Why is the silver price per ounce for American Silver Eagle Coins and Silver Buffalo Rounds so different? It's perhaps the most commonly asked question of bullion dealers from first-time buyers.
The answer must inevitably begin with the definitions of "spot price" and "premium." The silver price quoted on standard price charts is the "over-the-counter" spot price for a one thousand troy ounce silver bar on the commodities exchange. While these bars are available for mass market investors, they are far less popular than one ounce coins.
There are many factors which contribute to the "premium" for silver bullion. The premium is the mark-up above the spot price charged by mints and dealers for the cost of minting, sourcing, storing, and shipping silver bullion to customers.
As a general rule, the larger the denomination of silver, the lower the premium per ounce. For example, the premiums per ounce for a one-hundred ounce silver bar are typically much smaller than a one ounce silver coin or round, since the minting cost is much smaller.
But this still doesn't answer the question of why an American Silver Eagle Coin carries a premium of $2.50+ and a generic Silver Buffalo Round can be sourced for a premium of around $1. The difference is a question of legal tender. In fact, the term "coin" is used exclusively in reference to legal tender bullion coins issued from a government mint. A "round" is a non-legal tender one ounce silver medallion issued from a private mint. The silver weight and content remains identical, but the notional value amongst investors is markedly different.
Experts offer mixed opinions regarding the better investment between coins or rounds. Nevertheless, the government incentivizes those who favor federal coinage by allowing these coins to be used in IRAs and other retirement accounts.
On GoldShark.com, we analyze and compare silver prices amongst a large pool of dealers for all types of silver products. The differences in silver prices amongst these dealers is the result of many variables, including shipping and insurance charges, brokerage fees, and other factors.
It is our aim to navigate through the murky waters of fees, shipping times, and volume-based pricing to help you, the investor, get the best silver price for coins and bars and the most bang for your buck!