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Silver American Eagles Near 5M Sold

Jan 26, 2015

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Investors have continued feeding their voracious appetite for American Silver Eagles.  According to the United States Mint, sales of the American Silver Eagle currently hold at 4,760,500 year to date.  How does that affect the market?

So What’s in the price of a Silver American Eagle?

At Lexi Capital we receive numerous calls inquiring about Silver American Eagles and their purchase price.  The biggest question, “If silver is $18 at the spot price, why are Silver American Eagles $21, $22 or even $23?”  This is a great question for the first time investor to understand the basic nature of a precious metals investment.  Consider a similar example of a baker.  Did you know that if you were to purchase flour, eggs and sugar in bulk you could essentially buy your baked goods ingredients at “spot price”.  However, as you are purchasing that pastry from the bakery, you are paying for a finished baked good.  Think of the Silver American Eagle as a finished pastry.  The wholesale “ingredient” costs of a Silver American Eagle includes the 1 ounce of silver ($18), the cost of turning the silver rock into a silver coin ($2), marketing, a supply/demand premium and a dealer profit.  The only real variable in the equation is the dealer profit markup which even on the high end is only about 3-6%.

What is a supply/demand premium?

At Lexi Capital, we explain to perspective buyers that the cost of a coin can often spike beyond an average market price due to supply and demand.  For instance, when demand for a Silver Eagle outstrips supply its not unusual to see a $1-$3 premium on that coin for both the ask/bid price.  This represents a real opportunity in the market place for experienced precious metals investors.  These types of spikes can last 1-2 weeks and generally occur a couple of times a year and without warning.

General Cost of a Silver American Eagle with spot Silver at $18:

  • Spot Silver = $18
  • Coin Production = $1-2
  • Government Marketing & Profits = $1-$2
  • Dealer Markups = $1-2
  • TOTAL = $21-$24. 

At Lexi Capital we offer a variety of silver products including Silver American Eagles.  Please call today to hear about our silver product specials and incentives.

 

 

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