Why do silver coins cost more than the exchange rate?

Question

if I buy a gold coin the price is just a small percentage above the gold index. But a silver coin is 20 dollars when the exchange of silver is 17. Why is that?

Answer 1

Popular, bullion silver coins like the American Silver Eagle and the Canadian Maple Leaf do sell above the spot silver price.  I don't understand the psychology that leads some buyers to pay premium prices for these coins; however, some of that demand may come from those who are seeking only high purity (.999 fine) coins whose silver content is clearly marked in legends on the coins.  There is simply a limited supply of those types of coins, especially from official mints like the US Mint and Royal Canadian Mint.

However, most other silver coins do not sell above the spot silver price.  On eBay, one can still buy some US 90% silver coin lots and many world silver coin lots at prices below the spot silver price, even when accounting for both the 3% or so reduction in silver content due to wear on circulated coins, and shipping prices.  For instance, I'm still occasionally seeing circulated Canadian 80% silver coin lots sell at net prices in the $13-$14/Troy ounce range, and many of these lots go for $15-$16 per oz., even after shipping costs are included.  (That's compared to a current spot price of approximately $17.)

Answer 2

When you buy coins you have to pay for the minting of the coin. The cost of making a coin is about the same whether you make a silver or a gold coin. If you pay $3 for making any coin, it is a small percentage of the overall price in the case of an ounce of gold (approx. $900) but a larger percentage in the case of an ounce of silver (approx. $17).

Answer 3

The silver coin cost more because the mint cares a manufracting fee for producting the coin.