Market 101 - Silver Dollars on the Move?

We’ve recently seen silver prices push above $40 per ounce, and many dealers took notice. During nearly every silver run-up I’ve witnessed over the past 50 years in the coin business, melt values versus price-premium ratios are often overlooked in a rising market. This is something that particularly hits home with Morgan and Peace Dollars, which represent a major portion of the market. Specifications on silver content for these two coins show that each Morgan and Peace Dollar should contain .77344 ounces of pure silver. Meanwhile, the base silver value is more than $30 for any Morgan or Peace Dollar regardless of grade condition.

I really like PCGS-graded common-date Morgan and Peace Dollars in MS62 and higher grades. In relation to their overall melt value, I believe they’re extremely affordable. And in periods when silver bullion prices get hot, so, too, does market potential for generic Morgan and Peace Dollars grading MS62 or better. Ultimately, more attention generates more demand, and with a basal melt value of around $35 each, PCGS-graded Morgan and Peace Dollars in MS62 and better are quite appealing.

What I have seen occur in strong silver markets of the past is that some customers (mainly coin dealers) generally prefer monetized silver coins versus generic bars or rounds. Some of these folks are particularly strong buyers, often wanting to acquire 500 or even 1,000 PCGS-graded Morgan or Peace Dollars in MS64 or MS65.

While hundreds of thousands of PCGS-graded Morgan and Peace Dollars exist, very few dealers would be able to fill an order of 500 or 1,000 such pieces. Many dealers view these coins as something they can always acquire, stocking up on them due to the usually favorable results of previous market events. Ultimately, the amount of capital dealers can tie up in holding generic dollars isn’t attractive to them unless retail sales of these coins are also strong. But the hope for such results draws dealers to buy these coins in big numbers, especially when prices are as they present themselves for generic Morgan and Peace Dollars these days – especially in the MS62 range.

A major dealer held a massive promotion centered around PCGS-graded silver dollars, and sales far exceeded this dealer’s inventory. Coincidentally, several other major dealers were also short. There was nowhere for prices to go but up, nearly every day for several weeks, until the inventory shorts were filled. When push comes to shove in a rising bullion market, PCGS-graded Morgan and Peace dollars are a great value.

Paying attention to market trends and recognizing how they correlate to current events is crucial for any numismatist – especially when buying and selling popular coins. Am I suggesting you take a position in generic Morgan and Peace Dollars? That’s for you to decide. But at these price levels, I think generic PCGSgraded silver dollars represent great value – especially if silver bullion prices continue to rise.