The price of silver and gold goes up and down over time. Rising gold and silver prices means that what was bought last week is worth more this week. But what happens when prices fall as has been seen from June 2021 into August of 2021? The price of silver has fallen about 17% and the price of gold has fallen about 9% in just 60 days. Even coin dealers have to cope with falling gold and silver prices.

Whether a person is collector or an investor in gold and silver, either party is likely to watch daily prices. Price changes create challenges for doing business as a coin and bullion dealer, and falling prices can discourage many buyers who feel down and out. In many ways and throughout many times, the precious metals market feels brings the emotions of the stock market on steroids.

Silver prices, according to Monex.com, were $23.42 cents at the time if this article. Gold was about $1,731.00 per ounce (August 10, 2021). Perhaps most significant is that the price of silver was $28.11 as recently as June 10, 2021.
Collectors Dashboard reached out to local coin dealers to better understand how changes in precious metal prices affect business.

Coin shops are not immune to the price fluctuations of gold and silver, however a coin shop from a business perspective is more able to endure price changes than average collectors and investors. Joe Heggy of McQueeney Coins in McQueeney, Texas had this to say:

Coin dealers operate on the spread between buying and selling, even with having a position in the metals they can continue lowering their cost based on the fact that they are making money on the spread. As long as they can order or replace the metal they will always be able to sell it.

The coin shop business perspective is in contrast to the average collector, After all, most individuals who invest in gold and silver are not as easily able to absorb changes in precious metal prices.

Collectors might avoid coins of higher precious metal contact. For instance, a Morgan Silver dollar is just under an ounce of silver. When silver was selling for over $40.00 an ounce each coin, no matter the condition, saw the higher prices passed on to collectors. Many collectors chose to sell entire silver collections at that time.

Make no mistake here. At Collectors Dashboard our role is not to call bottoms and tops in asset prices. Wall Street analysts cannot get their calls right on public stock prices about 90% of the time. This means that making predictions about the alternative asset class of collectibles is a guessing game with many variables.

Daily price fluctuations of gold and silver can easily create daily concerns for those who are investing in precious metals. Prices paid for any object with gold are at their lowest values from the price of precious metals instead of potential price as a collectible. That may not be as true for coins from the ancient world or of historical significance, but it’s certainly true for buyers of Canadian Maple Leaf coins, Krugerands and various U.S. 1-ounce coins.

There is another way that coin and bullion dealers can use the financial markets to hedge or lock in their silver and gold prices. Put options can be purchased against gold and silver exchange-traded funds (ETFs) if a dealer is worried their business might get stuck holding on to the metals for longer than they hope. Those put options also act as a protection against lower prices, but they are not forced sale prices so the coin or bullion dealer can still win if prices rise.

Another financial market tool that can be implemented is by selling futures contracts when it comes to larger purchases of precious metals. Selling the gold and silver futures contracts effectively locks in a sale price that is at-the-market. The only downside for a coin and bullion dealer selling futures to lock in their price is that they do not benefit if the price screams higher.

One aspect of the gold coin market that is not likely to fluctuate so much with falling prices is gold-plated commemorative coins. These ‘trick gold’ coins from late-night TV are awful investments and one ounce of gold is enough to mint so many coins that the seller doesn’t have to care about gold prices.

Collectors Dashboard wishes to thank McQueeney Coins for their candid nature in better understanding changes in precious metals values. A price drop in one area can create opportunities to be sold in other areas. At what price does the collector choose to sell his silver? In many ways the same question a stock broker asks concerning the price needs to sell a particular stock at.