Why the different prices for gold and silver?

peilthetraveler

peilthetraveler

I'm just wondering, why do gold/silver american eagle coins cost more than gold krugerands or plain silver rounds? 1 oz of gold is 1 oz of gold. 1 oz of silver is 1 oz of silver. If the fit ever hit the shan, all those american eagles would go down in price to the price of the gold krugerands and silver rounds. Nobody would pay a premium for them if they were ever used to trade again. So why do people pay more for it.

And some 1oz silver coins like the australian kangaroo coin sells for something like 36 USD per ounce. Maybe its just my sound business sense, but really...what good is silver/gold except to hedge against inflation, or protect your wealth...why pay a premium for what is really just a pretty picture?
 
There are at least two factors that one must consider when placing a value on coins:
1. The melt value or the cash value of the metal if melted down.
2. more importantly the perceived value or rarity of the coin.

You get at least the melt value of the coin plus the perceived add on value based on rarity, popularity of the coin etc.

Take a look at stamps. Recently a 1cent stamp sold at auction for over 100K.
 
Quote from peilthetraveler:
----So why do people pay more for it.
----Maybe its just my sound business sense
----why pay a premium
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1) Confidence and greed.
2) You only "think" you are being "logical".
3) You believe someone else will pay a higher price and the premium can grow larger. :cool:
 
Quote from peilthetraveler:

I'm just wondering, why do gold/silver american eagle coins cost more than gold krugerands or plain silver rounds?
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It's been a while, so things may have changed, or my memory is worse than I think it is... ;-)

Anyway, I think the following only apply to the gold American Eagle, not the silver.

One is that it's eligible for a cap gain rate of 15%, provided you're in the 15% tax bracket. Otherwise, it's at the same rate as all other forms of gold.

Also, the gold Eagle is classified as a numismatic item, so it's exempt from government confiscation unlike other forms of gold.

One other interesting point, which applies to all US coin, is that you're only taxed on the face value of your compensation, not market value. So, if you can get compensated in US coin at market value you're going to save a whopping amount in income and SS taxes.

Of course, all of this is subject to the whim of Washington and I'm not a tax advisor, practitioner, et al.
 
Quote from jprad:


Also, the gold Eagle is classified as a numismatic item, so it's exempt from government confiscation unlike other forms of gold.
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I'm curious about the OP's question too, since I have some silver trades on now. Perhaps gold and silver have different industrial uses?

As for the above, what does that mean? Our government will confiscate any damn thing it wants, I think. They change their "rules" all the time. Nothing would surprise me when it comes to the crooks in Washington.
 
Quote from drcha:

I'm curious about the OP's question too, since I have some silver trades on now. Perhaps gold and silver have different industrial uses?

As for the above, what does that mean? Our government will confiscate any damn thing it wants, I think. They change their "rules" all the time. Nothing would surprise me when it comes to the crooks in Washington.
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You must have stopped reading before you reached the end of my post...
 
Quote from peilthetraveler:

I'm just wondering, why do gold/silver american eagle coins cost more than gold krugerands or plain silver rounds? 1 oz of gold is 1 oz of gold. 1 oz of silver is 1 oz of silver. If the fit ever hit the shan, all those american eagles would go down in price to the price of the gold krugerands and silver rounds. Nobody would pay a premium for them if they were ever used to trade again. So why do people pay more for it.

And some 1oz silver coins like the australian kangaroo coin sells for something like 36 USD per ounce. Maybe its just my sound business sense, but really...what good is silver/gold except to hedge against inflation, or protect your wealth...why pay a premium for what is really just a pretty picture?
More...

American Eagles are official US bullion coinage. Weight and content of each coin is guaranteed by the US Mint. Furthermore, the US Mint sells bullion to authorized dealers only, and each coin is sold to the dealer with a premium. Premiums are determined by the Treasury Department and changes to the premiums are published in the Federal Register (as well as memos to authorized dealers.) Dealer "cost" is spot(paid) + premium + shipping + insurance + optional storage.

Other mints, such as Perth Mint in Australia have very low mintages. I just read last week Perth Mint has already met 2009 mintage limits for I think it was Silver Kookaburra, but it may have been Gold Kangaroo. I don't recall.

Yes it's true, an ounce of gold/silver is an ounce of gold/silver. But as you say, when/if the fit hits the shan you'll want recognized weights and trusted mintage, preferably marked in the language of the country where the exchange will take place.

Once unthinkable, now unstoppable
obama-lama
 
Quote from obama-lama:

Furthermore, the US Mint sells bullion to authorized dealers only, and each coin is sold to the dealer with a premium.
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Not true. all numismatic U.S. coins can be bought by anyone via the U.S. Mint direct:

http://catalog.usmint.gov/webapp/wc...storeId=10001&catalogId=10001&identifier=1000

The reason you can't buy these coins from the Treasury department direct is because they are not in circulation. They are only struck as uncirculated, proof or high relief proof. The strike condition and lack of circulation is where the premium comes from.

BTW, the high relief double eagle proof will begin shipping 6/19.
 
Quote from jprad:

Not true. all numismatic U.S. coins can be bought by anyone via the U.S. Mint direct:

http://catalog.usmint.gov/webapp/wc...storeId=10001&catalogId=10001&identifier=1000

The reason you can't buy these coins from the Treasury department direct is because they are not in circulation. They are only struck as uncirculated, proof or high relief proof. The strike condition and lack of circulation is where the premium comes from.

BTW, the high relief double eagle proof will begin shipping 6/19.
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http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=american_eagle_bullion
Highlights added as direct response to your ET-standardized, ill-founded information.

Congressionally authorized American Eagle Bullion coins provide investors with a convenient and cost effective way to add a small amount of physical platinum, gold, or silver to their investment portfolios. The American Eagle Bullion program was launched in 1986 with the sale of gold and silver bullion coins. Platinum was added to the American Eagle Bullion family in 1997.

A bullion coin is a coin that is valued by its weight in a specific precious metal. Unlike commemorative or numismatic coins valued by limited mintage, rarity, condition and age, bullion coins are purchased by investors seeking a simple and tangible means to own and invest in the gold, silver, and platinum markets. American Eagle Gold and Platinum Bullion Coins are available in four denominations: one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce while the Silver Bullion Coin is only available in the one ounce size.

Aside from the proof version, the United States Mint does not sell American Eagle Bullion coins directly to the public. Instead, the Mint distributes uncirculated Bullion coins through a network of wholesalers, brokerage companies, precious metal firms, coin dealers, and participating banks, a network known as Authorized Purchasers.

* Listing of Bullion Retailers
* Becoming an Authorized Purchaser

This method provides effective and efficient distribution, which maximizes the availability of the coins in retail markets as well as major investment markets. For more information about American Eagle Bullion Coins, call 1-800-USA-GOLD.

American Eagle Bullion coins are sold based on the current market price of platinum, gold, or silver plus a small premium to cover minting, distribution, and marketing costs. A portion of this premium is often recoverable upon resale. Prices between dealers will vary. Volume discounts often apply.
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