When Silver Eagles Cost Less than Silver Rounds

Updated by 7 Comments

Stack of Silver Eagle CoinsDoes paying a higher premium for U.S. Silver Eagles versus generic silver rounds make sense? Sometimes it does. Silver Eagles are generally priced with a higher premium, but depending on the premium difference, your time horizon and your purpose for buying silver, Silver Eagles can have a lower “cost” compared to silver rounds.

Paying a higher premium for Silver Eagles can be justified if the difference in price is reasonable. The return on an ounce of silver via Eagles can be higher than that of silver rounds, despite the higher purchase cost. It all comes down to the ultimate sale price for the Silver Eagle or Silver Round. It really doesn’t matter that both options are comprised of 999 silver. Your round trip transaction cost for both the purchase and sale of your silver is what matters.

In PMBull’s guide to silver bullion, we discuss how and where to buy silver at the best price. The objective of the guide is to identify good dealers with low prices and how to compare dealer premiums over spot silver prices. Buying silver at the lowest possible cost allows you to maximize the amount of silver purchased.

If maximizing the amount of silver you acquire is your objective, you might conclude that choosing lower premium generic silver rounds over higher premium government coins like American Silver Eagles makes sense. Is maximizing the ounces of silver one holds a reasonable objective though? What about maximizing the value of your silver stack instead? The question that needs to be answered is whether or not Silver Eagles are sufficiently more valuable than a specific silver round to justify the higher price at the time of purchase.

A silver buyer preparing for a currency collapse, hyperinflation or a financial system reset might choose to buy the cheapest precious metals with the lowest possible premium over the current silver spot price that he can find. He may do this because he believes there will be no difference between coins and round prices under these circumstances. An ounce of silver is an ounce of silver, regardless of the design engraved into it, right?

Silver Eagle Coin

Where to Buy Low Cost American Silver Eagles

This dealer features a wealth of options for buying U.S. Silver Eagles at very low prices. See prices for single coins, tubes of 20 or monster boxes of 500. – View Silver Eagle Prices

Not necessarily. This argument is only correct if you assume that the simple engravings that designate a government coin will carry no value or meaning for the people to whom you will sell your silver, or with whom you wish to trade for goods and services. It doesn’t matter whether you are living in a post-collapse doomsday situation, or just a basic shift in the economic order, where society continues on. Your belief in the value of your silver is less important than your buyer’s, at the time of sale.

Why Silver Eagles Are Priced Higher than Silver Rounds

Don't Tread on Me 1 Ounce Silver Round
In addition to the underlying value of silver in a coin, some “non-intrinsic” value like that associated with fiat currency is built in, resulting in a higher price. Silver coins like the U.S. Silver Eagle are produced by government mints. Whether right or wrong, this results in a higher level of trust for silver in this form. They are considered legal tender, have a face value, and are backed by a sovereign nation. Eagles are the most popular silver coin in the world, and silver buyers trust them more, making the market for them quite liquid.

In that doomsday situation, the guy with some canned goods or a gallon of gas with whom you wish to transact is more likely to recognize and trust the Silver Eagle. If Silver Eagles are more more universally accepted, you should be able to purchase more with them. The 1 ounce silver coin will get you more goods and services than generic silver in any other format. The Silver Eagle, by virtue of its ability to get you more goods in trade, by definition has a higher value than the generic round, does it not? This is the case, despite the fact that both contain exactly 1 troy ounce of silver.

Elemetal Buffalo Silver Round

Where to Buy Low Cost Silver Rounds

For perhaps one of the best selections of low cost silver rounds, this trusted and leading dealer is a favorite among silver round collectors. See both generic private mint rounds and limited mintage collectible rounds. – View Silver Rounds & Prices

Even in less extreme economic circumstances, higher premiums that accrue to government coins exist when coins are sold new, and in secondary silver bullion markets. The price difference between Silver Eagle Coins and silver rounds has persisted for as long as the choice has been available. This supports the premise that Silver Eagle coins do indeed carry value over generic rounds, even if that value is non-intrinsic and based on something other than the underlying value of the silver content.

If you accept that the reasons for higher Eagle prices will persist into the future, under any economic scenario, you can justify the higher price for Silver Eagles. If not, you are operating from the belief that the only value in a silver coin is the underlying value of the silver content, and that paying a premium for any type of government silver is pointless from a purely financial perspective.

How Much More Should You Pay for Silver Eagles versus Silver Rounds?

If you buy the fact that coins are worth more, and will retain their higher premium into the future, it doesn’t mean that you should pay a $10.00 premium for an Eagle when spot prices sit below $17.00 per ounce. There’s a limit to how much more a Silver Eagle coin is worth.

Differences in premiums between Eagles and rounds fluctuate as the relative supply for each fluctuates. So how does one determine how much more one should pay for a Silver Eagle vs. a silver round?

One possible way to assess whether current premiums on coins are too high, or current discounts on rounds are too low, is to look at buy-back prices at the dealers willing to publish them. You can also use sites like eBay to get a feel for retail prices, but keep in mind that prices on single items at eBay tend to be higher, and include shipping charges, which you as the seller would need to incur.

How Can Silver Eagles be “Cheaper” than Silver Rounds?

Silver Eagles can cost less than silver rounds, when looked at the right way. Consider more than just premiums at the time of purchase. The total round trip cost should be factored into your decision-making process.

If you want to know whether buying Eagles or Rounds make more sense at specific offered prices, calculate the cost for a purchase, followed by an immediate sale back to the dealer (or into the secondary market), on each. We’ll call the difference your round trip cost. This number reflects your true transaction slippage relative to spot silver prices, right now.

This exercise can provide a rude awakening for those that only purchase silver bullion on the basis of upfront cost or premium, without consideration for likely resale value of the coin or round they have purchased. This is a different way of looking at your cost:

500 Ounces Silver Eagle Coin Generic Silver Round
Purchase Price $19.04 $17.24
Less Spot Price – $16.35 – $16.35
Premium Over Spot $2.69 $0.99
500 Ounces Silver Eagle Coin Generic Silver Round
Purchase Price $19.04 $17.24
Dealer Buy-Back Price – $18.10 – $16.25
Round Trip Cost $0.94 $0.99
Round Trip Cost % 4.94% 5.74%

In this particular example, your true cost for the generic silver round is higher, despite a higher premium over spot for the Silver Eagle and a lower purchase price for the silver round. For the round trip transaction, you will have paid 0.8% more for the round. The total cost picture changes when you factor in the resale proceeds, using the dealer’s assessed buy-back price.

This analysis is not unlike considering the lifetime cost of owning a car. Cars that hold a higher percentage resale value can be deemed less expensive, even when the purchase price is higher than another model that depreciates faster.

Be careful though. This cost model only tells us the relative value difference between two options at the present moment and cannot predict what happens to price in the future. Unlike automobiles, we are buying silver because we expect it to ultimately rise in value, not depreciate over time. Below, we explore some scenarios where Eagles may be a better value right now, but also scenarios in which silver rounds, or specific non-generic rounds, could be the better buy.

Silver Eagle Prices Rise As they Age, Independent of Spot

It should be noted that premiums on U.S. Silver Eagle coins have generally risen, relative to spot price, over time. To see rising Silver Eagle prices over the years, check out prices for different mintages at this low cost Silver Eagle dealer and note the price of a 2010 versus a 2014 Eagle. In this particular instance, the 2010 Eagle sells for 13% more at the time of this post. This kind of gain in Eagles is another reason some believe coins are a better investment than rounds. There are more likely to be numismatic gains on the coins that you won’t see on random, generic silver purchases.

In that currency collapse scenario, premiums on all silver products should rise as silver supplies disappear and hoarding kicks in.. Put another way, all prices on any kind of physical silver should rise, when the demand for precious metals rise (let’s assume paper shenanigans in COMEX goes away entirely).

Will the higher upfront price that one paid for a new American Silver Eagle coin be retained? Yes, probably so, for reasons we’ve already indicated. Will the even higher premium on older Silver Eagles continue to perpetuate? Well, this is less likely, unless the coin in question is truly rare. True numismatics, like fine art, might continue to hold their present relative value, but PMBull.com is less concerned with numismatics. There are other sites that can do a much better job of detailing the opportunities that may exist in that field.

Even if premiums disappeared in extreme economic scenarios, the incremental premium paid for the added trust in a Silver Eagle would be minuscule compared to the gain in value experienced by the underlying silver itself, perhaps making the whole question moot.

When Silver Rounds are a Better Buy than Eagles:

It is not always the case that Silver Eagles will add more value to your stack than Silver Rounds. Do a round trip cost calculation and you will find many periods when the generic silver round is a relatively better value when compared to Eagles. Likewise, you will often find some products like generic silver bars, or even name-brand rounds and bars on sale, that carry not only a lower premium than Silver Eagles, but also a lower total cost, when considering the entire purchase and sale transaction. The quantity of silver purchased may affect the outcome as well. Often, you will pay substantially higher premiums for lower quantities of Silver Eagles, while silver rounds may maintain their lower pricing at lower quantities.

When the U.S. Mint suspends production, runs out of Eagles and puts dealers on allocation, the news can trigger fear that major shortages are developing. This fear results in temporary price spikes and premium increases. The result is a lower relative cost for generic silver rounds, even when you factor in buy-back prices. This is especially true when dealers are NOT increasing buy-back prices on Eagles, along with the panic-induced premium increases. Rising premiums, without a commensurate increase in buy-back prices, is an indication that price spikes on shortage fears are unfounded and that dealers are expecting new inventory soon.

Since more silver investors buy Silver Eagles, more investors watch Silver Eagle premiums. Thus, a rapid price spike in Eagles is more likely to induce panic buying. Once the temporary supply hiccup is resolved, premiums come back down and those that over-paid end up kicking themselves. This is not to say that there won’t be a time when premium spikes are truly justified, and will continue to persist. In those times though, you will likely see a commensurate spike in all silver bullion products, including the generic silver round.

When Dealer Inventories Stabilize and Silver Round Offerings Increase

In more calm markets, void of massive price spikes or heavy selling, dealer inventories can stabilize and a larger variety of silver rounds and bars may fill dealer shelves. Under these scenarios, pricing differences between silver rounds and Eagles may increase, with silver round premiums dropping faster than the premiums for Eagles. There will be a greater degree of competition between private mints producing rounds.

When Dealers Put Silver Rounds On Sale

There are times when dealers have a great promotion on a specific silver round, and are willing to temporarily sell them for substantially lower premiums. Assuming a sufficient discount, and assuming Silver Eagles have not also been discounted, the round trip cost for a silver round on sale can be substantially lower. A more simple way to describe the price dip: A dealer is just offering a good deal!

Not every price movement has some deep, underlying macro-economic or precious metals market message behind it. The discount might simply be a loss-leader strategy to win market share from a competitor.

Generic vs. Specialty Rounds: Some Rounds are Worth More than Silver Eagles

Throughout this article, we’ve been careful to indicate “generic” with our references to silver rounds. There are many rounds with desirable characteristics that might cause one to value them higher than a silver coin like the American Silver Eagle, now, or in the future. Some silver rounds carry a higher premium, or have features built into them that increase their relative value over coins, even if not yet recognized by the market.

Consider Sunshine Minting’s Mint Mark SI technology, for instance. Its anti-counterfeit features should boost a buyer’s confidence that they are truly getting one troy ounce of silver. The Sunshine Minting Rounds are currently priced like most generic rounds. When silver prices rise, counterfeiting for both coins and rounds will increase. The Sunshine Minting silver rounds would be a good hedge against increased counterfeiting, would they not? Could the greater confidence in Sunshine Minting’s product result in a more rapidly rising premium for the round vs. an Eagle? If so, one might argue that holding this round vs. holding a silver Eagle is the smarter investment.

Calculating and comparing the round trip cost of specific silver options can only tell us the relative value difference between them at the present time. It cannot predict what happens to prices, premiums and buy-back prices in reaction to changes in the market.

Limited Mintage collectible rounds like the highly desirable Zombucks Series rounds, produced by Provident, have built in scarcity, resulting in rising prices over time, independent of spot. The Zombucks Walker, sold in the fall of 2013, at much higher spot prices than today. No longer available at the dealer, it now trades on eBay for nearly double the price.

One again, calculating the round trip cost could not have predicted this, or told us that the value of the limited mintage round would rise.

Silver Eagles vs. Silver Rounds: Conclusions

Whether to buy Eagles or Rounds depends on a few factors. First, you must determine whether the current round trip cost for an Eagle is higher or lower than that for silver rounds. Next, you must decide for yourself whether the current incremental premium that the market ascribes to Silver Eagles will remain in place or grow over time. Only you can answer the latter question for yourself.

If you are trying to decide on an initial purchase, we’d suggest first identifying silver dealers with the best prices on Silver Eagles, and that have a variety of silver rounds from which to choose. Then do a true cost calculation for a complete round trip. Do this every time you plan to add to your stack. If a dealer doesn’t display buy-back prices, check another dealer like Provident Metals.

The questions and answers found in this article are nowhere close to complete. They are only presented to get you thinking about your standard silver purchase assumptions and to help you make adjustments to your thinking, if you find it necessary to do so.

It is virtually impossible to all factors that should be considered when making a decision between two different silver offerings. We can’t tell you if a Silver Eagle or a Silver Round is the better buy. Like most things, the only legitimate answer is: “It Depends.”

The most sensible way to hold silver is with a variety of rounds, coins and bars, acquired at good prices. Diversify your silver stack so that you are covered in all scenarios. A collection of rounds, coins and bars, some purchased with a higher premium because we simply liked the design, keeps things interesting and fun, and that is perfectly fine.

In the broad scheme of things, silver IS indeed just silver.

At meaningfully higher prices, we may end up feeling silly for sweating the details just a little too much.

In the replies below, we may occasionally provide an updated comparison table, and perhaps even consider different coins and rounds. We’d love to hear your feedback, and even ideas for comparing Silver Coin prices and Silver Round prices. Perhaps we should try this analysis on 10 or 100 ounce silver bars?

More Reading:

Silver Bullion: Where to Buy Silver at the Best Price
Silver Rounds: Top Rounds from Top Dealers
The 10 Ounce Silver Bars Advantage: Price

Comments

  1. I love that you shared all of this information on silver eagles and silver rounds. There is so much detail when it comes to the coin industry. I like to use smart scales to measure the difference in coin weights. Buying premium really does keep the coin collection interesting and fun.

  2. Silver prices have come down further, along with premiums on Eagles and Rounds, let’s do another update to our Round Trip Comparison Table. A week ago, we could have done this comparison with lower quantities on Silver Eagles since Provident was offering a deal on Eagles at any quantity. Quantity must be considered when looking at the conclusions on this analysis, because those conclusions can change based on the size of your purchase for any given product.

    500 Ounces Silver Maple Prospector Round
    Purchase Price $16.83 $15.68
    Less Spot Price – $14.84 – $14.84
    Premium Over Spot $1.99 $0.84
    500 Ounces Silver Maple Prospector Round
    Purchase Price $16.83 $15.68
    Dealer Buy-Back Price – $16.09 – $14.94
    Round Trip Cost $0.74 $0.74
    Round Trip Cost % 4.40% 4.72%

    Since Provident has a deal going on Canadian Silver Maple Leafs (which is ending today), we’ve substituted Maples for Eagles. Canadian Silver Maples are a highly trusted .9999 purity silver coin that caries a lower premium than .999 purity Silver Eagles.

    Compare the best price silver coins, rounds and bars from top silver dealers here.

  3. I was able at the end of july to pay a premium on eagles of 2.25 [at one dealer]. Which I thought was a fair price since the mint charges 2.00 per eagle over spot. Then it seems like hell froze over and all of a sudden 3.60 was the new premium. What the hell. The mint by law must meet demand, so will purchase silver and make eagles and sell them at 2.00 over spot on the day of the order. Since the spot price is determined by the bankers who are shorting silver to keep the price down, we should be the recipients of the lower price, but no, everyone seems to think they are entitled to screw the buyers. Well, I’m waiting for the premium to be reasonable again. Commodity prices are deflating across the board and the prices are going lower, its time the distributors passed the savings on to us the purchasers, so the game can continue. At some point in the future the demand will exceed supply and when that happens the spot price will increase, and all of us who purchased will cash in, but while the banks are driving down the cost, we need the distributors to reign in the premiums and not get so f’in greedy. There is plenty of money to be made at a reasonable premium, gouging the customer base is a short term profit, but will alienate your customers. If you have eagles, sell them, buy more, and sell them, repeat. The mint will make more I promise. While spot is at 15.22, we should be able to buy eagles somewhere at 17.82. If you are selling thousands of eagles, you should be able to live off 60 cents per eagle. For every monster box you make $300.00 plus shipping and handling, which most places is > 15.00.

    • Mort, the mint sold out, the wholesalers can’t supply the retail dealers, the dealers are all sold out and waiting for inventory. The dealers saw this coming and raised premiums. The higher premiums are fundamental economics. Spot price is the paper price. Higher premiums over spot for Eagles simply give you the real price for real physical silver, under the current Supply / Demand dynamic. It’s not complicated. If 100 people want your Silver Eagle and you only have 10 of them, are you going to sell it for $2.60 more than spot? Here’s an offer: Will you give me 10 Eagles at $2.60 over spot, with free shipping, right now?

  4. Right now is a perfect time to revisit this article and see what has happened in the market, and the impact on premiums.

    On July 7th, following a steady decline in prices, silver broke a technical line of support and plunged 4%. During the decline, many retail silver dealers experienced extremely high demand, and began to post shipping delays. Inventory shortages began to appear in certain retail silver products and premiums began rising. The U.S. Mint announced that it would be temporarily suspending sales of U.S. Silver Eagles, having run out of silver. Premiums on Eagles shot higher.

    Today, dealer inventories are getting replenished. Some delivery delays are still taking place, due to fulfillment issues arising out of extreme retail demand. The U.S. Mint has announced that it will begin selling Eagles again within the next few days, on an allocation basis. Premiums remain high on both Eagles and Generic Silver at this time.

    For Silver Eagles, we will use the purchase price from one dealer, and the buy-back price from another dealer. We will use Sunshine Rounds because they carry a slightly higher buy-back price than an equally priced generic silver round at this time.

    500 Ounces Silver Eagle Coin Sunshine Silver Round
    Purchase Price $18.09 $15.83
    Less Spot Price – $14.74 – $14.74
    Premium Over Spot $3.35 $1.09
    500 Ounces Silver Eagle Coin Sunshine Silver Round
    Purchase Price $18.09 $15.83
    Dealer Buy-Back Price – $16.49 – $14.84
    Round Trip Cost $1.60 $0.99
    Round Trip Cost % 8.84% 6.25%

    Based on our contention that a round trip cost analysis can tell us whether Silver Eagles or Silver Rounds are the best option for buying silver, it would appear that the generic rounds win. This is probably a temporary phenomenon though. Once the U.S. Mint starts shipping Eagles again, the fear premium should diminish, and Eagles at various times could once again become “cheaper” than silver rounds.

    • Today, $3.79 over spot for any quantity seems reasonable, after weeks of $4.00 – $5.00 premiums during U.S. Mint allocation. Right on queue with rising prices, inventory starts showing up and premiums on Silver Eagles have started coming back down. Many rounds are now selling for $1.29 over spot.

      See where to buy Silver Eagles or Silver Rounds here.

      • Luxurious Coins & Bullion Altamonte Mall says:

        Great article and analysis of the trends that we have to compete with as dealers.

        I will share a personal reaction to this market as a dealer who faces fierce competition both online and in the extremely saturated PM community in Orlando, FL.

        We’ve been buying and selling metals for over 5 years at our shop which is located in a busy mall in Central Florida. Just a few months ago when Silver price was floating in the 14.00/oz to 15.00/oz range we noticed something highly unusual. It was impossible to physically buy anything within that range from the community or from other dealers. Premiums for generic rounds were $1.50 to $2.00 over spot (our cost). Premiums for Eagles were $3.00 to $4.00 over (our cost). We were selling product like hot cakes. In fact, I remember buying Eagles from another dealer at $4.50 over and still being able to sell them at $5.00 over for a profit. Then all of a sudden spot rose to $15 to $16 range (which we are currently in).

        Now I’ve been able to acquire generic rounds for .25 CENTS to $.50 CENTS over spot. However, even when I advertise to sell them for .62 CENTS TO .87 CENTS over spot, NOTHING is selling. The same goes for Eagles: I can acquire ASEs for $1.50 to $2.00 over but when I advertise to sell them for $2.25 to $2.50 over, NOTHING is selling. I consider this the cursed range for silver as it is stagnant and there is little to no movement for physical inventory to turn into cash flow. I won’t even go into our Gold inventory as we effectively beat every online and local dealer in pricing and still cannot make any sales. In fact, wholesalers are not even answering our calls and what that means is physical inventory levels are at an all time high.

        The bottomline is LIQUIDITY. Liquidity is the most important aspect of precious metal investing from the dealer level and the consumer level. You must be able to liquidate when you need the cash flow. It can be scary when no one is buying because they’re too afraid to stack more physical beyond their fears of market volatility. I’m not even advertising to buy right now and people are still coming to sell. Yes, I can make a profit, BUT, the amount of time it takes to profit vs. volatility must be taken into consideration. Therefore, I advise PM buyers to be especially cautious of the equation of profit vs. volatility. If we can’t even liquidate by lowering our prices and beating mainstream and local competition, what makes you think your investment is rationale?

        Just some words of reality from a fellow dealer that follows the ups and downs every second.

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