If your silver junior and explorer stocks are languishing at ho-hum performance levels like mine, then you’ve probably been thinking what else you can do to wake up this slumbering monster metal. We know the mining stocks are unable to turn a meaningful profit because their costs are not fully replenished by a rising silver price. Their costs to mine are rising sharply, but their assets aren’t. It gets old doesn’t it. We need excitement.
What good does it do to plow more into the mining stocks if their underlying asset - silver - is not appreciating? Maybe we can give it a goose by attracting new investors.
Right now there exists a peculiar anomaly in the minting of the US Silver Eagle one ounce coin. Monthly 2005 Mint production through August has been averaging 340,000 coins. Over the life of the silver eagle from 1986-2005 average monthly Mint production has been 588,000. Increased December production to account for Christmas is not reflected in the 2005 average. Based on past years we can reasonably anticipate a production of around 2,000,000 for December 2005. Even with production at 340,000 for the remaining months through November and a 2,000,000 tacked on for December, we come up with a monthly mintage of 478,000 or 5,800,000 produced for the complete 2005 year - way below the 9 million-plus average for the past six years! Here’s a numismatic play for all of us without the numis premium!
Others outside our world of silver bugs collect these by date, you know. They like to build a series set, one coin for each year minted. If they begin to suspect a "shortage" in a particular date they’ll buy with urgent frenzy. Look at the premium demanded for the 1996 date - it has a ratio factor of 9.86 compared to 2005’s 1.74! To arrive at those ratio factors I took a coin dealer’s selling prices and divided them by an August 1st silver spot price of $7.25. The 1996 date is a $50 coin! Understand that these ratio factors are for single coin purchases. By the roll or in quantity any of the dates cost considerably less. You would be hard pressed to find the 1996 available by the roll at any price. The 2005 is still out there in quantity, however. Tulving is showing the 2005’s at 500 for $4,270 or $8.54 per coin.
If you’re ’well-heeled’ or know of anyone with considerable investment interest in silver, please pass this along. When you put it all together the remaining estimated 2005 silver eagle production of 2.6 million can be purchased for a paltry $22 million, creating a key date demand for coin collectors around the world, giving the investment buyer a higher premium factor, and igniting popularity for silver eagles and the silver price itself! Silver eagle collectors are ’keepers’, the eagles are in safe hands. Maybe a consortium amongst us can be created to advantageously get a better buy price - although with actually delivery being taken by you. You can now place US Silver Eagles in your IRA, but don’t believe you can be date-selective, although you’ll probably get the 2005’s anyway.
I read somewhere that only 1-2% of the silver futures contracts result in actual delivery. Creating a heavier than normal physical demand on those Chicago inventories from the US Mint will certainly raise some eyebrows among the paper-trading spec funds and commercial hedgers.
So, I suggest backing off these junior explorers for the time being and devote our energies on levitating their underlying asset. Even with ballooning revenues, I’m led to believe that the oil companies are not aggressively seeking new oil sources through the oil juniors and explorers. Let’s not let that same occurrence befall our mining darlings.
For those unable to hoard oil, silver is the precious metal alternative. Coin dealers are excellent promoters and can be our greatest allies.
Let’s give ourselves an early Christmas.
