The Better Inflation Hedge: American Silver Eagles or Morgan Silver Dollars? (2024)

I recently had the opportunity to sit down with a repeat customer to discuss whether or not American silver eagles or Morgan silver dollars were a better investment option considering his long term goals, risk tolerance and time horizon. As we’ve discussed in the past, there are many parallels between coin dealers and investment advisors, and as a coin dealer, I believe that we have a fiduciary responsibility to look out for our customers’ best interests’ as opposed to guiding them toward our highest profit margin items. Below is a summary of the discussion, the factors that he considered, and the choice that he ultimately made.

The individual that we met with has just recently begun to purchase and collect coins. His introduction to silver coins began at Christmas time when he received a handful of Morgan silver dollars, and he was instantly hooked. He subsequently contacted us to schedule an appointment to add to his Morgan silver dollar collection. At the time, he mentioned that he liked the historical significance of the coins and was also interested in purchasing silver as a hedge against inflation. While he was set on purchasing Morgan silver dollars at the time, we also briefly discussed some lower premium coin options, such as American silver eagles and 90% silver coins, if the primary reason for purchasing coins was as a hedge against inflation.

A few weeks after his initial purchase, he contacted us again and was interested in making another silver coin purchase. This time, he was open to other options besides Morgan silver dollars. We discussed the pros and coins of Morgan silver dollars and American silver eagles so that he could make a well informed decision. Below is a brief summary of our conversation:

Morgan Silver Dollars

1. Pros. Morgan silver dollars are some of the most beautiful and collectible coins ever minted by the U.S. Mint, or for that matter, any world mint. They are sought after by silver bullion investors and coin collectors alike, and are highly marketable. Additionally, many of these coins have been melted over the years; therefore, the number of coins produced isn’t an accurate estimate of the number of coins in existence today. Key date Morgan silver dollars, in particular, sell at many multiples of the underlying silver content of the coins.
2. Cons. Because Morgan silver dollars have wide appeal and collectible value, they sell at a decent premium over the melt value of the coins. Furthermore, they contain less silver content than American silver eagles, at .774 troy ounces. Additionally, demand and premiums for these coins tend to move in cycles, so it’s important to keep your thumb on the pulse of the market. Lastly, a number of counterfeit Morgan silver dollars are floating around the market, so unless you’re highly skilled at identifying counterfeit coins or have a local coin dealer that you trust, you could end up purchasing worthless coins.

American Silver Eagles

1. Pros. American silver eagles are the official silver bullion coin of the United States. Nearly a billion American silver eagles have been produced since 1986, making them one of the highest minted modern silver coins in existence. Last year a record number of 43 million ounces of silver eagles were sold, and the pace thus far in 2014 hasn’t waned. When purchasing bullion silver coins, the larger the number produced and in circulation, the better, as this expands the potential marketplace when the time comes to sell your coins. Additionally, American silver eagles contain exactly one troy ounce of silver, which makes it easy to calculate the silver value at any particular time. Lastly, while some replicas exist, they’re not counterfeited nearly to the extent as Morgan silver dollars.
2. Cons. While the premium for American silver eagles is much lower than for Morgan silver dollars, they still sell at a higher premium than some other silver coin options, such as 90% silver coins. If the price of silver skyrockets to $100 or more per ounce, as many silver experts are predicting, American silver eagles may not sell at a higher premium over generic silver rounds and bars. In other words, you may not realize a premium when you sell the coins, depending on the price of silver at that time.

After weighing the pros and cons of Morgan silver dollars and American silver eagles, and deciding that his primary reason for purchasing silver coins was as an inflation hedge, our customer decided to purchase a few rolls of American silver eagles. He still plans on holding on to his Morgan silver dollars, and is hopeful that they’ll continue to appreciate in value over time as the price of silver increases and as more accurate information on the survivorship of the coins becomes available.

In conclusion, we recommend that you assess the reasons for purchasing silver coins prior to entering into a transaction. In the particular case that we highlighted above, the customer decided that American silver eagles were the better option for him considering that he was planning on using them primarily as an inflation hedge. Many coin collectors prefer Morgan silver dollars, which is perfectly fine as well. Our advice is to objectively evaluate your options and reasons for purchasing silver coins, and to not let a coin dealer or broker, who may be looking out for his own interests, pressure you into making a decision that you’re not completely comfortable with.