Premiums on U.S. Mint Silver Coins Drop From 4-Year High

Premiums on American Eagle silver coins sold by the U.S. Mint dropped in May from a four-year high, signaling waning demand.

The premium charged by wholesale dealers fell to 13 percent from 25 percent in April, Richard Nachbar, a coin dealer based in Williamsville, New York, said today in a telephone interview. The premium rose as high as 55 percent in the two months ended November 2008, he said. Dimes, quarters and half-dollars dated before 1965, which are 90 percent silver, traded at a premium of 17 percent in April after usually selling at a discount, he said.

Sales of American Eagle silver coins in May have dropped 15 percent from the full month of April, according to data on the mint’s website. Sales jumped to a monthly record in January, and the mint suspended business for a week because of a lack of inventory.

Silver futures have tumbled 26 percent this year, the most among 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index. The commodity slumped into a bear market on April 1, partly on concern that industrial demand would ebb.

Gold premiums have tumbled in India and Hong Kong, the world’s biggest consumers, signaling that the buying frenzy that followed the metal’s biggest slump in three decades has weakened.

On April 15, gold plunged 9.3 percent, the most in 33 years, on record-high trading after an unexpected slowdown in China’s economic expansion sparked a commodity selloff.

Gold has tumbled 17 percent this year as some investors lost faith in the metal as a store of value amid low inflation and a rally in equities.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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