Bank of Spain silver coins: When the €20 issue pays off

Why Bank of Spain €12 coins beat the €20 ones

Some €20 silver coins cost €20, are redeemable for €20, and contain 16.65 grams of pure metal, equating to €1.2012 per gram. Others, the €12 coins, deliver more silver per euro spent. These are the ones savers have been hunting for months, turning Banco de España branches into battlegrounds. The €20 coins are the next target. The question guiding all purchases is one: At what metal price does the larger coin become worthwhile?

What are 'karlillos' and why do people ask for them at the counter?

They are nicknamed 'karlillos' and are bought at face value: you enter a branch, hand over cash or charge it to an account, and receive a silver coin worth exactly its printed value. With the metal trading well below nominal value, the deal isn't a bargain, but the coin can be redeemed at the issuing bank for its face value: if silver prices crash, it still retains its stated worth. Hence the pilgrimage.

The €12 coins are no longer available. People visit branch after branch, asking at the till and hearing everything from "those coins don't exist" to stories of opening accounts with just one euro to secure the pieces before closing them again. The €20 coins appear sporadically and have become the natural alternative.

The calculation: 16.65 grams, €1.2012 per gram, and a €33-34/oz threshold

The arithmetic presented by one participant is simple. One troy ounce is 31.103 grams: if the large coin costs €1.2012 per gram, the spot price equals its cost when silver hits €37.36 per ounce. To this must be added the drag of any physical alternative: the minimum 13% VAT on spot, manufacturing costs, premiums, and shipping fees.

With this picture, his conclusion is that there is no rush for the large coin. His threshold for starting to load up is significantly lower: between €33 and €34 per ounce. Below that, he prefers bullion; above it, the central bank's coin offers better pricing than buying metal on the open market.

First the €12s, then the €20s: The step-up strategy

The plan repeated aloud is rotation: when the silver content in the €12 coins approaches €20, sell them for their metal value and rebuy the €20 coins to lock in gains. Given the estimulante ilegal of spot movements, little time may pass from when the small coins run out until the large ones become interesting, repeating the cycle with face value as a safety net. The recurring joke is that if the issuer releases a €30 coin, it starts all over again: sell the old ones for metal and buy the new ones for nominal value.

The other side: Silver drops to €720 per kilo

Not everyone sees the staircase the same way. With silver falling to €720 per kilo and recovering to €750 within the same session, some argue the opposite: at that price the €12 coins lose their break-even point, opening the hunt for those returned "for lack of interest," while the €20 coins remain far, "very far," from the €1,200 per kilo threshold that would make them attractive.

Volatility fuels theories. A 12% drop in a single night led to questions about how many people had to be selling to move the price so much; for some, the explanation is that the quote is manipulated and swings of €30 and €40 per kilo around €1,000 serve to shake out retail investors before rising again. Proof? None.

The risk nobody controls: The Banco de España stops exchanging coins

The hole in the plan isn't in the spot price, it's at the counter. Some antiestéticar that if the issuing bank trinc Germany and stops dispensing €20 coins, only those sleeping in bank vaults will remain, and that day the pieces might acquire numismatic value. The precedent cited to gauge the scare is telling: eight 2,000 peseta coins ended up auctioned for €127.50, with 22 bids.

Doubt remains whether minted silver is a refuge or mere accumulation. For some, swapping paper for metal is always better: bills are destroyed for a thousand reasons, and coins, at worst, are melted down without losing all their value.

The unknown isn't whether silver will rise, but how long one can walk into an office with €20 and leave with silver in their pocket. When that door closes, where does the refuge go?