Real Answers To Your Silver Bullion Questions
Legal & Non-Legal Tender - Reporting
Requirements - Premiums Explained
| Silver
Price News |
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Most everyone knows something about
silver bullion coins and silver bullion bars but the
number of these products available today may cause even
the experienced investor to pause. And then there is the
practical consideration as to where to buy or sell silver
bullion and the notion of getting fair value. The good
news is that most silver bullion is similar in nature,
meaning it moves up or down with the price of silver, buy
and sell prices are easy to understand, and all silver
bullion coins and bars are very liquid. So real silver
bullion products are easy to buy and sell but keep in
mind Uncle Sam does watch some transactions closer than
others, so read on before making your choice and be sure
to look at our List
of Reportable Silver Bullion Transactions.
The precious metals are bought and sold
worldwide using the troy ounce which is slightly more
than 31 grams. This may be a bit confusing to the
beginner because when weighing yourself in the bathroom
or going to the Post Office the world standard is the
avoirdupois ounce which is slightly more than 28 grams.
In other words the troy ounce used for metals is about
10% heavier than the avoirdupois ounce. Understanding
weight component and premium is important because
investment in silver bullion requires an authentic
bullion product. Bullion products by definition have low
premiums so investment in certified silver coins, for
example, belongs on the rare coin side of the ledger and
has nothing to do with silver as a commodity.
All real bullion products move directly
with the New York Commodity Exchange, which opens for
trading at 5:30 AM and closes at 10:30 AM California
time. After the COMEX is closed the price of silver
bullion usually remains constant until the beginning of
the next trading day. But on occasion, especially on
volatile or hectic trading days there is an aftermarket
which may move both the buy and sell price higher or
lower depending on continued public demand.
A simple definition of any silver bullion
coin or bar is one in which there is a small premium
above the content or weight value of the product. In
other words you are buying only the commodity itself.
Bullion coins or bars will increase in value if the world
silver market moves higher and will decrease in value if
that same market moves lower. This happens because
bullion manufacturers usually produce large quantities
which eliminates the notion of rarity. In the case of US
90% silver coins (1964 earier) the quantities minted were
so large they too have no rarity factor and their price
is an excellent approximation of their silver weight.
So what is the difference between a 1
ounce silver bullion coin, bars of silver available in
various sizes and the old 90% silver bullion coin bag?
Actually all of these are pretty much the same as far as
our definition of silver bullion investments. But because
of relative availability and demand it is important to
compare ounce to ounce prices. So these commodities are
similar but not exactly alike because each may offer a
particular advantage or disadvantage depending on your
needs.
Three Important Components Of
Today's Silver Price
1. The most obvious
place to begin is the daily electronic price of silver on
the COMEX sometimes referred to as "spot". Once
the COMEX or spot market is closed the actual physical
market can and often does develop what is now called the
"aftermarket". An aftermarket does not change
the spot price but could change the physical product
price. This happens because bullion dealers remain open
after the COMEX paper market closes and in conducting
business may reflect rising or falling demand between
themselves. Most of the time the consumer need not be
concerned because these changes are small but during
market stress the aftermarket could become volatile and
the price over or under spot could be dramatically
different simply because the "aftermarket" is
creating additional volatility and real traders are
reflecting this in their buy and sell prices. If you do
not like the aftermarket call simply wait until the
following day and see if the aftermarket premium goes
down. This is prudent because once your order is placed
the CNI trader hedges your order, aftermarket and all and
the order cannot be canceled or changed after the fact.
2. The next and very
important consideration is the actual availability of the
physical product you want. The manufacturing of silver
bullion products can be erratic even with solid public
demand. For example the US Mint may decide to stop Silver
Eagle production because of other priorities. When they
work out their production problems the US Mint will begin
producing the Silver Eagle but this delay could last
months and during that time a premium may develop which
can add dollars to the ounce price. The important point
here is that lack of availability and increased demand
always lead to increased premiums over what a silver
bullion product should cost under normal circumstances.
3. Unless you are a
purist, paying increased premiums does not make sense
because they always move lower as new production enters
the marketplace. Your best move is to compare relative
premiums between similar bullion products and choose the
bullion product with the lowest premium. You may be
looking for a box of US Silver Eagles (500 count) and
decide the premium on 90% bags is much lower, and
therefore a better investment choice. This is true
because you could be getting 10% or even 20% more silver
bullion per dollar invested, which could translate into
higher profits if the market moves in your favor.
Remember that premiums come and go because they relate
directly to public demand (or lack of it) so if you
insist on a particular product when there is not much
around and the manufacture of this product increases
production the premium you paid is likely to disappear. The
important rule here is simply that premiums can and
usually do change quickly with investor sentiment so you
may or may not get them back when you are selling.
This interactive chart shows the price of
silver per ounce, historically. Please allow a minute to
load.
Silver Chart courtesy of: http://www.24hgold.com/
See The Silver Institute
for information on silver, including charts and
statistics.
| LEGAL TENDER SILVER BULLION COINS Silver Bullion Prices
| $1000 Face Value 90%
Silver Bag |
| A popular way of owning
silver bullion is in the form of $1000
face value U.S. silver coins struck in
1964 or sooner. These fall into the
general category of Legal Tender
silver bullion, which has a specific
definition in that Legal Tender is
actually real money and can be minted
only by sovereign governments. Bags weigh
about 54 pounds and are sometimes called
"junk" silver bags which is
misleading. This unfortunate name was
developed in the 1970's and used to
describe a bag of average circulated
silver coins which did not contain
anything that was rare or collectable.
These bags contain $1000 face so if half
dollars were used there would be 2,000
coins. If the bag contained quarters the
count would be 4,000 coins. If the bag
contained dimes there would be 10,000
coins. If a bag were melted it would
contain about 715 ounces of pure silver
but this is seldom done because the
silver coins themselves are worth a
premium. All silver coins struck in 1964
or sooner are 90% pure so bags will move
up or down with the daily price of
silver. If you want a handy way to
approximate bag price changes, either up
or down, figure a commercial 90% bag will
move about $7.00 for every one cent
change in the daily paper market. For
your convenience we divide a bag into two
units of $500 face each which makes for
easier handling and storage and each of
these $500 face bags all contain either
all dimes, all quarters, or all half
dollars. Most of the time the selling
price of these bags simply reflect their
silver content, but because old silver
coins are no longer being produced there
may be other considerations as well. If
demand for this particular silver product
increases the price over their normal
silver value could develop. Premiums also
develop because the survival folks, who
want U.S. silver coins for barter
sometimes insist on this form of silver
bullion. The premium on 90% silver bags
can vary from negative (trading for less
than content) to as much as 30% over
their actual silver weight because of
changes in public demand. The difference
between the buy and sell is fairly
constant and there are investors who buy
bags when premiums are cheap or negative
and trade them for 100 ounce bars when
premiums increase substantially, thus
increasing their net silver bullion
position without additional charges. Some
investors look particularly for silver
legal tender coins because they believe
that sooner or later this type of money
will replace currency in circulation
today. Some folks think this idea is
silly but like the notion of having real
U.S. silver coins because they are easily
identified. Either way, U.S. 90% silver
bags are popular and make up a large
percentage of silver bullion holdings
today.
Dealers are required by law to
report your sale of $1000 face 90% bags
on I.R.S. Form 1099B, but smaller
quantities of 90% are not reportable by
the buying dealer.
|
| |
Gross
Weight
|
Fineness
|
Silver
Content
|
Price
|
 |
54 pounds
|
0.900
|
715 troy ounces
|
Price
|
| $1000
Face Value Bag of Silver Dollars
(1878-1935) |
| This interesting play in
silver is not exactly a bullion
investment but it is not a rare coin
investment either. Circulated silver
dollars struck between 1878 and 1935
carry higher premiums, yet they are a
prime source of legal tender silver coins
because they are so recognizable. These
early dollars are divided into two price
categories: The more expensive Morgan
dollar struck between 1878 and 1904 and
the Peace dollar struck between 1921 and
1935, usually worth less but again driven
by the price of silver and the coin's
condition. There are better or key-date
Morgan and Peace dollars which are worth
substantially more but in 9 out of 10
cases most dates and mint marks from this
era are common because they were minted
in the millions. Both the Morgan and
Peace silver dollars can be bought or
sold by the bag (meaning a thousand
silver dollars) but such bags should be
carefully described as to the condition
of the coins in each. Most commercial
bags contain coins which are VG (Very
Good) or better so when examined you will
see only normal wear. They do not contain
coins which have been excessively cleaned
or are damaged, sometimes called
"cull" examples. These options
are popular because silver dollar bags
have represented real, portable wealth
for more than 100 years. But
because of the collector premium
circulated silver dollars are not your
best choice when it come to a pure
bullion investment. It is
possible that because even circulated
silver dollars cost much more than their
silver content an investor making this
choice could see COMEX silver advance 30%
and still not be in a profit position
just because of the extra collector value
he paid. Also note that real silver
dollars only contain about 3/4 of an
ounce of pure silver so do the math
before making this choice and calling it
a "bullion investment". A
better way to describe circulated silver
dollars is "semi-numismatic"
meaning not really bullion but not really
rare.
|
| $1000 Face Value 40%
Silver Bag (Half
Dollars Only) |
| The last silver coin the
United States made for general
circulation was the Kennedy 40% silver
clad half dollar struck from 1965 through
1969. This is another popular way to own
silver bullion in legal tender form. Like
circulated 90% coins these $1000 face
bags are traded primarily for content.
Because they are 40% pure a bag contains
substantially less silver (295 troy
ounces) which is reflected in a lower
selling price. The silver investor has
a number of advantages: First these are
real U.S. coins and therefore are legal
tender (real money) of our nation, so in
an emergency this could be a significant.
Second, the bag has a high face value
($1000) which limits the money anyone
could lose should silver move lower. And
finally, unlike 90% silver bags, dealers
are not required to fill out I.R.S. Form
1099B on 40% bags when you sell. The one
disadvantage is that because the coins
are 40% silver it takes a larger storage
area versus other forms of silver
bullion. If you are talking about a bag
or two this is not a big deal, but if you
are a big player the storage factor
should be considered.
|
| |
Gross
Weight
|
Fineness
|
Silver
Content
|
Price
|
 |
50 pounds
|
0.400
|
295 troy ounces
|
Price
|
| US
Silver Eagle - Legal Tender (1 Ounce) |
| This popular silver
bullion product has been produced each
year by the United States Mint
since 1986. It contains 1 ounce of pure
silver, and actually represents $1 in
legal tender, meaning real currency like
a paper dollar. No person would use this
coin for a dollar's worth of gas, because
the silver value is worth more than its
legal tender value. This legal tender
guarantee, however, backed by the US
government provides an added plus with
some investors. The Mint produces
these coins each year and their price
fluctuates directly with silver but
because production can be interrupted by
the US Mint this bullion product can
develop a large premium over melt when
production is down and lose that premium
when production is up. It makes
for good investment sense to check
premiums carefully before purchase and if
they are very high consider a lower
premium bullion product. The big
advantage in these silver bullion coins
is they have complete worldwide
recognition because they are produced and
promoted by the US Mint. |
| |
Gross Weight
|
Fineness
|
Silver Content
|
Diameter
|
Thickness
|
Price |
One Ounce
US Silver Eagles
Box of 500 pictured weighs about 41
pounds
 |
41 Pounds
|
0.999
|
500 troy ounces
|
Box dimensions:
12.75" x 8.5" x 4.75"
|
|
Price
|
One Ounce US
Silver Eagles
Tube of 20 Coins
 |
1.4 pounds
|
0.999
|
20 troy ounces
|
|
|
Price
|
The one ounce US
Silver Eagle is available in mint state
which is a bullion coin produced in large
quantities and is less expensive than its
collectable proof cousin which come in a
special case with papers from the US
Mint.
 |
1 troy ounce
|
0.999
|
1 troy ounce
|
1.598"
|
0.117"
|
|
| Austrian Silver
Philharmonic (1
Ounce) |
| These beautiful silver
bullion coins come in sealed mint boxes
of 500 coins similar to the US Silver
Eagles Green Monster Box. They are first
rate in every respect and often sell at a
lower premium than the Silver Eagle so
consider this choice if you are looking
for a great silver bullion investment
without the extra cost of the US Silver
Eagle. Recommended for a pure silver
bullion play as long as premiums remain
low. |
| |
Gross Weight
|
Fineness
|
Silver Content
|
Diameter
|
Thickness
|
Price
|
 |
41 Pounds
|
0.999
|
500 troy ounces
|
|
|
Price
|
One Ounce Austrian Silver
Philharmonic
In Tubes of 20 Coins
 |
1.4 pounds
|
0.999
|
20 troy ounces
|
|
|
Price
|
 |
1 troy ounce
|
0.999
|
1 troy ounce
|
37 mm
|
2 mm
|
Price
|
| Canadian
Silver Maple Leaf (1 Ounce) |
| The Royal Canadian Mint's
Silver Maple Leaf 1 ounce silver bullion
coin is also one of the great silver
bullion products on the market today.
Recognized and traded internationally
because it is produced by the Canadian
government. These bullion coins also come
in sealed mint boxes of 500 coins. They
too make a first rate silver bullion
investment play as long as premiums over
spot remain low. |
| |
Gross Weight
|
Fineness
|
Silver Content
|
Diameter
|
Thickness
|
Price
|
The Silver Maple Leaf
Box of 500 weighs
about 37 pounds
|
37 pounds
|
0.999
|
500 troy ounces
|
|
|
Price
|
One Ounce Silver
Maple Leafs
Tube of 25 coins
 |
1.7 pounds
|
0.999
|
25 troy ounces
|
|
|
Price
|
One Ounce Silver Maple
Leaf
 |
1 troy ounce
|
0.9999
|
1 troy ounce
|
38 mm
|
2.87 mm
|
Price
|
One Ounce Silver Wolf
 |
1 troy ounce
|
0.9999
|
1 troy ounce
|
38 mm
|
2.87 mm
|
Price
|
One Ounce Silver Maple
Grizzly
 |
1 troy ounce
|
0.9999
|
1 troy ounce
|
38 mm
|
2.87 mm
|
Price
|
One Ounce Silver Maple
Cougar
 |
1 troy ounce
|
0.9999
|
1 troy ounce
|
38 mm
|
2.87 mm
|
Price
|
|
| POPULAR GENERIC SILVER
BULLION Silver Bullion Prices
COMEX
Bar approximately 1000 ounce 0.999 Fine
|
| New York
Commodity Exchange (COMEX) and Royal
Canadian Mint (RCM) are rough looking
bars which vary in size and are traded
using the exact stamped weight. All buy
or sell spot prices are multiplied by the
actual bar weight. This is a good way to
purchase silver as premiums are always
low on these bars, but their weight (65
pounds) is a big disadvantage as moving
is very difficult. Most investors are
willing to give up the few cents saved
for easier portability and the fact that
smaller units provide choices as to how
much one can sell at any given time.
Still these large bars are a popular and
cheap way to own silver bullion. Also
note that we say approximately
1000 ounces, Comex bars are stamped with
an exact weight but for some strange
reason these weights vary an ounce or two
from bar to bar, so the amount you pay
per ounce is the same but the total will
be adjusted to the specific bar weight in
each case. We are
required to report your
sale of any 1000 ounce COMEX bar, there
is no reporting when you buy unless it is
a large cash transaction.
|
| |
Gross
Weight
|
Fineness
|
Silver
Content
|
Dimensions
|
Price
|
 |
65 pounds
|
0.999
|
1000 troy ounces
Approximately
|
15" x 6"
x 4" Approximately
|
Price
|
| 100
ounce Silver Bar |
| The 100 ounce bar has
been one of the most popular ways to own
bullion silver for decades. Its size is
convenient and purity (0.999 Fine) easily
understood. All bullion bars fall into
the general category of non-legal tender
silver bullion because they are produced
by private firms. For years the two most
accepted 100 ounce bars were produced by Johnson and Matthey
(J.M.) and Engelhard but
production delays allowed other good
manufactures to increase market share and
today there are many quality bars like
Academy and others which trade worldwide
and have consistent pricing and
acceptability. All 100 ounce bars weigh
about 6.8 pounds, are easily identified,
and easily moved. We are
required by law to report your sale of 10
or more 100 ounce silver bars on I.R.S.
Form 1099B.
|
| |
Gross Weight
|
Fineness
|
Silver
Content
|
Dimensions
|
Price
|
Johnson Matthey
(brand name)
 |
100 troy ounces
|
0.999
|
100 troy ounces
|
6" x 2" x
1.5" Approximately
|
Price
|
Engelhard (brand name)
 |
100 troy ounces
|
0.999
|
100 troy ounces
|
5.5" x
2.5" x 1" Approximately
|
Price
|
Academy (brand
name)
 |
100 troy Ounces
|
0.999
|
100 troy Ounces
|
5.5" x
2.5" x 1" Approximately
|
Price
|
Royal Canadian
Mint (brand name)
 |
100 troy ounces
|
0.9999
|
100 troy ounces
|
6.5" x
2.5" x 0.7" Approximately
|
Price
|
| 1 ounce
Round & 10 ounce Silver Bar |
| Finally, and equally
popular are these 0.999 fine smaller 1
ounce and 10 ounce units. In each case
the two so called "generic"
rounds or bars trade worldwide and can be
bought or sold in virtually any quantity.
They do, however, cost slightly more than
100 ounce bars but are easier to handle
and popular with investors who want the
ability to sell or buy smaller quantities
at any given time. Today the 1 ounce
silver piece is produced in the shape of
a coin instead of a bar because they are
easily stored in plastic tubes, thus the
name 1 ounce silver rounds. They are
struck by a variety of excellent private
mints and thus have many different
pictures and symbols on the front and
back. All, however, are clearly
identified as to weight and content.
These smaller units are very popular with
those investors who want them for
potential barter purposes. |
| |
Gross Weight
|
Fineness
|
Silver Content
|
Dimensions
|
Price
|
Sample Image. Actual
coin may look different but each is
clearly identified as to weight and
content. |
1 troy ounce
|
0.999
|
1
troy ounce
|
1.6 inches
Approximately
|
Price
|
Sample Image. Actual
item may look different but each is
clearly identified as to weight and
content. |
10 troy ounces
|
0.999
|
10
troy ounces
|
3" x 2" x
0.25" Approximately
|
Price
|
|
|
