Silver Prices and Premiums

SilverCoinsThere is a common question I get from first time silver buyers, a question I’ll address right now. That question: Why is the price for a 99.9% pure troy ounce of silver different between the types of silver?  The American Silver Eagle coin has just as much and the same purity of silver as the Silver Buffalo Rounds so why are the American Eagles more expensive?  I get this question at least a dozen times a week and I don’t blame anyone for asking nor do I get tired of answering! It’s important to understand.

To answer this we have to answer another question, what is a “spot price” and what is a “premium.”  The “spot price” is the current price at which a particular security or commodity can be bought or sold at a specified time and place, according to Investopedia.com. The spot price is regarded as the explicit value an ounce of silver (or anything other metal, security and/or commodity) at any given time in the market.

There are many factors which contribute to the “premium” for silver and any other metal. To keep it simple, the premium is the mark-up above the spot price charged by the mints and dealers. As we already know the premiums can and do change and can be different even for the exact same amount of silver

It is common in the industry for larger denominations of silver (10oz, 50oz, 100oz, 1000oz) to have a lower the premium per ounce. While there are exceptions, this is a general rule. This means that in most cases you will pay less per ounce when you buy a 100oz bar of silver than you will when you buy a 1oz bar (or round).

I know I still haven’t addressed the question at hand, why is an 1oz .999 American Silver Eagle Coin more expensive than the 1oz .999 Silver Buffalo Round?

The difference is a question of legal tender. Here is another often unknown fact, the term “coin” is used exclusively in reference to legal tender bullion coins issued from a government mint. The term “round” as in a silver round, is referencing non-legal tender silver that is issued from a private mint. The silver weight and content remains identical, one can be used to directly purchase goods and services same as the paper dollar bill you use, a private round is not legal tender. Being that an American Eagle is indeed legal tender worth a $1 if used as “money” and is minted by the government it costs everyone more to attain.

There will forever be a debate about which is a better investment, coins or rounds.  My opinion is to have both, I personally have more rounds than government minted silver coins, but not by a lot.  To help sweeten the pot, the government throws a few other incentives for purchasing government minted silver (and gold) by allowing these coins to be used in IRAs and other retirement accounts.

Why is it that if you research 100 different silver dealers you may find 1oo different prices for silver? Many dealers add brokerage fees, commissions and many other hidden fees to the price of their silver coins and bullion which obviously increases their premiums.

At Pacific Coin Exchange we have some of the lowest premiums you can find because we don’t add brokerage fees, commissions or any other hidden charges/fees as you will find when you buy from most other dealers. In my opinion it is best to stay away from those who charge commissions and fees, unfortunately you may not know about the commissions and fees until you get your metals, after you have paid! Be careful!

Cut your risk factor and simply buy silver from Pacific Coin Exchange, we have the most transparent system you’ll find, period. Why take chances? Buy Silver from Pacific Coin Exchange where you know you’ll get more metal for your money and more money for your metals!

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