On April 28, silver closed in London at $48.70 an ounce after
reaching almost $50 an ounce during the day’s trading. Just a week
later on May 6, silver closed in London at $34.20 an ounce and on May
17, it hovered near $34 an ounce.
Gold has shown more stability, its price ascent also having been
more gradual than silver’s. When silver started to fall at the start
of May, gold held its own until May 5, gradually dropping from its May
4 close of $1,541. By midday May 17, gold had declined to $1,470.
In the past several weeks, demand for generic Morgan dollars — a
market sector that has shown dramatic gains in the past several months
— has slowed as market makers stopped buying them in quantities. The
primary demand for these coins came not from collectors, but from
telemarketers, and the sharp decline in silver has made these
relatively common coins a tougher sell at current levels to
noncollectors who may be hesitant to invest in silver coins now.
To capitalize on the earlier dollar craze, Numismatic Guaranty
Corp. had begun offering a new on-site grading tier at $30 for Morgan
and Peace dollars valued at $500 and under, during major shows such as
the June Whitman Baltimore Coins and Collectibles Expo.
Perhaps most sensitive to price fluctuations are Mint State 63 and
MS-64 Morgan dollars. As prices increased, the grading services
received an influx of Mint State examples for grading, with the
majority of these coins grading from MS-60 to MS-64, meaning that the
supply for MS-65 and MS-66 coins is not increasing in a meaningful way.
Proof American Eagle silver coins have also declined in price in
the wholesale markets over the past two weeks. While on May 2 major
buyers were paying $95 for examples with original packaging, on May 17
many of the major buyers stopped buying and the few continuing buyers
were paying $73. For comparison, in mid-March these were trading at
$50 each while silver was trading around the $35 an ounce level. The
U.S. Mint is scheduled to release Proof 2011-W American Eagle silver
coins on June 30, which will further reduce the pressure on the prices
for these coins.
The recent influx of Proof 2011-W American Eagle gold coins, which
first went on sale April 21, has not put much of a damper on that
market, as prices had stayed reasonable and had not jumped as
dramatically as the Proof silver American Eagles. At the peak on May 2
dealers were paying $1,750 an ounce for the gold issues, but on May 17
prices fell to $1,675 an ounce. ■