Should We Hold Off On Stacking For A While?

At least till dealer margins go back to normal

If you’re adding regularly to your physical gold and silver holdings, you’ve probably noticed that silver coins cost way more than the spot price lately. This is not your imagination; the mark-ups on silver eagles, for instance, have risen dramatically, which means it’s hard to buy physical metal at attractive (or even fair) prices. Today, $1000 spent on random-year one-ounce coins nets only 14, for an average price of $70.90, which is 20% above the current Kitco spot price.

In a recent video, silver analysts David Morgan and Bob Coleman explain why silver coin prices are so high, especially for small orders. A quick summary:

Silver’s massive run-up in 2025 led many silver owners to cash out. They brought silverware, jewellery, coins, and bars to pawn shops and coin dealers, swamping them with metal. Then the silver price fell hard, leaving dealers with overpriced, stranded inventory.

In response, dealers are widening their margins — paying far below spot for even top-tier coins like silver eagles, while charging buyers way above spot for the same coins. The result: customers are now underpaid when selling and overcharged when buying. No one is getting a good deal.

Here’s the video, followed by excerpts of the relevant parts:

Partial excerpt

In the last few months, really since the beginning of the year, people have been selling metals from their IRAs and personal holdings, either because they’re worried about their retirement savings or because they have profits to protect.

Because dealers have plenty of inventory, they’re not buying new coins from the mints, which are scaling back production in response.

Dealers are not seeing the same transactional business they saw in the past. So, the only way to make that up is, “Hey, let’s just widen the spreads and make more money off the guy who’s selling with the idea that we’re never going to see them again. Then we’ll try to resell that metal on the fly back to another person.” It’s unfortunate.

With the market melting down like this, if a dealer is hedged correctly, you’re not going to be impacted. But some dealers don’t hedge. And even with these big discounts that they’re buying metals back at, prices have dropped so much that a lot of these guys could be underwater at this point.

Many big online dealers are paying $8 under spot on almost any silver product. That disincentivises consumers from adding to their portfolios or using physical metal as a store of value.

Other Ways to Stack

There is no perfect substitute for metal in hand. But while the dealer supply chain is this out of whack, it might be wise to seek alternatives. Some possibilities, from the archives:

The Only Gold Stocks You Really Need (1/3/23)

How You Store It, Part 2: Physical ETFs (7/25/23)

Buy All The Big Gold/Silver Miners With A Mouse Click (12/5/23)