Recently a reader asked why common-date certified Mint State 65 Morgan dollars retail for around $150, when 1-ounce silver rounds retail for several dollars over the spot price of an ounce of silver. The answer is that a finite number of Morgan dollars is available, while availability of silver rounds is generally unlimited.

The increased interest in bullion over the past year has had a mildly positive effect on common Mint State Morgan dollars, which are often traded in large groups at the wholesale level.

The wholesale price is often referred to as "bid." When dealers buy easily interchangeable coins, like common MS-65 Morgan dollars, they will generally pay less than bid. This is referred to as "back of bid."

If a coin dealer quotes a buy price as "$20 back of bid," that means he or she will pay $20 less than the published wholesale bid price. Coin World's Coin Values reports prices for the retail coin market, the price at which one would expect to purchase the coin retail.

The market is strongest for generic MS-65 dollars certified by Professional Coin Grading Service and Numismatic Guaranty Corp., with similarly certified examples by ANACS and Independent Coin Grading often selling at a discount.

The quintessential MS-65 Morgan dollar is the 1881-S coin. In MS-65, PCGS has certified 44,175 and NGC has certified 43,615. The two services have graded nearly 30,000 1881-S dollars finer.

This seems like a large number, until one compares it with the mintages of American Eagle silver bullion coins or the production of private silver rounds, of which millions are made each year.

As the reader pointed out, silver rounds are large and flashy, and grading is generally not an issue. But, the reader also pointed out that the Morgan dollars have a historical element that silver rounds cannot duplicate, and that an MS-65 Morgan dollar will likely never meet the melting pot.

Issues of relative value are central to coin pricing. While MS-65 Morgan dollars are common, when compared to silver rounds or American Eagle silver bullion coins, they are proportionally rare, and thus command a substantial premium.