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What Factors Influence Silver Coin Prices?

What Factors Influence Silver Coin Prices?

If you've shopped for silver coins before, you know that there are a lot of factors to consider. From finish to packaging, grade to coin name—there's a lot to learn! While silver coins can look pretty similar, appearances aren't everything. Follow along as we break down the many factors that can impact silver coin prices.

Spot Price of Silver

The spot price of silver is one of the most important factors that influence silver coin prices. It's foundational. The spot price of silver is the current market price at which silver is bought or sold for immediate payment and delivery. It's the price you'd pay “on-the-spot,” as opposed to some time in the future.

The spot price of silver refers to the price for one troy ounce and is most often quoted in U.S. dollars. One troy ounce is 31.1034768 grams (1.097142857143 oz.), but you’ll often see silver prices listed as $/oz. without “troy.”

In theory, if you could buy silver straight from the mine before it was minted into a coin, you'd pay the spot price. However, buying a silver coin at the spot price of silver isn't really possible.

It would be like trying to buy a cotton t-shirt for the price of raw cotton. What about the time and effort that went into designing, producing, marketing, and shipping the t-shirt? The raw price of cotton doesn't account for any of these steps. In the same way, the spot price of silver doesn't account for the effort it takes to transform raw silver into a beautiful silver coin, then get it to your doorstep.

The spot price of silver, and therefore silver coin prices, can be impacted by many factors that include: silver supply and demand; silver's industrial uses; the economy, at home and abroad; the strength of the U.S. dollar; gold prices; interest rates; and U.S. government policies.

Silver Coin Type

The spot price of silver is foundational to all silver coin prices. From there, however, the coin type is the next most important price factor.

That's because a silver coin with the same design can be minted in a number of different ways, with different finishes and, subsequently, different prices! Take the Silver American Eagle, one of the most popular silver coins in the United States. Tens of millions have been minted since it was first released in 1986.

You can choose from three different versions: a Bullion Silver American Eagle, a Proof Silver American Eagle, or a Burnished Silver American Eagle (uncirculated). Each coin is minted differently to produce a different finish, which in turn impacts the coin's price. (Check out Silver American Eagle Coin Q&A for a side-by-side comparison of these three coins.)

We break down a few of the most commonly found types of silver coins below.

Bullion Coins: Bullion is widely defined as “precious metals in bulk form.” Silver bullion coins are available in sizes ranging from 10 kg. to 1/2 oz., though 1 oz. coins are the most popular.

Silver bullion coins are made from blanks that are “punched” from strips of silver, then cleaned, polished, and struck only once with their design. Their finish is neither too matte or too shiny. Instead, it appears more satiny with a slight frost.

Because silver bullion coins are typically produced in much higher mintages than other silver coin types, they can be less expensive and easier to find.

Proof Coins: “Proof” indicates a coin’s finish and method of manufacture, not a coin’s condition or grade.

Proof silver coins, like Proof Silver American Eagle Coins, are made from hand-polished silver blanks that are specially treated, struck at least twice with their design, and then carefully packaged to preserve their exceptional finish.

The Guide Book of United States Coins (via NGC) defines the term as: “Proof, A specially made coin distinguished by sharpness of detail and usually with brilliant, mirror-like surfaces.”

The price of a proof coin is also tied to its availability and condition. Not all proof coins are graded and certified, but those that are have shown to not be as vulnerable to the same level of spot price volatility as bullion coins.

Uncirculated (Burnished) Coins: The term “uncirculated” is widely misunderstood. It can actually refer to three things:

  1. A coin that’s released to the public but not intended for general circulation
  2. A coin that’s been given an official grade of Mint State 60+
  3. The process by which a coin is made

The third definition is how the U.S. Mint refers to uncirculated coins and the interpretation we use here at U.S. Money Reserve. Uncirculated silver coins are minted from burnished silver blanks that are hand-loaded into the press and struck once. The resulting coin has a soft, matte-like finish with some shine, but not as much shine as a proof coin.

Because uncirculated coins, like Burnished Silver American Eagle Coins, are typically produced less often and in lower mintages than both bullion and proof coins, they can be more expensive.

Certified Coins: “Certified” doesn't refer to a coin's method of manufacture or finish. Instead, it indicates a coin's condition or grade. Almost any type of silver coins can go through this process, including Burnished Silver Eagles and Proof Silver Eagles.

Certified silver coins are evaluated and graded for their condition by a third-party grading service, like Professional Coin Grading Service (PCGS), on the Sheldon Coin Grading Scale of 1 to 70. The higher the number, the more perfect the coin.

The price of a certified silver coin is tied to the coin’s weight in silver, but also to its availability and condition. Because a certified coin’s condition plays such a significant role in its market potential, certified coins are encapsulated and sealed in impact-resistant, tamper-proof slabs.

Silver Coin Grade

As mentioned, coin grading is the process of determining a coin’s condition on the Sheldon Coin Grading Scale of 1 to 70. The higher the grade, the higher the coin quality—and often, the higher the price!

“Seventy is perfect and flawless with absolutely no imperfections, no fine scratches, no hairlines at all,” says John Rothans, Chief Numismatist at U.S. Money Reserve. “That’s basically the top, top, A +++ of the coin grading scale.”

A coin’s grade is an important factor in its price. As PCGS notes, this idea coincides with the basis of Sheldon’s Coin Grading theory, “that a ’70’ would be worth 70 times as much as a ‘1.’”

There can only be so many high-grade coins in existence, and silver coin prices often reflect this.

Any type of silver coin can be graded, even bullion, but you're most likely to see certified, proof, and uncirculated/burnished coins that are graded.

Graded silver coins have been examined and evaluated by trained experts. Many silver enthusiasts find that that expertise is worth paying for.

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Amount of Silver

Generally speaking, the more silver you buy, the more you'll pay. The same can be said for most things in life, from groceries to clothing.

This price factor is three-fold. First, the larger the coin, the higher the price. A 1 kg. silver bullion coin will contain more silver than a 1 oz. silver bullion coin and the price will reflect this increase in the amount of silver.

Note that coin size isn't an absolute factor in coin pricing. You can find 1/4 oz. silver coins that are priced higher than 1 oz. silver coins due to grade, rarity, demand, or historical significance.

Second, how many silver coins are you purchasing at one time? Some coin companies will offer you a discount for buying silver in bulk.

For example, U.S. Money Reserve's Silver Eagle Monster Box includes 500 Silver Eagle Coins. As of November 30, 2018, one Silver Eagle Monster box costs $8,343.59 online. For comparison, a single 1 oz. Silver American Eagle Coin costs $17.49. If you were to buy 500 Silver Eagles one by one, you'd end up spending $8,745. That's almost 5 percent more than if you purchased them in bulk!

Third, are you looking at a pure silver coin or a silver clad coin? All that shines isn't silver (or gold). Silver clad coins are silver-colored coins with absolutely no silver in them. A clad coin is essentially a piece of copper sandwiched between two layers of nickel and zinc. It’s the metal composition you’ll find in your pocket change today. So, while a clad coin may look shiny and silvery, it doesn’t contain an ounce of silver!

Silver Coin Company

Where you buy silver coins is just as important as what type of silver coin you purchase. Every precious metals company is different!

You can buy silver coins online, over the phone, or even purchase silver locally. Some silver buyers avoid local dealers, though, because they don’t want to deal with potentially higher prices, sales tax, false advertising, limited variety, and wasted travel time. Buy silver coins online, and you can shop anywhere, any time of day. You can shop in private and you can also compare a variety of silver coin types and prices, all in one place.

We can't speak to the experience you'll have at other precious metals companies, but we can tell you what to expect when you choose U.S. Money Reserve. Call us, and you'll be greeted by a knowledgeable Account Executive who will take the time to listen to you about your goals and objectives, and help you make the right decisions for your unique situation. You also get the peace of mind that comes with buying silver coins produced by the U.S. Mint and fully backed by the United States government for their silver weight, content, and purity.

If you have questions about silver coins or the price of silver today, call 1-844-307-1598. Account Executives are standing by to take your call!

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