What is the Difference Between Generic Silver and Government-Issued Precious Coins?

What is the Difference Between Generic Silver and Government-Issued Precious Coins?

Silver is a popular choice for financial investors who want to diversify their portfolios. Precious metals such as gold and silver hold their value well and provide a good counterbalance to stocks and bonds. When you’re purchasing silver, you can choose between government-issued precious coins and generic silver bars or rounds. Though similar in composition and form, these two options are valued differently. Understanding your options will help you make the optimal choice for your investment needs in Las Vegas, Nevada.

WHAT IS GENERIC SILVER?

generic silver march 2024 blog

Private mints or refineries produce generic silver, which comes in the form of rounds or bullion. Rounds typically have a simple design with fewer embellishments than what you’ll find on government-issued coins. However, there are some decorative forms of silver bullion that will still add aesthetic appeal to your investment. Some popular options include Buffalo Silver Rounds, Lady Liberty Silver Rounds, and Morgan Dollar Silver Rounds.

The value of the silver a generic silver round contains almost exclusively determines its value. The term generic doesn’t refer to the quality of the silver itself. Generic silver rounds usually have the same 99.9% purity as government-issued silver. 

WHAT ARE GOVERNMENT-ISSUED PRECIOUS COINS?

Government mints produce government-issued coins, or sovereign rounds, which carry legal tender status. This means that you could use government-issued precious coins as functional currency in the country that minted them.

Since government-issued coins have the backing of the government, they also have a higher premium than generic silver. These coins have a face value as tender but are often worth more than that due to their exclusive design, mint condition, or rarity. For example, the American Eagle silver bullion coin has a face value of just $1. However, the value of a Silver American Eagle coin was $28.45 as of Feb. 16, 2024. This price varies with the fluctuating price of silver. For example, the Silver American Eagle was valued at $39.09 on May 9, 2023.

VALUE OF GENERIC SILVER VS. GOVERNMENT-ISSUED COINS

The primary difference between generic silver rounds and government-issued coins is that generic silver doesn’t have government backing. The backing of the government adds value to the precious coins that a country mints. This can work for or against you depending on how you look at the investment. When you purchase a government-issued precious coin, you pay far more than the silver is worth. However, you will also get more for the coin when you sell it because it retains the value inferred upon it by that government.

Generic silver coins get most of their value from their silver content. This means that you’ll get far more silver for the price. If your primary goal is investing in fine silver, generic rounds are the best way to acquire that metal. 

FACTORS IN THE VALUE OF GOVERNMENT-ISSUED COINS

Both precious coins and generic rounds will fluctuate in value. The fluctuation for precious coins is more complex, as it’s linked to several different factors.

Spot Price of Silver

The spot price of silver fluctuates continually. The amount of silver in the coin and the spot price for that silver will impact the coin’s value.

Coin Grade

Coin experts use a 70-point scale to grade precious silver coins based on their quality. A coin graded one is on the lowest end of the scale and has a date and mint mark but no other identifiable markings. Around the middle of the scale, a coin graded 30 has clear legends but some minor wear on the high points and details. A mint state perfect coin with a grade of 70 has full luster and no flaws even at eight times magnification.

Coin Design

Governments issue many different coin designs. Some are part of a limited mint, feature fine artwork, or even have valuable errors. The exact design that you own will have a significant impact on the overall value of the coin. Some coins have a greater demand, and this can fluctuate from time to time.

The extremely rare American Flowing Hair Dollar from 1794 was the first dollar coin produced by the U.S. Mint. It contains just 0.773 ounces of 90% silver, which is less than what you’ll find in modern coins. However, its rarity is such that this coin went for $10 million at a 2013 auction.

FACTORS IN THE VALUE OF GENERIC SILVER COINS

The value of a generic silver coin depends primarily on the spot price of silver. This constantly fluctuates, so you’ll need to keep a close eye on the market to determine the best time to buy or sell generic silver. The spot price does influence the value of government-issued coins as well, but this is just one of many factors. 

Several factors influence the spot price of silver, including the following:

  • Stability of the dollar: Precious metals such as silver rely on the U.S. dollar as their base currency. If the dollar is weak, the price of silver goes down.
  • State of the economy: Silver is worth more when the economy is strong. As economic times get more difficult, silver sales go down, and the value of silver plummets alongside.
  • Industrial use: Silver has many valuable industrial uses that drive its price up; for example, in 1999, photography used 25% of all fabricated silver, but the advent of digital photography reduced this significantly. Silver is now used as the base element for solar panels and is a key component for 5G wireless technologies, so these new industries are picking up the slack.

INVESTING IN SILVER

Both generic silver and government-issued precious coins offer valid avenues for investing in silver. If you’re looking for new pieces to add to your collection, come explore our inventory at Las Vegas Jewelry and Coin Buyers. We have a variety of options for you to explore. You can also sell your silver here if you’d like to diversify your investments in other ways.