How Silver Is Sold by Weight: Purity, Price, and Premiums
Understand how silver's market value is determined. Learn about weight, purity, and premiums that impact its price when sold.
Silver, a precious metal, holds value as a commodity, an industrial material, and an investment. Its worth is primarily determined by its weight and purity. This foundational knowledge is key to navigating the silver market effectively.
How Silver’s Weight is Measured
When silver is sold, its weight is typically measured using the troy ounce, a unit specifically for precious metals. One troy ounce is approximately 31.1035 grams. This differs from the more common avoirdupois ounce, which weighs about 28.35 grams, making a troy ounce roughly 10% heavier. While other units like grams or kilograms are used, particularly in larger quantities, the troy ounce remains the standard.
Understanding Silver’s Purity
Silver’s purity, also known as fineness, is a factor influencing its value by weight. Fineness indicates the proportion of pure silver within an alloy, expressed in parts per thousand. For example, “.999 fine silver” means the material is 99.9% pure silver, with the remaining 0.1% typically consisting of trace impurities.
Investment-grade bullion, such as bars and rounds, is almost always .999 fine. Sterling silver, commonly used in jewelry, has a fineness of .925, meaning it is 92.5% silver and 7.5% other metals, usually copper, added for durability. Other purity levels exist, like .900 for “coin silver” used in historical coinage, but .999 is the standard for pure investment silver.
Different Forms of Silver and Their Value by Weight
Silver is available in various physical forms, each valued based on its weight and purity, yet often traded with varying premiums. Bullion, which includes bars and rounds, represents silver primarily for its metal content and typically comes in high purity levels like .999 fine. Bars are often available in sizes ranging from one ounce to 1,000 ounces and generally have lower premiums.
Investment-grade coins, such as American Silver Eagles or Canadian Silver Maple Leafs, are also popular forms of physical silver. These coins are typically minted by government authorities and carry a face value, which can contribute to a higher premium over the metal’s intrinsic value. Scrap silver, which includes older jewelry or industrial silver, is valued based on its pure silver content after refining.
Key Factors Affecting Silver’s Price Per Weight
The price a buyer or seller encounters for silver involves more than just its metal value. The “spot price” serves as the baseline, representing the current market price for one troy ounce of pure silver. This price constantly fluctuates based on global supply and demand dynamics, influenced by factors such as economic conditions, industrial demand, and geopolitical events.
Beyond the spot price, a “premium” is added to or subtracted from this baseline when physical silver is traded. This premium covers various costs, including manufacturing, distribution, and dealer markup. Premiums can also vary significantly based on the product type, with government-mintted coins often commanding higher premiums than generic rounds or bars due to their collectibility and legal tender status. Market conditions, such as high demand or supply chain disruptions, can also lead to increased premiums.