How do dealers calculate buy/sell spreads and premiums on junk silver coins today?
Executive summary
Dealers set buy/sell spreads and premiums on junk silver by starting from the metal’s melt value (coin silver content × live spot price) and then adding or subtracting percentages that reflect dealer costs, market liquidity and coin condition; typical retail premiums over spot for physical silver range from a few percent to well into double digits while bids (what dealers pay) are set below spot or near melt depending on buyer type (retail vs wholesale) and demand [1] [2] [3].
1. How the “melt value” anchors every price
The foundational number dealers use is the melt value: the coin’s silver content in troy ounces multiplied by the live spot price of silver, a calculation offered by many online calculators and dealer tools for U.S. junk silver (90% pre‑1965 coins and war nickels with different silver content) and that is updated to reflect the live market spot price [4] [5] [1] [6].
2. Converting face value and coin types into ounces
Practical dealer pricing often begins from face‑value batches (e.g., $1 face of dimes/quarters) or by counting specific coin types and converting those to total troy ounces using standard silver content figures—examples and formulas are in calculators and guides that note, for instance, Mercury dimes contain 0.0715 troy oz and many pre‑1965 coins are 90% silver [7] [1] [8].
3. From melt to bid: why dealers pay less than spot
Wholesale buyers and dealers will often offer the melt value or less when buying large quantities, because they need margin to cover refining, handling and resale risk; consumer‑oriented dealers may pay closer to melt when liquidity and competition are strong, but the bid will generally sit below the retail ask to preserve a spread [9] [6] [8].
4. Premiums on the ask side: product, processing and profit
Consumers buy physical coins at a price above spot—the premium—which covers minting or acquisition costs, inventory, insurance, shipping and dealer profit; industry examples note premiums on physical silver products commonly range roughly from low single digits up to the mid‑teens percent depending on product and market conditions [2] [3].
5. Condition, scarcity and “numismatic vs junk” effects
Although “junk” implies no collectible premium, factors like heavy damage, rarity of specific dates, or particularly desirable lots can raise or lower dealer pricing: damaged common coins typically fetch less, while certain pre‑1936 silver dollars (which carry more silver per dollar of face value) may command different multipliers, so dealers adjust spreads accordingly [10] [9].
6. Market liquidity, timing and spread width
Dealers widen spreads when market volatility rises or when demand is thin; conversely, when spot is stable and demand high, bid/ask spreads narrow—this is the same bid‑ask mechanic seen across bullion markets and explicitly tied to the spot price benchmark [3] [11].
7. Practical math dealers use in a sale
A dealer will calculate total silver ounces from the coin inventory, multiply by current spot to get melt, then subtract a buy margin (or add an ask premium) to cover costs and profit; online calculators and dealer tools replicate this same arithmetic for transparency, though individual dealers set exact percentages based on scale, overhead and competition [1] [4] [6].
8. Alternative viewpoints and hidden incentives
Retail buyers should be aware that dealer sites and calculators can present slightly different outcomes: some operator tools aim to be transparent while dealer pricing may reflect commercial incentives to maximize margins; users comparing offers should factor in dealer reputation, shipping/insurance fees and whether sales are retail or wholesale, because those implicit agendas shift where the spread lands [1] [2].