Common Methods of Buying Silver Bullion & Their Premiums

Precious metals customers frequently ask the same question, “Why are there differences in the premiums for the different types of precious metals?”

Currently 1 oz, 10 oz, and 100 oz. silver sell for $1.70 per ounce over spot, which is roughly 11 percent. At first glance it seems to be a fairly significant mark-up, however we are required to pay a premium over spot from our suppliers. With expenses calculated in, Christopher’s’ after expense and before-tax net profit is less than 3 percent.

The premium over spot for American Silver Eagles is significantly different and can vary depending on the current market conditions, as well as supply and demand. Silver Eagles are currently selling for $4.30 per ounce over spot. This seems like a significant mark-up only because of the methods of manufacturing and distribution. When looking closely, the final mark-up, after expense, and before tax profit is quite small.

The U.S. Government sells American Silver Eagles to a network of distributors who are required to order large quantities at a time. These distributors add on a small mark-up and sell the Silver Eagles to dealers like Christopher’s. We, in turn, add on a minimal mark-up to pay our overhead and make a small profit. According to law, the U.S. Mint is required to use only U.S. Mined silver for the production of Silver Eagles. Due to this requirement, the U.S. Mint has to pay more for raw silver than private manufacturers do. Unlike private industries, the U.S. Mint can purchase recycled silver much cheaper than newly mined silver.

These are the reasons why generic silver premiums are much lower than American Silver Eagles. When selling Silver Eagles, however, you can get more than generic silver over spot. Thus re-cooping some of the discrepancies. American Silver Eagles’ $1 legal tender makes it a popular sought out item by collectors.

Christopher’s is one of the largest bullion distributors in the region and we would like you consider us for your next precious metals transaction.

Happy collecting,

Chris Seuntjens,
Christopher’s Fine Jewelry and Rare Coins