The Reason for the Difference in Silver Coin Prices, Part 1
While perusing a precious metals dealer website, such as Metals.com, one will see different prices for silver bullion. There are a variety of reasons why silver prices are priced differently. We’ll walk you through the most common ones below.
Common reasons for price differences
The most common reasons for different silver prices are differing sizes, the payment method chosen, the quantity being purchased, government mint seigniorage fees, year of issuance, condition and secondary market sales volume (such as what might be sold on eBay).
Silver spot prices fluctuate regularly and are mostly a result of the price determined by the futures market for silver bullion.
A seigniorage fee is a fee charged by mints owned by governments. This fee is charged in an effort to make a profit as well as recapture the costs associated with production.
Dealers add their own premiums to silver bullion being sold simply as a cost of doing business, such as costs associated with marketing, selling, storing, buying, shipping and more.
Silver prices will also vary based on global economic conditions, type of silver bullion coins being sold, the seller’s overall objective and demand. When it comes to demand, the total supply and demand for silver bullion directly influence the premium price. If a dealer has too much inventory of silver bullion, this could have a negative effect on costs associated with financing, storage and insuring inventory. If a dealer has too little inventory, then buyers may easily go elsewhere in order to avoid delays, thus decreasing sales.
Difference in popularity
The most popular silver coin, based on sales volume, is the US Mint’s 1 oz American Silver Eagle Coin. This is the most popular coin in the world, followed by the 1 oz Canadian Maple Leaf Coin. Combined, they represent more than half a billion silver bullion coins struck and sold since they were originally created in 1986 and 1988, respectively.
Since the financial crisis of 2008, the sale of physical silver coins, bars and rounds has increased dramatically. In the 7 years prior to the financial crisis, physical silver bullion saw a total of 292 million oz sold. In the next seven years, over 786 million oz of silver was sold, representing an increase of more than 2.5 times.
Coins, rounds, and bars
Bullion coins carry a higher price compared to physical rounds or bars, primarily because of the intricate design and collectability. Silver bullion rounds are typically next in terms of the highest prices due to its unique designs, but slightly lower premium related to collectability. Bullion bars will carry the lowest premium, since their interest among collectors is lower compared to coins and rounds and their design may not be as intricate.
The second part of this article will address economic conditions, volume, types of coins sold and other issues that impact the price of silver bullion.
The Metals.com Staff
