China is supposed to get another week of record rain. You need to check out this youtube video by BIG T that shows it’s a much bigger problem going on downriver from the THREE GORGES DAM.
https://www.youtube.com/watch?v=nELmf3ZxbCo&feature=youtu.be
steve
wow! Watched all the videos. Pretty bad news. In 1956, UK invaded Egypt, silver plumeted, and Russia took advantage to invade Hungary. What will China do to avert attention from this disaster? Hong Kong? Taiwan? What will Egypt do with the dam in Ethiopia that China built? Is water to play a more important role than oil? Any views?
What advantage did Russia take to invade Hungary? Soviet Union (not Russia!) just backed its interest in Hungary after protests that turned to revolution.
Not Russia? I am not sure the Eastern European nations of today would call it a “Union”. I live in Finland, which had a “Union” with Sweden for 800 years. Russia invaded Finland, and Finland had a “Union” with Russia for 150 years. Whatever “Interests” Russia feels it needs, they will find no profit or interest, if they move west again.
There is a lot of misinformation about the real causes of the revolt in Hungary. The Russians put a bunch of Jews in charge of Hungary after WW2. The revolt initially was all about that.
Strangely enough, in 2014 the USA did something rather similar in Ukraine. Now, a bunch of Jews are in charge. I wonder how long it will take for the people of Ukraine to wake up. Only 1% of the population of Ukraine is Jewish.
Copied ——Highlighted comment
paulrward
2 days ago (edited)
Lots of good points, Mr. Katusa, but you left a few out. First, it is true that 65% of silver used each year goes into industrial uses, unlike gold. What is also true is that the silver used in industry, with the exception of photographic silver, is NOT reclaimed. Some 95% of all gold mined in the past 6000 years is still with us in one form or another. Not so for silver – the amount in electronic landfills and waste dumps that is not reclaimed due to reclamation cost means that , each year, silver is mined, and about 50% of it is lost back into the earth in landfills.
Second, for the past four years, the amount of silver mined each year has been flat in terms of tonnage, while the amount used in industry, jewelry, and bullion has been rising. This means that the supply of silver is rapidly becoming ‘ inelastic ‘, that is to say, it cannot be expanded to meet increased demand. Or, to put it another way, if a lot of people suddenly want silver bars and ounces, there will be a massive shortage of silver. Now, while it is true that Central Banks don’t store silver, common people around the world DO, and there are a hell of a lot more common people who will want silver in an emergency than there are Central Banks……
Third, last year, about 27,000 tons of silver were mined worldwide. Let us assume there is a crisis in China, or India, ( like the border war they are having ) or here in the U.S., ( like maybe a pandemic or a lot of riots and civil disorders ) and suddenly a lot of people want silver ounces. 27,000 tons is about 65 million ounces. Which means that, with a combined population of about 2.3 billion, if just one person in ten in the above mentioned three countries decides to buy a single silver ounce for wealth preservation, you will have four people competing for each ounce, assuming that EVERY single ounce of silver that is mined in 2020 is suddenly turned into silver ounce coins.
Fourth, you mentioned that while there is 62 billion dollars invested in the gold ETFs, there is only 4.3 billion dollars in silver ETFs. Interesting that this is about a 16:1 ratio, which was almost exactly the traditional ratio of price between gold and silver….. Is it possible that, when the price of gold skyrockets and the price of GLD ETF shares is too high for the average investor,, that demand for the lower priced SLV ETF shares will take off, forcing the SLV managers to purchase more silver, further driving up the price of the white metal ? I would think that would be a good bet……
Finally, at 6:51 in your presentation, you show a graph of the Silver price from 2010 to 2013. In the graph can be seen two days when the price of Silver dropped dramatically, What you DON’T say is that this was because, on both occasions, the cause of the drop was the change in Comex – Nymex margin requirements, forcing investors who were long in Silver to suddenly face massive increases in their margin requirements, in the first case, by as much 50%. This forced a number of investors to liquidate their options quickly, driving the price of silver down. In April, 2011, the Comex increased the margin requirement five times in nine business days., making it impossible for most investors to keep their options.
This was done at the behest of the Federal Reserve, to hide the weakness of the U.S. Dollar in the face of massive money printing by the Fed. In effect, to protect the Federal Reserve and the large New York Banks, they sacrificed all the silver investors. The same thing happened again in September of 2011, as the price of silver had begun to rise again.
However, there have been some changes since then. First, there is the creation of the Shanghai metals exchange, which is NOT under the control of the U.S. Federal Reserve, and is unlikely to screw over the average citizen of China just to protect the United States Dollar. Second, there is now a worldwide shortage of both gold and silver, which we saw in March and April of this year. When the price of both gold and silver went down as the Dow crashed, many people tried to cash in by ‘buying the dip’ in silver and gold . To their surprise, there was NO gold or silver available, or, if it was, there was such a premium that the net price for both gold and silver bullion had NOT DECREASED, BUT IN FACT WENT UP !! At one point, when silver had dropped on the Comex from $ 18.00 per ounce to $ 12.00 per ounce, to get a single ounce of physical silver bullion you had to pay $ 24,00 per ounce, or a 50% premium over spot price. What is more, as people demanded delivery of gold on the Comex, the Comex was unable to deliver, and had to settle contracts with paper promises to deliver partial London Known Good Delivery Bars
Mr. Katusa, the Comex is a Ponzi Fraud, with over fifty silver futures contracts for delivery for each ounce of silver in the Comex vaults. All it takes is for a small number of customers to try to take advantage of the rising price in silver to demand delivery, and the entire structure comes undone. Like the old story, the Emperor is Naked, and it only takes one voice for people to realize this. And when the Comex/Nymex loses control over the spot price, it’s Katy Bar The Door ! The price of silver and gold will rise overnight to unheard of levels.
And that is the silver lining to this story… {AND MADE FOR A FINE READ — 4 oz}