Why are American Silver Eagle rounds better than others?

[HoyaGuru]

Hi, new guy here. Quick question or two... I can get 1 oz silver rounds today with a premium of 81 cents per ounce, but they are the Buffalo design, with the Native American on the other side. I keep reading that the American Silver Eagle rounds are better, but the best I can get them for today is at a premium of $3.79 per ounce. I've found this every time I've searched, it is not always this much more for the American Silver Eagles, but the premium is always much more for them. Why is this? Why are the American Silver Eagles sought after, and why are the cheapest premiums I find always on the Buffalo rounds? Is it worth it for me to shell out the extra money for the American Silver Eagles for some reason?

[Bigmarc]

21 minutes ago, HoyaGuru said:

Hi, new guy here. Quick question or two... I can get 1 oz silver rounds today with a premium of 81 cents per ounce, but they are the Buffalo design, with the Native American on the other side. I keep reading that the American Silver Eagle rounds are better, but the best I can get them for today is at a premium of $3.79 per ounce. I've found this every time I've searched, it is not always this much more for the American Silver Eagles, but the premium is always much more for them. Why is this? Why are the American Silver Eagles sought after, and why are the cheapest premiums I find always on the Buffalo rounds? Is it worth it for me to shell out the extra money for the American Silver Eagles for some reason?

A complete wild guess. 

I would say the silver eagles are from a government mint and the buffalo's are probably not. So the premium you are paying is because of it being internationally recognised from a us mint. Have a look at the second hand market and see if it still carries that premium. 

[HonestMoneyGoldSilver]

American Silver Eagles (ASEs) are not rounds, they are coins. That nuance explains part of the premium vs silver rounds like Buffalos. The ASEs are legal tender in the USA (definition of a coin is legal tender, rounds are not legal tender), are produced by the US Mint, backed by the US government and are widely recognised world wide

A small part of the premium on ASEs is due to being domestically produced in the USA. A lot of rounds are also made in the USA but other coins (Maples, Britannias, etc) are not made in the USA. Every country has a preference for their own legal tender made by their own people. In some countries with strong domestic production like Austria, US coinage is not popular at all. I watched a YouTube video the other day of an American in Austria trying to sell US Constitutional silver (90% silver) and the bullion dealers in Austria wouldn't even make him an offer, just a flat NO

The majority of the premium on ASEs vs rounds is due to the US Mint itself not meeting its legal obligations. Under US law as overseen by Congress, the US Mint is obligated to produce enough coins to satisfy the domestic demand in the US market. The US Mint has failed to meet this legal obligation by not producing as many coins as they promised and also by letting QC standards slide

So like everything else in free markets, the premium on ASEs are due to supply and demand. The premiums on ASEs have been higher than any other government-minted coin for the past several years and have on occasion exceeded 100%, or double spot price

The situation is made more complicated by corrupt authorised distributors and bullion dealers in business with the US Mint. The US Mint bases its demand figures on orders from these big players. The big players are artificially lowering the demands placed on the US Mint by purposefully ordering less ASEs than demand they receive from customers. Why they do this is simple. The partners of the US Mint are paying spot + $2.50 for an ASE regardless of end-user demand. If the big players order fewer coins (still > 100,000 per year) the price they pay the US Mint remains the same but the premiums they charge customers increases. There's a perverse incentive to undersupply the market and keep premiums artificially high on ASEs

There are several YouTubers in the US who have made videos about this like Silver Dragons, Yankee Stacking, Salivate Metal. When the premiums are high these guys recommend NOT to buy ASEs. They prefer rounds like Buffalos, foreign coins like Maples and Britannias, along with bars and other lower-premium options. Now that premiums have fallen they are happy to start buying ASEs again.

Here's a selection from Silver Dragons that explores this topic and we even have one answering your specific question - ASEs or Buffalos?

 

 

 

And here is the most recent video talking about premiums coming down ($3.79 is a low premium on ASEs compared with recent prices). SD now advocates buying ASEs at these lower premiums:

 

 

You are in a privileged position in the US of being able to buy any silver at a fair price, a lower price than in the UK or EU where we pay 19-23% VAT (Value Added Tax). I would personally stack some Eagles but I would definitely also own some rounds like Buffalos as well as other government coins like Maples (Canada), Britannias (UK) and Kookaburras (Australia). You have unlimited options in the USA and don't have to buy only coins/rounds, you can also buy bars and other silver items which are all taxed at the same rate

[HoyaGuru]

Thanks for the info. I might be looking at it wrong, but the way I see it, an ounce of silver is an ounce of silver, I'd rather get it as cheap as possible. Can't see spending an extra $2.50 or more per ounce for the same weight in metal, unless I'm going to get more for it when I cash it in. Coin shops don't pay more for American Silver Eagle rounds than they do for Buffalo rounds do they?

[HonestMoneyGoldSilver]

7 hours ago, HoyaGuru said:

Thanks for the info. I might be looking at it wrong, but the way I see it, an ounce of silver is an ounce of silver, I'd rather get it as cheap as possible. Can't see spending an extra $2.50 or more per ounce for the same weight in metal, unless I'm going to get more for it when I cash it in. Coin shops don't pay more for American Silver Eagle rounds than they do for Buffalo rounds do they?

Sell Gold Silver Bullion | Highest Payout Online | SD Bullion

Yes the coin shops pay more for ASE coins vs Buffalo rounds

ASE coin buyback price = spot (bid) + $2.75

Buffalo round buyback price = spot (bid) + $0.30

I don't recommend selling back to coin shops though. You will get back all of the premium on ASEs in private sales assuming you buy them at a decent price and spot price is the same. If you're able to buy ASEs for spot + $3.79 = roughly $27/ounce, I personally think that's a good deal. The two biggest online dealers are APMEX and SDBullion. They are currently charging $31.18 and $28.42 respectively for 2023 ASEs. If you bought 2023 ASEs today for $27 you should be able to sell them on the same day in private sales for at least $27

IMHO an ounce of silver is not just an ounce of silver. As the Royal Mint puts it: Decus et Tutament - an ornament and a safeguard

Other people disagree and think silver is just silver. They intend on selling back to their LCS or online dealer and buy generic rounds and bars, whatever is the lowest premium

I recommend watching Silver Dragons and Yankee Stacking discuss the pros and cons of each type of silver and keep up to date as the best thing to stack changes month by month

 

[Silverlocks]

23 hours ago, HoyaGuru said:

Hi, new guy here. Quick question or two... I can get 1 oz silver rounds today with a premium of 81 cents per ounce, but they are the Buffalo design, with the Native American on the other side. I keep reading that the American Silver Eagle rounds are better, but the best I can get them for today is at a premium of $3.79 per ounce. I've found this every time I've searched, it is not always this much more for the American Silver Eagles, but the premium is always much more for them. Why is this? Why are the American Silver Eagles sought after, and why are the cheapest premiums I find always on the Buffalo rounds? Is it worth it for me to shell out the extra money for the American Silver Eagles for some reason?

Sort of.  ASE's are popular in the U.S. because they are trusted, therefore sell for more, therefore dealers will buy for more, therefore they sell for more.  There's an economic feedback loop that means they go for a bit of a premium in the U.S.  There's a similar effect that applies to AGEs.  I think there was also some issue with the U.S. mint being unable to supply enough so there was some shortage, but that might just be rumours on t'interwebs.  You can do your own research on that.

The buffalo rounds are probably made by some third party mint, and are basically just 1oz lumps of silver.  As far as I know, the U.S. mint doesn't make silver buffalos, but I have seen plenty of pics of 3rd party rounds using the buffalo design.

Should you buy ASE's?  Assuming current market conditions it's possibly ok to buy and sell at the higher premiums, but it does mean that you have more value at risk if conditions change.  You're always going to have some VAR from volatility in the spot price anyway.

At a guess, get a mix of AGE's, lower premium items like maples and silver bars in the 10 oz to 1kg range.  These are all small enough to be pretty liquid and will give you a range of low premium to high premium items.  Consider also getting some gold.

Not financial advice.  Do your own research etc.

 

Edited September 9, 2023 by Silverlocks

[HoyaGuru]

OK, finally had the time to watch the videos. Seems the more I learn, the harder it is to decide on what to get. I can get the buffalo rounds for as low as 37 cents over spot, if I get a dollar apiece over spot when I sell them, I make a little on the premium. If I pay an extra $2.50 to $3.00 over spot for ASEs, and get $2.50 to $3.00 over spot when I sell them, I'm just breaking even on the premium. Where would the premium for ASEs have to be for it to be worth getting? In one of the videos above, the guy is saying they were something like $16.00 over spot at one time. I'm guessing it's going to be a different amount from every buyer, what they will pay over spot for ASEs, I've seen many videos of guys calling around to see what coin shops will pay for silver, they are all over the place. I guess if I can get them for $2.00 or less over spot, it would be worth getting some ASEs, otherwise I think I'll stick to cheaper rounds and bars. Another way to look at it, if silver were to go up to $50 an ounce, it would probably go up and down in price by a dollar or two every couple of days, waiting and selling the Buffalos at $52 or $53 instead of selling the ASEs at $50 would even everything out, but I'd have to depend on luck for that. Too many ways to look at the question! Lol, thanks for the advice, I have a lot to think about before my next purchase.

[HonestMoneyGoldSilver]

On 10/09/2023 at 09:15, HoyaGuru said:

OK, finally had the time to watch the videos. Seems the more I learn, the harder it is to decide on what to get. I can get the buffalo rounds for as low as 37 cents over spot, if I get a dollar apiece over spot when I sell them, I make a little on the premium. If I pay an extra $2.50 to $3.00 over spot for ASEs, and get $2.50 to $3.00 over spot when I sell them, I'm just breaking even on the premium. Where would the premium for ASEs have to be for it to be worth getting? In one of the videos above, the guy is saying they were something like $16.00 over spot at one time. I'm guessing it's going to be a different amount from every buyer, what they will pay over spot for ASEs, I've seen many videos of guys calling around to see what coin shops will pay for silver, they are all over the place. I guess if I can get them for $2.00 or less over spot, it would be worth getting some ASEs, otherwise I think I'll stick to cheaper rounds and bars. Another way to look at it, if silver were to go up to $50 an ounce, it would probably go up and down in price by a dollar or two every couple of days, waiting and selling the Buffalos at $52 or $53 instead of selling the ASEs at $50 would even everything out, but I'd have to depend on luck for that. Too many ways to look at the question! Lol, thanks for the advice, I have a lot to think about before my next purchase.

In the USA you can often find great deals for new customers including spot price silver and gold. If you want an ASE then check out SDBullion and get one at spot (offer ends soon):

Buy 2023 American Silver Eagle Coins - Lowest Prices Online (sdbullion.com)

Also check out this price comparison website and similar websites. Their info is not always comprehensive but it's a good start:

Silver at Spot Price Deals | Buy Silver at Spot Price (findbullionprices.com)

 

[HoyaGuru]

On 14/09/2023 at 00:33, HonestMoneyGoldSilver said:

In the USA you can often find great deals for new customers including spot price silver and gold. If you want an ASE then check out SDBullion and get one at spot (offer ends soon):

Buy 2023 American Silver Eagle Coins - Lowest Prices Online (sdbullion.com)

Also check out this price comparison website and similar websites. Their info is not always comprehensive but it's a good start:

Silver at Spot Price Deals | Buy Silver at Spot Price (findbullionprices.com)

 

Cool, thanks. I've been getting mine at walmart.com with a capital one walmart card that gives me 5% cash back, with that factored in, best I got so far is 100 ounces at 37 cents premium per ounce. Then I use the cash back to buy more silver. But getting it at spot, can't beat that!