Why do dealers offer so far below melt for 90%? Why don't they just not buy it?
lsica
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I do understand that getting rid of large quantities of silver can take a lot of time, so I understand why dealers are leery about having to sit on large stock in a potentially volatile market. But why don't they just not continue to buy instead of offering prices that are often less than 2/3 of melt?
Philately will get you nowhere....
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Some people might take the lower price, some won't. They are creating a market at realistic levels for market conditions.
Volatile pricing, no one wants 90%, refineries backed up and taking weeks to pay, often the weights are off because coins are slick/damaged/worn, people only want bars/rounds/.999 fine etc take your pick. Constitutional silver isn't as popular as other items when Silver is at $100/oz.
Dealer margins on bullion are extremely slim, and tying up their money in an unattractive asset with low demand in a market where they need liquidity is often why they are so low.
Collector of Capped Bust Halves, SLQ's, Commems, and random cool stuff! @davidv_numismatics on Instagram
They can't afford to tie up the money in a volatile investment. Warren Buffett could take that risk.
Dealers make a living buying and selling stuff, not by not buying. At some price most will be buyers, that price will vary.
More like gouging the public for what they can get away with. Beat them down low, rip them off high.🤑🤑🤑👹
If no one wants it, why do dealers continue to buy it? If it's that unpopular why are they even buying it at 2/3 melt?
(Edited for typo) Because, when considering volatility and liquidity, at a certain price, they’re willing to take the risk that they’ll be able to make a profit.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
My understanding is that most shops have a ton more sellers than buyers. If the shop is buying with the thought that the silver will be sent to a smelter they need to buy significantly back of spot. For 90% they can't melt it at the moment, so the liquidity is not great. As a business, do you want to take the risk of holding a significant amount of 90% for an extended period of time?
It's pretty simple, if you don't like the price you're offered, don't sell. Nobody is obligated to pay you the price you think you deserve.
Dealers will buy bullion no matter what spot is at, you just might not like the price they'd pay. They're the ones who need to store, sort, sell/refine and they often have overhead. 2/3 melt is where they are comfortable buying and not losing their shirts.
Collector of Capped Bust Halves, SLQ's, Commems, and random cool stuff! @davidv_numismatics on Instagram
This!
I'm a buyer of silver, but not at melt. Wholesalers and refiners aren't paying melt. [I'm not at 2/3 either. ] I'll buy it if I can make money. I won't buy it if I can't.
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FWIW... my local silver guys stopped buying 40% at any price months ago. I tried with some 90% rolls when silver passed $50/oz and got the same treatment. I ended up selling at about 10% behind melt at the Baltimore-Whitman coin Expo back in November last year. I've got a very little bit of 90% left and if I'm going to sell, I'll likely go through a jeweler friend of mine that uses silver in his settings... but this guy isn't buying STACKS of silver...
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Here's the problem, right here. Some people don't like it when they imagine you're making more money than they think you should.
During the last weeks of the Hunt Brothers bubble American refiners were backed up at least six weeks. They would accept silver for refining, (refining was necessary because the people desperate to cover contract silver owed to the Hunt Brothers had to deliver it in .999 form) but would not pay the depositors until the refining was done, and then they would only pay at the silver market price in effect on the day of settlement, not the day of the deposit. If the market had crashed in the meantime, as ultimately happened, the depositors stood to lose a lot of money.
European refineries were not as busy. A guy I worked with at Harlan J. Berk in Chicago had worked for Rarcoa at that location during the Hunt Brothers bubble. He told me how once a week they would ship about a ton of silver AIR FREIGHT to Switzerland to be refined, and one of the staff would have to fly there to handle the deposit. That air freight and that air fare was not cheap, but they got their settlement in a few days rather than weeks, and were left holding relatively little silver when the crash finally happened. They paid for that air freight and that air fare by buying silver well back of spot.
So, what we are seeing is called "Reality."
I don’t blame dealer’s not being aggressive with their buy prices regarding 90% silver. The long term chart is literally vertical. Look at what has happened in past bull moves in silver or any stock for that matter. The price of silver is eventually going to come down very hard and they don’t want to get in the way of that train wreck when that occurs.
I remember a day when some guy came into the coin shop and asked what our prices were on one ounce gold bullion coins. I gave him our Buy and Sell prices on Eagles, Maple Leafs and Krugerrands, which at the time were all $30 apart though the Buy on the Eagle was spot, the ML was $5 under spot and the KR $10 under spot, with correspondingly lower Sells.
The guy was shocked and horrified and said "You're selling them for more than you're paying for them???" I said "How do you think we pay the Rent?" He seemed confused by the concept.
No matter what happens, you will never see $40 silver again. Probably not $75 silver either. It will plateau, but this isn't anything like 1980.
Even Franklin Mint stuff is selling and that hasn't happened in the last 40 years!
High risk environment.
Dealers do not have unlimited funds and even the most moneyed understand the opportunity costs and risks in buying assets that are not presently moving. Refiners aren't accepting 90% junk silver and some are paying $20 in back of spot for .999.
90% is, in my view, an opportunity for stackers presently. If they can accumulate well below melt, they are getting discounted silver that will remain silver nonetheless.
A local dealer has been selling around $20K a week to a travelling wholesale buyer for a while now. He and others can set their "buys" at numbers which effectively compete with others around, especially if there is no better competition than the "gold buyers" or pawn shops. The temptation is to be greedy if they know there are not real competitors around.
Actually, it's a lot like 1980 in many ways. Franklin Mint stuff was selling in 1980 also.
The Hunt brothers didn't intentionally create the bubble. They knew there was a shortage of physical relative to paper and expected to profit on the move. Read above for the refinery backup in 1980 which is the same as today and for the EXACT SAME REASON. The price surge created a short squeeze on paper positions that needed to be covered in 999 bars. The only difference is that the shortage was in the US (IIRC) and right now it was in London.
Demand for silver declined in 2025 and is expected to decline in 2026. So, the rise is due to speculation in future usage coupled with a physical shortage to cover the paper.
Well it crash to 35? Probably not. But HSBC predicted $100 first quarter peak and $57 by year end. Could that happen? Yes. Does it have to happen? No.
It's also worth pointing out that the crash in 1980 was created in large measure by the government intentionally popping the bubble by increasing reserve requirements and limiting the Hunts ability to unravel their positions.
All comments reflect the opinion of the author, even when irrefutably accurate.
Too many sellers "don't shop around" to get best price for their silver and gold. 2/3 melt is unacceptable pay for 90% imo. Dealer that can't pay any more than that, time to fold the tent. I wonder if unwillingness to pay more than 2/3 or so for 90% resulted in a local shop doing exactly that, folding the tent.Their business of selling collector coins pretty much went to hell the last few years with the runup in silver and gold combined with poor customer service to the collector.
"Great spirits have always been met with violent opposition by mediocre minds."
Albert Einstein
Dealers can't afford to flip it here in WA with the new sales tax. They have to buy well back of spot.
Watched a silver bullion transaction fall apart this week when the buyer found out he was going to pay 10.1% in tax.
At the same store I was offered 90% of spot for gold! Should have sold it to the 98% buyer at FUN!
Only way to unload it for the small shops is to sell to the bigger fish who also need to make some $$ for their efforts/risk.
What is “so far below” 90% melt?
Unless you are dealing with a large sophisticated buyer, you have to pay for their protection. Silver is quite volatile, although you have perhaps only seen it go up -- I've been trading it since the 1970s and anyone that calls natural gas futures the widow maker has not traded silver during a volatile period. Hedge contracts cost money, and with margin levels increased and potentially increasing further, not many want to take the risk that you want to dump on them.
The refineries are as of yesterday were not accepting 90% or sterling -- they are maxed out with .999 small qualities making COMEX deliverable bars (1000ox +/- 10% .9999 fine). December was the largest COMEX delivery month on record, (around 64 million ounces delivered that normally roll to a new paper contract) and much of that was on the expiring futures contract that delivered in Hong Kong. One day settlements are now around 8 weeks, so there is a great deal of risk for a dealer holding inventory. That is just the way that life is in silver especially during volatile periods.
And as the saying goes in silver futures, if you think that you know what you are doing -- you don't. Only the central banks and largest miners have a clue.
From a dealers post:
Some food for thought on the dealer side of buying silver.
Why we pay less than spot price (plain English)
I’ve been buying and selling precious metals since 1980, and the most important thing to understand is this:
Spot price is a paper price — not the price anyone actually gets paid for physical metal.
Here’s why.
Refiners are businesses, not charities
Refiners do not process silver at razor-thin margins. In normal markets, refining and handling costs for silver often work out to several percent, and in stressed or volatile markets those costs can easily rise into the high single-digit range.
If refiners didn’t charge enough to cover costs and risk, they wouldn’t exist.
Silver leasing and financing costs are real
Most large refiners are backed by banks. Those banks charge lease or financing fees for the silver while it’s being processed.
When markets are tight, lease rates rise sharply. Even a few dollars per ounce over several weeks adds up fast.
If refining takes:
6–10 weeks (which is common right now due to backlogs),
the financing cost alone can materially reduce what the refiner nets.
That cost comes out of the chain before anyone makes a profit.
Refiners have massive overhead
Refining silver isn’t melting scrap in a garage. Refiners must pay for:
Electricity (very expensive)
Water and sewer
Insurance
Payroll
Environmental compliance
Local, state, and federal taxes
Licenses and permits
All of that is built into the price they pay for metal.
Volume requirements and price risk
Many refiners require 1,000 ounces or more to lock in pricing.
If we buy silver but don’t yet have enough volume:
We take all the price risk
If silver drops tomorrow, we absorb the loss
The seller has already been paid
That risk has value, and it must be priced in.
Margins widen when markets are volatile
In calm markets, the spread between spot and physical transactions might be relatively tight.
In volatile markets — like we’re in now — spreads always widen:
Financing costs rise
Backlogs grow
Risk increases
That’s not greed — it’s survival.
Bottom line
Spot price is just a starting reference, not a payout price.
Between refining fees, financing costs, operating expenses, delays, and price risk, everyone in the chain has to make a profit — or the business simply doesn’t work.
We’re not paying under spot to take advantage of anyone.
We’re paying a realistic, sustainable price that reflects what it actually costs to turn metal into money.
That’s the honest explanation.
Proud follower of Christ!
Agreed.
Nobody says you have to accept it.
Our only local coin shop, which is actually quite large as they vanquished all competition over the decades, sells silver and gold above spot. All sourced below spot including .999 fine.
No premiums paid on slabbed 70 graded bullion.
Plastic encapsulation adds zero premium for sellers.
No OGP costs seller an additional $25 deduction per item, even if it's a PCGS PROOF 70.
Locally yesterday I got 90% buy quotes from two shops - one 45x face (they hadn't increased it since a week prior) and the other 55x face. Watched a lot of people unload at the cheap place...
How much will you pay for my 40% and 90% silver ?
I won’t pay even 2/3 of melt at current silver prices. For uncirculated pre-1965 silver I would pay 1/4.
So as a non-dealer who is paying $2400 for a roll of silver eagles from eBay sellers? Anyone buying at that price? A Monster box would be $50K+.
JM Bullion is $58,710 echeck for 2026 ASE Monster Box
&
$61,156.23 credit card
2026 20 coin ASE tube is $2,412.40 echeck
&
$2512.92 credit card
Their silver ask is $103.93 right now
Free shipping on orders above $199.
If nothing else, the recent moves have added spice to stacking and numismatics. It's created food for thought for this relative newbie. I can at least say I've lived through a surge and now sit back and watch...and hopefully get a bit smarter. To this point, I can only opine that too much time is spent worrying about and/or nitpicking numbers and I don't want to become Ebenezer.
USAF veteran 1984-2005
Nice, but who is buying them at those prices?
So you believe that, if a dealer is getting all the junk silver he/she/they want, at, say, 2/3 of melt, they are somehow morally-bound to pay more, because "fair"?
I don't. Nobody is forcing anybody to sell. Spot markets don't define the market for buying and selling junk 90% silver; what a willing buyer is ready to pay a willing seller does.
Yes. People are buying
All comments reflect the opinion of the author, even when irrefutably accurate.
You want names? People are buying. There's a lot of hype out there and People are lining up for $100 silver who never bought it at $20 or even $50. Just because you aren't interested didn't mean Johnny Come Lately isn't.
Will it end well or end badly? My crystal ball is broken. But all my dealer friends are setting new buy AND sell records every month.
All comments reflect the opinion of the author, even when irrefutably accurate.
Some of the largest refiners have either stopped accepting alloyed silver entirely, or theyre paying $15 back of melt....and thats with an 8 week settlement. Many B&M Dealers are on the verge of "shutting down" next week to process backlogged inventory and organize the mountains of silver that came in. Many are neck deep in inventory, capital has been almost entirely depleted with an unprecedented surge of sellers and with the current conditions theres too much risk for shops to lay out 50k to make $500 , so its a buyer's market.
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No names necessary. Was just curious if sales were less or about the same at these levels.
I remember when silver hit $50 some years back. My local dealer bought a bunch on a Saturday, but failed to sell it off at the end of the day. On Monday morning he took it in the shorts pretty good from what he said.
This. The whole system is on the verge of locking up. The warehouses are full but the bank accounts are empty.
I do sometimes wonder if the price collapses if the refineries catch up. There's a lot of supply waiting to be processed. Time will tell...
Dealers have offered me silver, even 999, back of spot. I've turned it all down. The margins are too low to move it effectively on ebay or BST. And I don't want to be holding if the price corrects. They are safer places to park money right now.
Good to see you back, by the way.
All comments reflect the opinion of the author, even when irrefutably accurate.
I'm a coin collector, not a silver accumulator with $ signs in my eyes. Will you let me go through your 90% to cherrypick possible collectible pieces and then sell me those pieces I select for say, 10% above what you had to pay to acquire them?
"Great spirits have always been met with violent opposition by mediocre minds."
Albert Einstein
Lately, I’ve been buying and selling 90% coin in the vicinity of 90% of melt. Everyone seems happy, so I keep doing it.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
No $ signs in your eyes - but you want to "cherrypick". Bit of an inconsistency there.
If you are going to buy one quarter for 10% over what I paid, I think I'll pass on you wasting my time for $1.50
All comments reflect the opinion of the author, even when irrefutably accurate.
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I don't see any problem in wanting to collect and save one coin (or a few coins) from being melted.
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Everyone is morally bound to be “fair”. The catch, of course, is that everyone gets to define what is fair for himself.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I see circulated Peace Dollars selling around $70 on ebay. That's about 90% of spot for retail prices.
If I were a dealer I'd probably pay 80% of spot with strong 2-way business, but only 60% of spot (or less) if I were backed up. You can always sell on ebay, but you might not like the results any better.
Some online dealers are still selling at formulaic markups to spot, but that is obviously not the market any longer.
It's interesting that the gold/silver ratio is around 50, which is close to the historic average.
Neither do I, and I imagine @jmlanzaf wouldn't mind either..... but not at his/my expense, and more importantly...time. In a transaction like this, the seller would have to babysit while someone sorted through a bag of 90% with the potential upside of possibly making enough to buy a can of soda.
Now, I think a more attractive solution would be for the sorting party to offer a trade that favors the seller in some way, for a guaranteed quantity. I.e. Halves in exchange for quarters/dimes, or a 2/3 exchange rate of 3 ASE/$2FV 90%. Same principle as the original suggestion, but at a minimum scale where the seller isnt wasting their time. Then the buyer can just quickly swap for the 90% he wants to search and everyone can get on with their day.
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I didn't say there was a problem with it. But, as you know, volume customers get the discount. My having to sit there and let you pick through inventory rather than instantly ship it out creates risk for which he is expecting a preferred price.
I see no problem with his request. He (and you) should also see no problem with why I would refuse the request if it adds risk and no profit for $1.50
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Thanks pal, it's good to be seen.🥸
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