With more and more investors entering the market for the first time, we thought it was important to notify our readers how they should buy 90% silver coins, or more specifically how not to do so. Some coin and bullion dealers are taking advantage of the lack of knowledge by some newcomers to the market by trying to sell 90% silver coins by the ounce or pound. This article explains why this is not the correct approach to buying 90% silver coins, how it could result in you paying substantially more for your silver coins, and what the correct approach should be to buying 90% silver coins.
To begin with, it’s important to clarify how precious metals, such as gold, silver and platinum are valued. The correct weight or measurement when dealing in precious metals is troy ounce as opposed to a standard ounce. A standard ounce is equal to 28 grams while a troy ounce is 31.1 grams. While on the surface, there doesn’t appear to be much of a discrepancy between the two measurements, you might be surprised to find that a troy ounce is 10% more than a standard ounce.
The idea of spending 10% more for 90% silver coins doesn’t sit well with most folks, but it gets even worse when individuals are selling coins by a standard ounce or pound. An important factor that oftentimes isn’t contemplated is that individuals are buying 90% pure coins as opposed to .999 fine silver coins, so if an individual is advertising the sale of an ounce of 90% silver coins for $29/ounce (the spot price at the time of this writing), you’ll end up paying 20% above the melt price of the coins, which is an unacceptable premium for 90% silver coins.
So if you’re in the market to purchase 90% silver coins, how should you go about doing so? The ideal way to purchase these coins is by the coin, the roll, or bag (according to the total face value). A quick calculation that can be used to arrive at the melt value of 90% silver dimes, quarters and half dollars minted in 1964 and earlier is to multiply the spot price of silver by .7238. The calculation for U.S. silver dollars minted in 1935 and earlier is slightly different, in that the spot price should be multiplied by .774. This will provide you with a multiple that you can then multiple by the face value of the coin to arrive at the silver melt value.
The following is an example of how you would arrive at the melt value of a silver dime at a spot price of $29 per troy ounce. First, multiple $29 x .7238 (the figure provided above) to arrive at a multiple of 20.99. Let’s round up to 21 for purposes of our example. You would then multiple 21 by .10 (the face value of a dime) to arrive at a current melt value of $2.10. The .7238 multiplier assumes that the coin has no wear. If the coin has moderate wear, use a calculation of .715. For a substantial amount of wear, you can weigh the coins to arrive at the melt value.
The easiest way to estimate the melt value of extremely worn 90% silver coins is to arrive at the price per gram of the coins. If we multiply the current spot price of $29 x .7238, we arrive at a multiple of 21, which is the price per $1 in face value of 90% silver coins. When divided by 31.1 (remember – there are 31.1 grams in a troy ounce of silver), we arrive at a price of .68/gram. We can then multiple this figure by the total weight in grams of the silver coins that we have available to arrive at the current melt value of the coins. An accurate portable scale that measures in tenths or hundreds of a gram should be used for this purpose.
In summary, there are several ways in which you can buy 90% silver coins, but unless you’re paying by the coin, the roll, or the bag, or in the case of heavily worn silver coins; by the gram, you’re likely paying too much for your 90% silver coins. If the silver coin dealer that you’re working with attempts to sell you 90% silver coins by a standard ounce or pound, we recommend that you look elsewhere for a coin dealer that will treat you fairly.