Understanding Silver Coin Prices

Silver coin prices can at times be confusing, especially if you are unfamiliar with the terminology that is often used when referring to precious metals.   Having a clearer understanding of the make up of a silver coin price is critical for helping you located the best deals on these valuable coins.

Spot Price – The Foundation Of Silver Coin Prices

When you begin checking the prices on silver coins one of the first terms you are likely to hear is “spot” or “spot price.”   In simple terms, this is the price of one ounce of silver if purchased for immediate delivery.  This is an important distinction, because precious metals are also bought and sold through contracts which are priced for future delivery.

If you are checking prices through a broker or dealer, you are also likely to hear the terms “bid” and “ask.”   These are both terms derived from the trading markets.   The bid price is the price a buyer is willing to pay for a specified quantity of the underlying asset.  The ask price on the other hand is the price at which a seller is willing to sell a specified quantity of the underlying asset.  These two terms are not as common when looking at silver coin prices, because they deal more with investing in silver bullion.

Silver Coin Prices Through Retail Distribution Channels

There are a number of factors that affect pricing beyond simply the spot price of the precious metal itself.   When shopping for coins it is important to inquire about the actual price that you will be paying for those coins.   Coin dealers will typically quote their silver coin prices as dollar amount over spot (e.g. $2.40 over spot) for silver bullion coins that are non-graded.  This means that the actual price of the coins will be the sum of the spot price plus the stated dollar amount over spot.   These prices will vary greatly amongst individual coin dealers, so it is important that you shop around for the best pricing.   It is also common for a dealer to give pricing breaks using a tiered pricing structure or to have minimum purchase requirements.

Another factor that can greatly influence silver coin prices is whether or not those coins are numismatic coins.   A numismatic coin is a coin that has been graded by a third party coin grading service such as NGC, PCGS or ICG.   The grader will assess the coin on a number of standardized grading criteria.  The coin is then assigned a value on the 70 point Sheldon Scale, with an MS70 grade being the highest.  Numismatics are generally sold for a fixed price, since their value is based more on collector value than it is on precious metal content.  Again, the prices for these coins can vary considerably by dealer and many dealers offer volume discounts.   Coins graded by the top level grading services will generally command a higher price than a coin graded by a lesser known coin grading service.

Understanding silver coin prices does not have to be complicated.  Have a little knowledge of the subject will help you located great deals for years to come.