Buy-Sell Spreads on Physical Silver

When buying or selling silver rounds, most investors are primarily concerned with obtaining the best pricing. The price for silver rounds begins with the spot price of silver, or the market value of one troy ounce of bullion. On top of this base value, there is the “premium,” a small amount charged by the dealer to account for the costs of producing and selling the round.

Another term that is important to understand when investing in silver is the “spread.” There is always some difference between the buy and sell prices for silver; this is known as the spread. In other words, the spread is the difference between what a dealer is willing to buy a particular round for, and how much they will sell the same round for.

For example, a particular dealer might be paying $2 under spot for a particular round, and selling it for $3 over spot (or in other words, charging a $3 premium). Whether you are buying or selling, understanding spreads is critical to maximizing your investment dollars.

Generics vs. Recognized Brands

Generic rounds tend to carry the lowest premiums, as their value is based solely on the silver they contain, rather than brand recognition or collectibility. Meanwhile, recognized brands – in particular, one-ounce coins like the American Silver Eagle – tend to carry higher premiums over the spot price of the silver they contain. In some cases, this premium is recouped when the time comes to sell your rounds, as buyers are willing to pay higher prices for them. In other cases, however, this high premium is not recouped.

Finding The Lowest Spreads

For investors seeking the best prices for their silver, it is important to find the lowest possible premiums and smallest possible spread. These amounts vary dramatically from dealer to dealer, and sometimes also according to the type of silver in question. For example, generic rounds tend to have lower spreads than the American Silver Eagle and other popular names.

Spreads are ultimately set by the dealer. Although all precious metal dealers are working with the same spot price, some dealers have significantly higher spreads than others. For example, a local coin shop might have a $5 spread – paying $2 under spot, and selling for $3 over spot. Meanwhile, a large online dealer might have a much smaller spread, because they are able to operate with a lower overhead and smaller profit margin.

Comparing Spreads

By checking with multiple dealers, you will be able to find the smallest possible spread, maximizing your investment potential. Some dealers publish their spread, expressed either as a percentage or a dollar value. Others do not publish the spread, though it can be determined from comparing their buy and sell prices against the current spot price of silver. In such situations, be sure to account for any additional costs such as shipping and credit card processing fees when determining which dealer has the smallest spread. Keeping the spread as small as possible is essential to getting the most out of your investment.