Why are American Silver Eagles so Expensive?
American Silver Eagles are one of the best-selling bullion products in history. To date, more than 530 million of these silver coins have been circulated by the United States Mint. The coins are so coveted by collectors that several congressmen filed a complaint against the U.S. Mint because demand continues to outpace production. But why are American Silver Eagles so expensive?
If you’ve ever considered investing in an American Silver Eagle, you already know the extreme premiums associated with this classic coin. Collectors who plan to invest in American Silver Eagles have to factor high premiums into their total cost, which eats into future profits and might make it tough to find the right buyer when it’s time to sell.
Today, we’re talking about what makes American Silver Eagles so expensive. As you’ll begin to understand, the high cost of investing in Silver Eagle Coins is a result of a number of factors, including general investor demand, design quality, and production value.
Government Backing and Purity
All bullion coins are backed by sovereign governments, so there’s not much unique about the American Silver Eagle in this regard. Silver rounds might look like coins, but they aren’t produced by official government mints – only coins can be minted by sovereign governments.
This is a big reason why all silver coins are more expensive than rounds. Government mints put quite a bit of production value into their coins, and the massive apparatus responsible for distributing them is expensive to run. Both of these factors drive up premiums on silver coins.
Legal Tender Status Backed by the U.S. Government
The United States government produces all American Silver Eagles. All coins distributed by the mint are authorized by the U.S. Congress and function as legal tender inside of the country. This doesn’t necessarily increase the value of the coin directly; very few people actually trade their American Silver Coins for services equal to their face values.
But there’s another element at play to make legal tender status an important factor in the premium value of a silver coin. The support of a government functions as an additional assurance that your coins are legitimate. The reputation of the U.S. Mint provides foundational value to the American Silver Eagle, which increases baseline premium costs. Why are American Silver Eagles so expensive? Their place within the U.S. Mint is one core reason.
High Purity of .999 Fine Silver
The high purity of the American Silver Eagle gives us another way to answer the question: why are American Silver Eagles so expensive? Silver content and silver melt value gives us the baseline for any silver product, including both silver bars and coins. During times of high demand and an inflated silver spot price, American Silver Eagles will be even more expensive than usual.
Numismatic and Collectible Value
American Silver Eagles are highly collectible. Why are American Silver Eagles so expensive as collectables, though? There are a couple of reasons why this might be the case, and we’ll cover them both below.
Limited Mintage and Collectability
First, American Silver Eagles are minted in extremely limited numbers. Like we said at the beginning of this article, mintage for the American Silver Eagle is so low that some congressmen have challenged the U.S. Mint to produce more of the coins to meet increasing demand. This alone should demonstrate the American Silver Eagle’s scarcity problem.
This limited mintage makes American Silver Eagles a scarce commodity – and a highly collectable one, too. Distributors of this coin often mark-up premiums to offset the high demand associated with the popular coin. Why are American Silver Eagles so expensive, despite falling silver prices? Part of the answer lies in the low mintage provided yearly by the United States Mint.
Premiums for Specific Editions and Conditions
Not all investors are looking to buy American Silver Eagles at the lowest possible premiums. Some collectors might actually prefer more expensive, rarer Silver Eagles. If this is you, then consider looking for some of the Silver Eagles with low mint numbers. During 1994, exceptionally low mint numbers meant that very few American Silver Eagles entered circulation. This makes Silver Eagles from this year rarer – and more expensive – than some of the newer coins.
To find the coins with higher-than-average numismatic value, look for the ones with a high total cost and a low mintage. The 1987 American Silver Eagle Coin is one example of a rare coin with an inflated premium. Why are American Silver Eagles so expensive when they come from certain years? This has to do almost entirely with rarity.
Investor Demand and Bullion Status
But why are American Silver Eagles so expensive in some years and cheaper in others? Demand is a driving force in the traditional stock market, and the marker for American Silver Eagles is no exception.
Seen as a Safe-Haven Investment
All silver products are considered safe-haven investments. Because precious metals are non-correlated assets, they are great places to hold your money during turbulent economic times. This is one reason why silver, gold, and platinum prices seem to skyrocket during unsure economic times. Investors who sense trouble in the traditional market tend to put their money on precious metals.
Global Demand for Silver Bullion Coins
Demand for silver coins increases and decreases over time. A variety of factors can increase demand for American Silver Eagles, including general market sentiment, speculation, and supply-demand trends. If you’re still wondering “why are American Silver Eagles so expensive,” try to take a closer look at the overall silver market. Gauging supply and demand is a good way for new investors to better understand the overall silver market – and prices as well.
Production Costs and Minting Standards
The production costs associated with minting the American Silver Eagle is another reason why the coin is so expensive. Why are American Silver Eagles so expensive to make? This is a question you’d have to ask the U.S. Mint yourself. On our end, we’d wager that the high quality of the coin’s intricate design makes it pretty costly to manufacture.
Stringent Quality Control and Standards
Quality control processes seem to dominate every step of the minting procedure for the American Silver Eagle. While some investors prefer to avoid doing business with big government mints, they do offer distinct advantages. The wealth of resources allocated to the official United States Mint allows the manufacturer to closely monitor the steps in their production line to ensure the highest possible quality and standards.
You won’t find this kind of attention to detail on most non-government rounds. Why are American Silver Eagles so expensive to buy? You get what you pay for, and investors in American Silver Eagles are paying for the backing of the massive minting apparatus of the U.S. Mint. The United States Mint has a whopping 1,650 employees, making them one of the most well-funded mints in the world. With an employee-base like this, it’s no wonder that the cost of production for all of the mint’s coins remains extremely high. These high production costs are kicked back to consumers, resulting in expensive American Silver Eagles.
Higher Production Costs for Intricate Designs
Design intricacy is undoubtedly one reason why American Silver Eagles come with such high premiums. The high degree of detail on these coins is tough to match, and this definitely contributes to their high production cost – and the increased premiums that result from this price.
Distribution Channels and Markup
The process required to bring silver coins to your door is a complicated one. The various distribution channels involved in American Silver Eagle distribution leads to markups, which influence the total cost of an American Silver Eagle. Why are American Silver Eagles so expensive when you buy from a local retailer? The short answer is that smaller distributors have to make a profit somewhere!
Involvement of Authorized Dealers
Not every American Silver Eagle dealer is allowed to work directly with the United States Mint. The U.S. Mint actually uses a list of ‘authorized dealers’ who are given exclusive rights to buy coins directly from them. Why are American Silver Eagles so expensive? The answer might have more to do with the authorized dealers purchasing coins from the U.S. Mint than with the official United States government mint.
Markup to Cover Expenses and Profit Margins
Authorized dealers add fees onto their American Silver Eagles to account for the costs associated with transporting, storing, and selling their products. Expenses can be significant, especially for dealers who choose to purchase a high quantity of American Silver Eagles. Reputable dealers will only include reasonable markups for their Silver Eagles. But the further down the line you have to go to secure your coins, the more expensive markups may become.
Each player involved in transporting and selling an American Silver Eagle will mark the price of their coin up in order to secure a profit. That’s why investors frequently ask, “why are American Silver Eagles so expensive at the local pawn shop?” When you buy locally, you’re paying to secure profit for a number of larger dealers further up the chain.
Market Forces and Supply-Demand
American Silver Eagles are not immune to the market forces that control nearly every investment sector. Supply and demand for these coins – as well as silver in general – impacts their value on the secondary market. Asking “why are American Silver Eagles so expensive” is a little bit like asking why Apple’s stock is so expensive. The answer to both questions has to do more with supply and demand than anything else.
Fluctuations in Silver Prices and Market Dynamics
Silver is a notoriously volatile asset. Silver prices can rise or fall at any moment, and the fluctuations of silver’s spot price can impact the value of your investment portfolio. Silver coin premiums aren’t the only thing you need to worry about when wondering, “why are American Silver Eagles so expensive?” Wise investors closely track the price of silver to figure out when it’s a good time to buy and when it’s time to sell.
Impact of Supply and Demand on Pricing
When the overall supply of American Silver Eagles is high, prices are likely to decrease. Recently, demand for the American Silver Eagle is high but supply is very low. This means more expensive American Silver Eagles – a problem for investors who want a lot of silver but are working with minimal capital.
Why are American Silver Eagles so expensive right now? The simplest answer is that supply is low and demand is as high as always. Because of this, authorized dealers are forced to hold onto their supply of American Silver Eagles by raising premium costs. When demand falls or supply finally catches up to investor demand, it’s likely that premium prices will fall once again.
Brand Reputation and Recognition
Brand recognition is clearly not much of an issue for the United States Mint. As one of the most respected refineries in the world, the reputation of the U.S. Mint is evident in every one of their American Silver Eagle coins. Why are American Silver Eagles so expensive because of their reputation?
Trust in the U.S. Mint and American Silver Eagles
Silver Eagles have been valued collectibles for decades, and it’s hard to imagine this trend changing in the near future. Americans and bullion collectors around the world have come to view American Silver Eagles as the gold standard for high quality silver bullion coins.
Why are American Silver Eagles so expensive, outside of silver prices? We briefly covered the high design and purity standards early in this guide, but they’re worthy of mentioning here as well. America’s government-backed mint puts an exceptional emphasis on ensuring maximal quality and consistency with every one of their silver coins. This has contributed to a level of trust that’s persisted since the very first American Silver Eagles were released.
International Recognition Attracting Buyers
American Silver Eagles are instantly recognizable. Along with Canadian Silver Maples, they occupy an important place in the minds of bullion collectors everywhere. Investors in American Silver Eagles should have no trouble finding a buyer for their coins once it’s time to unload the investment and reap their profits.
Why are American Silver Eagles so expensive on the secondary market? Fair question! When you try to sell your own American Silver Eagles, you’ll be able to capitalize on the profits over spot that your sellers benefited from.
Comparison to Other Silver Coins
Investors who don’t want to worry about the question of “why are American Silver Eagles so expensive” might benefit from looking into similarly numismatically valuable coins. The Tudor Beast Bull of Clarence Silver Coin is one good example of a coin with high collectible value but a lower premium over spot. It’s also worth noting that this coin offers an exceptional collectible value, as it’s part of a larger collection.
Price Difference Compared to Other Silver Coins
American Silver Eagles offer some of the highest premiums in the silver industry. This is one reason why so many people want to know: why are American Silver Eagles so expensive? An even more important question for would-be investors to consider:
What are some cheap alternatives to American Silver Eagles? The British Silver Britannia is one good option. With its important cultural imagery, high silver purity, and extreme recognizability, the coin is a favorite among investors looking for cheaper alternatives to the classic American Silver Eagle.
Factors Contributing to Perceived Value and Premiums
Scarcity is the main reason why American Silver Eagles have such high premiums, but there are a number of additional factors that contribute to the coin’s extremely high premiums. Why are American Silver Eagles so expensive given current market conditions? Market speculation, a limited number of authorized dealers, and the long history of the coin’s dominance are all influences on its high price.
Final Thoughts: Why Are American Silver Eagles so Expensive?
There are many different ways to answer the question, “why are American Silver Eagles so expensive?” While the long answer can be complicated, the simplest way to understand recent premium hikes is through supply and demand. Low mintage numbers have combined with a high level of brand recognition and collectability to make American Silver Eagles some of the most expensive coins in the world.
Buying your first American Silver Eagle can be an exciting experience. These coins have long been hallmarks of the bullion industry, and investors consider them one of the best ways to invest in pure precious metals. But their high entry cost keeps some investors from putting their money on American Silver Eagles. After you understand the answer to “why are American Silver Eagles so expensive,” it’s time to take concrete steps to secure your silver investment for a fair price.
Hero Bullion offers a wide range of American Silver Eagles for purchase. We work to ensure that our premiums are as low as we can possibly get them while still keeping the lights on in our offices. If you have any questions about how to purchase American Silver Eagles, please feel free to reach out. Our team is also happy to help you with more information about the core question of today’s blog: why are American Silver Eagles so expensive right now?
About The Author
Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.