Why are Silver Coins Different Prices?

When you look at an online bullion website like JMBullion you will typically find various government minted and guaranteed silver coins available for purchase.

Silver coin prices vary widely.

In fact silver coin prices are different due to a number of factors including the:

  • Differing silver coin sizes
  • Amount of you are buying
  • Payment method chosen
  • Supply / demand factors
  • Government mint seigniorage fees
  • Mintage or number of coins struck and issued
  • Year of issuance as some small mintages drive collectibility
  • Condition and type ( BU, proof, collectible, colored, privy, graded, etc. )
  • Secondary market sales volumes and prices (see Sold Listing data on eBay)

The most popular silver coin in the world in terms of overall sales volumes is the US Mint’s 1 oz American Silver Eagle Coin, followed closely by the Royal Canadian Mint’s standard 1 oz Canadian Maple Leaf Coin. Between the two, they have over 500,000,000 silver bullion coins stuck and sold since their respective 1986 and 1988 inceptions.

In fact since the year 2000, over 1 billion ounces of government silver coins have been struck and sold to the investing public around the world.

Note the dramatic 169% increase in official government silver coin sales since the worldwide financial crisis of 2008. This trend of physical silver coin, silver bullion bar, and silver round buying has actually increased since the end of 2008 (note “Coin & Bar” demand).

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Often the most popular silver coins in the bullion industry are referred to as bullion coins for they are struck and sold typically in million ounce or more mintages and carry slightly higher prices per ounce or premium than most competing silver bullion rounds or silver bullion bars.

How are Popular Silver Coin Prices Determined?

INPUT #1 ➤ Silver Spot Price

The silver spot price is the fluctuating price of silver exchanged on global commodity markets.

INPUT #2 ➤ Gov’t Silver Coin Seigniorage Fee

A seigniorage fee is often charged by government mints when issuing physical currency in order to recoup production costs and perhaps make a profit as well.

INPUT #3 ➤ Silver Dealer Premiums

Silver dealer supply chains add a premium to their silver coin prices to recoup the costs associated with buying, storing, inventorying, hedging, marketing, selling, and finally safely shipping the silver coins to their respective buyers.

Silver coin prices also depend on other various fluid factors:

  • The current silver bullion coin market’s supply and demand factors.
  • Local, national, and even global economic conditions.
  • The volume of silver bullion coins being bid upon.
  • The type of silver bullion coins being sold.
  • The silver bullion coin seller’s objectives.

Supply / Demand for Silver Coins

The total amount of supply and demand of a silver bullion coin has a major influence on bullion product premiums. Silver coin dealers are businesses, and they actively try to balance their silver coin inventory and profitability. Too much silver coin inventory typically leads to higher costs for financing, hedging, storing, and insuring. Too little silver coin inventory may mean customers go elsewhere or even shipping delays and perhaps disgruntled customers.

When price patterns are calm, demand for silver coins is typically diminished and thus silver bullion coin supplies tend to increase across the bullion industry. As a result sellers usually mark down their prices to attract buyers, insight revenues, and perhaps expand their market share.

When there is increased demand for silver coins, buying and selling picks up in volume. As a result silver coin sellers generally markup their prices to prevent running out of inventory and to capture larger profits.

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Economic Conditions Affect Silver Coin Prices / Premiums

The financial crisis of 2008 drove massive buying and selling in the physical silver coin world.

See in the chart above how much 1 oz American Silver Eagle coin premiums ballooned to +80% over the silver spot price in late 2008 and as much as +40% in early 2009.

Since that time, and on multiple occasions, the US Mint has frozen production of the American Silver Eagle coin program. This was typically due to industry bottlenecks in silver planchet or coin blank production volumes thus hindering the US Mint’s ability to strike and meet American Silver Eagle Coin demand.

Number of Silver Coins Being Sold

Every silver coin seller incurs costs on each transaction. Inputs such as time, overhead, or payment processing costs are some examples of expenses associated with selling silver online for instance.

Transactions with higher volumes of silver bullion coin often have their costs spread out. As a result the price per silver coin tends to be higher on small volume purchases, and lower per ounce on high volume buys.

Some sales costs are flat fixed costs regardless of the size or volume of the sale. For example a single transaction for a 1 oz silver coin may cost as much in the seller’s time as a 10,000 lot silver coin transaction.

Others sales costs are variable costs associated with the size of the transaction. For example a single transaction for a 1 oz silver coin paid by 100% credit card will cost much less in merchant account fees than a like kind 100 oz silver coin transaction. Storage and insurance costs for the larger 100 oz silver lot will be much more costly than for a 1 oz silver coin in general.

Type of Silver Coin Being Sold

High mintage, official 1 oz silver bullion coins with BU (brilliant uncirculated) condition will typically yield a much lower premium or price per ounce than a limited privy, proof, graded, or other collectible versions of official government coins.

As mentioned, the most popular silver bullion coin in the world is the American Silver Eagle coin. The US Mint charges authorized silver dealers $2 oz over silver spot for each 1 oz American Silver Eagle coin they issue. Other higher quality US Mint numismatic collectible coins typically carry higher premiums and much lower mintages than the American Silver Eagle coin. These higher premiums for collectible coins are passed on ultimately to the numismatic silver coin buyers making their price per ounce higher than standard high volume silver bullion coin buyers.

Silver Coin Seller Objectives

Whether a silver coin seller is a large bullion dealer or a private individual, they both will almost always want to receive the highest price they can get for silver coin they are selling.

One must consider these factors when setting the ask price of the silver coin they are selling:

  • Market supply
  • Market demand
  • Competitive sales data

If a silver coin seller sets their price too high, buyers will likely choose to another lower priced competitor or another silver coin option all together.

If a silver coin seller sets their price too low, they may not recoup as much profit as they otherwise might have had they done additional due diligence required.

How to Sell Silver Coins?

Silver coin sellers tend to try and find the price equilibrium or “sweet spot” for a silver coin’s price, where the time required to complete a sale is minimized and the seller’s profit is maximized.

We suggest a tool you can use to find the latest final sale prices for specific silver coins on eBay’s advanced search using the “☑ Sold listings” option.

Take note that as of writing this article, eBay charges a standard account 10% of the overall sale so this is likely a cost prohibitive option to use when selling high volume silver bullion coins to other parties.

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Some choose to sell their silver bullion coins and bars locally to speed up the sales process and recoup cash quickly.

All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.