Not for a second did we believe that the Reddit/Robinhood renegade young traders were going to commandeer the silver market like they successfully had done with a bankrupt game retailer. That nonetheless didn’t stopped the public from jumping on the silver bandwagon two weeks ago, when the metals markets opened feverishly up on Monday morning. Within a day, the euphoria had worn off. Silver prices went into a subsequent nose dive before they stabilized later in the week. What didn’t subside was the demand for physical silver. Gold’s pattern followed suit. Refineries were backed up 4 weeks or more. The U.S. Mint announced delays in delivery of both gold and silver Eagles, not for days or weeks, but months. It didn’t take long for premiums on physical gold and silver, IN ALL FORMATS, to balloon. We heard of one ounce silver Eagles being advertised for as a high as $50 (or almost double melt) by a leading metals marketer. Knowing that the supply shortages would eventually resolve themselves, these high premiums, on the surface, were nothing short of insanity. But, there may be more to this story. It appears that what market investors were betting on, was a stratospheric rise in the price of metals before the physical supply became sufficient. Precious metals turned from a market based on fundamentals, to one driven by supply shortages and speculation. The obvious question becomes, how long will this sustain?
More importantly, what is the relationship of heightened demand for precious metals to the rare coin market? Our offices have noticed an uptick in virtually every sector of our business. From pure numismatic coins to intrinsic bullion-related material, the newfound demand is across-the-board. Our inventory levels are at their lowest point in several years, while orders are coming in at an unprecedented pace. This has kept us all working around the clock trying to find fresh new deals of coins from both our collector base and dealer trading network. This is by all measures a seller’s market. Buyers who try to negotiate for a lower price or procrastinate on a purchase, are more times than not, walking away with an empty plate. We have done a one-eighty on our inventory philosophy, putting more value on coins and live inventory than a fat checking account balance. The velocity of sales has assured us of positive cash flow, but the shortage of coins remains a constant challenge. We are continuing to keep out heads above water as the shelves stay stocked, albeit not at the levels we would ultimately would hope for. As one of our colleagues recently noted, “Coins are so easy to sell right now, why do I need a lot of money sitting in my bank account?” We concur.
This week, we purchased a sizable silver dollar group, dozens of pieces of numismatic gold and several collector deals including a small cent collection. One would think that this was a pretty good week for buying (which it was). The sad truth is, by the time that you read this, well over half of the aforementioned coins will be gone. Until the resumption of regular coin shows, this may become a reoccurring theme. Rest assured, we at The Reeded Edge won’t be sitting on our laurels; we will continue to figure out this market, overcome its challenges, and in the process, keep new coins coming in for our customer base.
Until next week, happy collecting!