Buying and Selling Silver Bullion the Smart Way - ToughNickel - Money
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Buying and Selling Silver Bullion the Smart Way

Author:

Doug is an active trader of stocks, bonds, and commodities, as well as an experienced non-fiction writer.

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Tired of hearing other people talk about buying and selling silver bullion and not having a clue about what they are talking about? Now is your chance to get started in the world of silver investing. Silver, like gold, has been a medium of exchange and a store of value for at least 6,000 years. Not a bad track record! It's not that complicated, you just need a bit of information and a willingness to learn and give it a try. In this article I take some of the mystery out of the world of silver bullion investing and help you get started.

U.S. Silver Coins

Before silver bars and rounds became popular in the late 1970s, silver traders bought and sold United States 90 percent silver coins. These are dimes, quarters, halves, and dollars issued before 1965. In this section I go over some of the common types of U.S. silver coins that you would run into when buying and selling silver. If you are very lucky, you just might find one of these coins in your change.

Silver Content of U.S. Coins

Before you get serious about buying and selling silver coins you really need to know just how much silver is in each type of silver coin. Table 1 lists the actual silver content of each type of coin. As a coin wears, the silver is removed and actual silver weight of the coin slightly decreases. The silver content in Table 1 is for a freshly minted coin; however, the silver contents listed below are still useful for buying and selling.

United States common 90 percent silver coins. All date before 1965. These coins normally sell for a little over their silver content.

United States common 90 percent silver coins. All date before 1965. These coins normally sell for a little over their silver content.

How Much Silver Is There in a U.S. Coin?

DenominationOunces of Silver

Dimes (pre 1965-1965

0.07234

Quarters (pre-1965)

0.18084

Halves (pre-1965)

0.36169

Halves (1965-1970)

0.14792

Dollars (pre-1936)

0.77344

As an example to illustrate how to use this table, suppose you are buying a roll (40 coins) of silver Washington quarters.

How to calculate the silver value of the roll:

  • If silver is a $30.00 dollars per ounce on the SPOT market near the time of the auction close, then the roll is worth 40*0.18084*$30.00 = $217.00. This is the melt value of the roll when silver is at $30.00 per Troy ounce.
  • You will probably have to pay more than $217.00 for the roll. Normally the premium would be $10 to $20 over the melt value.
  • If you are selling the roll to a dealer, expect get $10 to $20 less than the melt value of the roll.

The difference between the buy and sell price for the dealer is his/her profit.

American Silver Eagles

American Silver Eagles

American Silver Eagles

The American Silver Eagle is one of the world’s most popular silver bullion coins. The U.S. Mint started production of this coin back in 1986 and minting continues today. Silver collectors and investors actively seek this coin for their collections. The coin features lady Liberty walking in the sunset on the obverse (front) of the coin and has an eagle on the back. The coin contains one Troy ounce of 999 fine silver. Normally, the Eagles sell for $3.00 to $4.00 over their melt value. Dealers normally pay their melt value or a $1.00 over melt to purchase the coins from the public.

How much is an American Silver Eagle coin worth?

Not all the dates of American Silver Eagles sell for around their bullion value. The 1996 is the low mintage date for the uncirculated bullion Eagles with just over 3.6 million minted. The 1996 Eagles sell for a $30.00 to $40.00 premium over their melt value. There are several other dates such as the 1986, 1994, 1995, 2006-W, and 2007-W Eagles that command a significant premium over melt. As a general rule, if you are buying American Silver Eagles for their bullion content you will be getting mainly coins minted within the last 10 years.

Morgan and Peace Silver Dollar

Morgan and Peace Silver Dollar

Morgan and Peace Silver Dollars

The Morgan Dollar was minted from 1878 until 1921 and in lower grades they can trade near their bullion value. These coins are very popular with collectors and high grade uncirculated coins sell for many thousands of dollars. The Morgan dollars that trade near their bullion value are called “culls”. A cull dollar will heave heavy wear (partial rims, partial date or legends), some damage (dings, scratches, …), and/or corrosion (turning funny colors). Due to the popularity of these dollars even the cull dollars trade for well over their bullion value. If you are sell cull Morgan dollars the dealer should at least give you the melt value. If silver is $30.00 per Troy ounce then the melt value of the Morgan dollar is 0.7734*$30 = $23.20. If you are buying cull Morgan dollars from a dealer expect to pay $2 to $3 over their melt value.

What is the difference between a Morgan Dollar and a Peace Dollar?

In 1921 the design of the Morgan Dollar was changed to commemorate the end of World War I. The new type of dollar was called the Peace Dollar. The Peace dollar contains the same amount of silver as the Morgan dollar and the cull dollars trade for about the same price as the cull Morgan dollars. See the above paragraph for the discussion on buying and selling cull dollars.

How much can I sell it for?

When you come across Peace dollars, you normally see the dates 1922, 1923, and 1924. These are high mintage dates and represent the bulk of the total mintage of the coinage for this series. Dates from 1927 to 1935 are less common and typically don’t trade near their bullion value unless they are damaged or have heavy wear.

999 Fine Silver Bullion Bars and Rounds

999 Fine Silver Bullion Bars and Rounds

Silver Bars and Rounds

Another form of silver that is commonly traded is in the form of 999 fine silver bars and rounds. Privately minted silver bars and rounds come in a variety of sizes, everything from a tenth of an ounce to over 100 ounces of silver. Whether you are buy a small quantity or large you want to make sure that the round or bar is marked "999 Fine Silver" and "One Troy Ounce" or some equivalent statement. The "999 Fine Silver" refers to the purity of the silver, which means, it is 99.9 percent pure silver. Sometimes you will see the abbreviation "F.S" for fine silver. The "One Troy Ounce" lets you know that the bar or round weights at least 31.1 grams, which is a Troy ounce. On any piece of bullion you buy it must be stated the weight and purity. Avoid bullion that is marked "100 mils", this refers to the thickness of the silver plating. The bar or round is most likely copper with a thin plating. If the word "plating" appears on the bullion try to determine if it is silver over copper or gold over silver, or whatever. The best advice is to buy from a reputable dealer that will buy the silver back at their buy price.

Silver Bar and Round Pricing

The general rule on pricing privately minted silver is the small the unit of weight the larger the premium over the silver melt value. For example, a one Troy ounce 999 fine silver round usually sells for $1.00 to $2.00 over the melt value and a 100 ounce bar may sell as cheap as $1.00 per ounce over the melt value. I usually have my customers purchase bars that are less than 20 ounces in total weight. When you go to sell you 999 fine silver bullion expect to receive around $1.00 below the melt value to $0.50 over melt value per Troy ounce. If the dealer is offering you less than this then you need to check with another dealer. Due to many factors, dealers all seem to have a slightly different buy/sell spread on their bullion pricing.

World Silver Bullion Coins

World Silver Bullion Coins

World Silver Bullion Coins

If you like silver bullion and like coins from interesting parts of the world, then collecting these coins is the way to go. The Canadian Maple Leaf one ounce 9999 fine silver coin is probably the most popular bullion related coin that is traded. Other commonly seen one ounce bullion coins are the Austria Philharmonic and the Mexico Libertad. These coins typically sell for $3.00 to $4.00 over their melt value and dealers normally pay around their melt value for these coins.

The Value of Silver Bullion Coins From Different Countries

Australia makes some very attractive one ounce silver coins with a Kookaburra and Koala on the obverse of the coin. These coins normally sell for $3.00 to $6.00 over their bullion value. The older Kookaburras and Koala can sell for a large premium over their bullion value. These would not be good coins to purchase for their bullion value due to the high premium. These coins may appreciate nicely in value over time to their relative scarcity and the intrinsic value of the silver.

Current Silver and Gold Price Information

Reference

Morgan, David and Christopher Marchese. The Silver Manifesto. 2015.

West, Doug. Buying and Selling Silver Bullion Like a Pro. C&D Publications. 2014.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Questions & Answers

Question: Where do I sell silver coins?

Answer: If you have a coin shop nearby then you can take them there. They buy and sell silver coins all the time. If you don't have a coin shop nearby, try a reputable jewelry shop, they sometimes buy silver coins. Learn what the going rate for your coins is before you sell them. You will probably not get their full melt silver value but you should get 80 to 90 percent of their silver value. You can always sell them yourself on eBay. Do your homework, some dealers pay much better than others.

Comments

Jay Prakash Gupta from Mumbai on November 10, 2016:

Trend and Outlook- MCX - Silver

MCX Silver Mega 05 DEC 2016 expiry contract is currently trading at 43988 with net change of 609 from previous closing, market may find immediate support near 42827 42275 & 41294. While market may face major resistance near 44360 45341 & 45893

Short to medium term trend is still looking positive on chart as long as market maintains support level of 41294 , Traders may create long position on corrective dips from current levels, Immediate upside move is possible till 45893 as long as market maintains support level.

Blackspaniel1 on February 27, 2015:

The one I would like to add is the silver American the Beautiful quarter, a 5-ounce quarter sold as bullion. I have seen a few, and the details are fantastic. Yet, it is a quarter, as is marked on it. I wish I would get a few in change.

Doug West (author) from Missouri on November 26, 2014:

There are a lot of very beautiful and interesting silver coins out there. Some are expensive and some are priced just over their bullion value. Good luck on building you collection.

Paula from The Midwest, USA on November 26, 2014:

Great hub on silver bullion. Its great to learn more about this topic, and learning more is something I hope to do. The coins are so beautiful, like in your first picture too. Sometimes, I think the art on them is just fascinating. Thanks for sharing your information!