Why Are Silver Eagles So Expensive?
In terms of demand and popularity, the gold standard for coin collectors is the American Silver Eagles, which the United States Mint first struck in 1986. These beautifully designed coins show the fine workmanship and artisan-ship of the nation’s leading designers to full effect. As such, it makes perfect sense why these coins would fetch a premium on the market.
What exactly makes them so expensive to purchase?
Specifically speaking, a host of production costs, dealer mark ups, and collector enthusiasm all play a role in the higher cost for this award winning coin.
The Realities of Striking Coinage
When the United States Mint produces a coin, it is not necessarily for altruistic reasons. In short, the mints are for-profit operations that seek to make a profit from their efforts. Oftentimes, dealers will develop design ideas, production methods, and packaging requirements before submitting their ideas to the mint for production. In the case of the Silver Eagle, they contain one troy ounce of 0.999 pure silver carrying a face value of one dollar.
Once completed, the mint does not sell uncirculated American Silver Eagles to the public, but rather sells the coin to professional bullion dealers and networks that then make them available to the public. Once released, the Silver Eagle, an American icon, was an immediate hit with the coin buying public, and this popularity has always boosted the premium on these beautiful coins. That being said, that beauty comes at a cost with increased production costs.
American Silver Eagles come from the US Mint in varying versions for the buying public:
- Uncirculated Silver Eagles—sometimes called “brilliant uncirculated,” these are the typical coins that most buyers acquire, and generally trade slightly above spot price.
- American Eagle Proof Coins—offer more detail and a frostier appearance as a result of the minting process. Owing to the increased production efforts, these coins carry a significant premium over spot prices and are primarily found in the hands of coin collectors.
Understanding what goes into the minting process goes a long way towards explaining why American Eagle Proof coins fetch such a high premium.
Production Method and Increased Costs
In order to achieve the distinctive look of a proof coin, the production method must employ special dies that goes into the presses in which burnished coin blanks are fed into by hand. The coins are then struck multiple times in order to achieve the fine detail and appearance expected by collectors. Obviously, with each additional production step in the process, the cost rises as a result, and that helps partially explain why the icon American Silver Eagle is priced so much more expensive than the spot price.
The Added Cost of Dealer Markups
As mentioned, the US Mint sells American Silver Eagles to bullion dealers and selling networks. As might be expected, these networks and dealers charge a markup to cover their costs to acquire the coins and still make a profit on the transaction. It is a good idea to think of these markups as the same as any retailer would price their product to help defray costs of doing business. Bullion dealers must absorb the cost of their physical facilities, security, insurance, and a host of expenses that are a part of doing business.
The Market Dictates Your Final Cost on an American Silver Eagle
As you can see, a number of factors dictate the final cost of an American Silver Eagle coin that you end up adding to your collection. From basic supply costs to specialized production methods to the need to allow all parties in the transaction from the mint to the bullion dealership needing to make a profit, all of these factors help boost the final cost you will pay for your American Silver Eagle.