There is no silver coin in the world that enjoys greater popularity than the American Silver Eagle (sometimes abbreviate as “ASE”), the official 1 oz silver bullion coin of the United States. First issued in 1986, the Silver Eagle has successively grown in popularity over time. In fact, it has set new annual sales records in each of the last three years, and is on pace to do so again this year.
Symbolism of the Silver Eagle
The captivating, classic design used on the obverse of the ASE traces its origin all the way back to 1916. Created by renowned artist Adolph A. Weinman, the beautiful Walking Liberty design is among the most celebrated images in the history of American coinage. Lady Liberty gracefully strides to the east toward the sun rising over the horizon, her arm outstretched as she beckons toward the hope the dawn of this metaphorical new day offers. Fittingly, her dress mimics Old Glory-the American flag-in its design.
This masterpiece of numismatic art is paired with the reverse design created by the former Chief Engraver of the U.S. Mint, John Mercanti. Mercanti’s creation is a take on the Great Seal of the United States, focusing upon an American bald eagle in heraldic pose. Hovering above the eagle’s head are thirteen stars, representing the original thirteen American colonies. The stars are arranged in an upside-down triangle. One of the nation’s oldest mottoes, “E PLURIBUS UNUM,” is emblazoned across a ribbon that is clasped firmly by the eagle’s beak. This phrase is Latin for the phrase “Out of Many, One,” which speaks to the fact that the country began as a collection of separate British colonies that banded together to form a single, unified nation.
Another popular symbol found in Mercanti’s design are the arrows and olive branch. These items are each held in one of the eagle’s talons. This is far from the only place in American iconography, or even the only place on coins, where we see these devices employed. The olive branch is a classical symbol of peace—as in extending an olive branch—while the bundle of arrows represents a preparedness for war. The meaning behind combining these symbols is to strike the delicate balance of a democratic superpower: the United States is committed to the goal of peace, but is always ready to defend itself if it comes to war.
Beyond its popular imagery, the Silver Eagle is also the most widely recognizable silver coin on Earth. This is part of why investors trust it so much: they know that, wherever they go in the world, the coin is very liquid and will be recognized and accepted by other traders.
American Silver Eagle Coins
One of the major appeals that gives the American Silver Eagle value, including the American Silver Eagle proof, is that it is both a trusted form of silver bullion and a popular collectible. The proof version is produced in far lower mintage numbers by the U.S. Mint. It is distinguished from the bullion or “uncirculated” version by the finish of the coin: proofs use a beautiful mirrored background that stands out against frosted relief devices, creating an eye-appealing contrast. However, the American Silver Eagle proof is a collector’s coin and is therefore not the ideal choice for customers looking to buy silver at wholesale prices.
Bullion investors have purchased the standard Silver Eagle coins (frequently referred to as the “Brilliant Uncirculated” finish) in staggering numbers over the past several years. In fact, the coin has set new annual sales records each of the last three years, topping 47 million coins sold in 2015. That’s 47 million troy ounces of silver! The U.S. Mint is already on pace to exceed this total so far this year with the 2016 American Silver Eagle.
Among the many reasons that investors choose the ASE over generic silver bullion products is the high degree of trust associated with the coin. Unlike generic products, the Silver Eagle’s fine silver content is backed by the full faith and credit of the U.S. government, providing some added assurance to consumers. This also endows the Silver Eagle with a universal reputation and international cachet; after all, it is technically the official silver dollar of the United States because it is designated with a legal tender face value of one dollar.
American Silver Eagle Prices
Before you decide to buy silver dollar coins of any kind, whether it is the modern ASE or the older coins like the Morgan dollar or Peace dollar that have since become collectibles, you should do your research first. Because annual mintage figures from the U.S. Mint are not fixed and are instead produced to meet demand, you will find that there is some variation for each American Silver Eagle value by year. For instance, the 1995-W Silver Eagle Proof and 1996-P Silver Eagle are considered “key dates” that are in exceptionally high demand among collectors due to the far lower mintage totals for these two specific coins issues. As a result, these coins will command far higher prices than their more common counterparts in the series. This is valuable information for any prospective buyer who might otherwise be confused by the difference in American Silver Eagle prices on the market. That’s why it’s important to consult an American Silver Eagle price guide in a numismatic publication such as the Whitman Red Book or one of the many online resources before you commit to a purchase. The old adage “knowledge is power” is especially applicable to the coin industry.
Perhaps the most useful tip for anyone who wants to buy silver coins is understanding that current-year Silver Eagles are invariably the cheapest option available relative to backdates (i.e. those coins from past year). Because current-year coins are still in production, they are always theoretically more widely available than the older coins, which is why they generally carry the lowest premium. In some cases, you may see random date ASEs at slightly lower premia simply because the dealer isn’t guaranteeing any specific date, allowing them to group together coins from any year.
What is probably most important to understand when you buy Silver Eagles in terms of where prices come from is the concept of the premium. Simply enough, the premium is the amount by which the total sale price is above the silver spot price. Because all precious metal products are priced in reference to the underlying price of silver or price of gold (depending upon the type of metal), it is crucial to understand that these spot prices are always fluctuating due to gold and silver trading on various commodity exchanges around the world. This is why you will always see product prices listed as some amount “over spot” rather than a fixed price.
Some sources may erroneously claim that the premium over spot represents the bullion dealer’s profit margin on each coin sold. This is inaccurate, because the U.S. Mint doesn’t sell these coins to its distributors for the melt value. The mint must charge its own premium to cover the cost of production (or “fabrication”) of the coins. This means that the premium over spot for a Silver Eagle is in fact determined by market forces—how highly in demand the coins are, and how scarce their availability is. The seller’s profit margin is therefore only a fraction of the total premium over spot. Considering that current-year ASEs are often available for just $3 over spot, this means that a given dealer’s profit on each coin sold is less than $1.
For more information about how the premium over spot is determined, follow the link provided.
Buying Silver Eagle Coins
Although the U.S. Mint strikes and issues (or mints) the Silver Eagle, it does not sell the bullion version of the coin directly to the public. Instead, the mint sells the coins in bulk to a select number of authorized distributors around the country and allows them to then place the Silver Eagles coins for sale directly to consumers. Each Silver Eagle distributor is obviously free to buy silver at wholesale prices from one another once they have received them from the mint, and this is done with some frequency throughout the year depending on regional demand for the coin.
The U.S. Mint makes these coins available in plastic tubes or “mint rolls.” A Silver Eagle roll contains 20 coins, which makes them a popular way for bullion investors to stack up many of these coins at once. The most economical way to buy silver coins like the ASE, however, is to purchase a so-called “Monster Box.” This is a sealed box that a Silver Eagle distributor will receive directly from the U.S. Mint containing 500 coins. The coins are conveniently stored in 25 of the mint rolls of 20 in a compact green box. The appeal of these mint-sealed boxes is not only the large volume of coins they contain in a compact space, but is also that most distributors will offer an American Silver Eagle Monster Box at a lower price per coin than if each coin had been bought separately.
You may have heard or seen that there are other places to buy silver coins online besides from reputable dealers. Although American Silver Eagle eBay sales are common, they are hardly the most secure way to purchase these coins. Fuzzy pictures are often the norm and some unscrupulous sellers will even use deceptive product titles Moreover, eBay charges sellers an 11% fee that is taken from the final sale price of the item, so you will often find that this is built in to the price, making it more expensive for the buyer. As a general rule of thumb, you should avoid trying to buy silver and gold on auction sites when it is much safer to purchase your precious metals from a reputable online retailer.
It is worth noting that legal tender silver bullion coins like the Silver Eagle, Silver Maple Leaf, or even the Chinese Silver Panda are not the only way that investors choose to add the argent metal to their portfolios. There are other options outside of the realm of government-issued legal tender. Even though some investors prefer the perceived security of a coin that is backed by a government guarantee, there are many buyers who are simply looking to stack as much silver bullion as possible at the best price. This means looking for lower-premium bullion products—of which there are a great many to choose from! This broad category includes generic silver bars and rounds, brand-name silver bars, and high-quality art silver rounds.
For thousands of years, human civilizations have used silver bullion in the course of trade. For most of this time, the silver came in the form of large ingots (bars), rings, or other odd shapes. Nonetheless, it served as an intermediary for exchanges of all sorts because of the various advantages that precious metals have as money. It took many centuries of this form of trade before the notion of silver coins arose and took hold.
The advantages of using coins quickly became clear. They were much easier to carry; they were easier to strike and mint in a uniform manner; and unlike the hand-poured ingots, they didn’t necessarily have to be melted and assayed after each trade to determine their true purity or bullion value. With a coin, the issuing authority (at first, kings or emperors) would place their insignia on the coin in order to communicate that they were conferring official value onto it, and guaranteeing its precious metal content.
Including Silver in Your IRA
Individual retirement accounts, or IRAs, are an extremely popular vehicle for saving for retirement. Depending on whether an account-holder chooses to set up a Traditional IRA or Roth IRA, the account is funded with pretax or after-tax funds (respectively) up to $5,000 annually. In general, these accounts are funded with investments in bonds and equities.
However, since 1997, exceptions were made to the rules about what kind of assets were prohibited from inclusion in an IRA so that government-issued gold, silver, and platinum bullion coins could be accepted as funding for an IRA. (Other specific forms of bullion are also acceptable, but the list of IRA-approved metals is fairly limited.) Although often simply referred to as a Gold IRA or a self-directed IRA, this became officially known as the Precious Metals IRA, accordingly.