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Understanding the Value of Precious Metals like Silver and Gold: Spot, Melt, Premiums, and More

Understanding the Value of Precious Metals like Silver and Gold: Spot, Melt, Premiums, and More
Category: Precious Metals Guide
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Posted: 11-22-2019 03:27:00 PM

Understanding the value of precious metals can be more involved than one may think. This article will discuss the how aspects like spot price and premiums affect the current worth of precious metals like silver and gold. 

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What is the Gold to Silver Ratio?

The gold to silver ratio is a simple equation of value. It is a reference to how many ounces of silver it takes to equal the value of an ounce of gold at a given moment. For example, if the gold to silver ratio is 60 to 1, it would take 60 ounces of silver to purchase a single ounce of gold.

Some figures and personalities involved with the coin and bullion market like to point to this figure to make predictions. While the logic is sound in some cases, no one can predict the future. This is an important point to remember. So, when you decide to make a purchase be sure that you can be happy with it today instead of buying something that you can only be satisfied with if it does something specific in the future.

How Much Are Precious Metals like Gold and Silver Worth?

How much gold, silver, and other precious metals are worth is based upon a variety of factors, including what is known as a spot price, or the price that silver or gold are trading for at that exact moment. The spot price changes in real-time and is built on market demand. Both the gold spot price and the silver spot price change constantly during trading hours and can be based off of a variety of factors including but not limited to current global events, economic trends. To see both the live and historical spot price of silver, click here.

Melt price is something that is used to put a number on the value of a bullion piece. It is based on the current spot price. Let’s say you have a 10 oz. silver bar and the silver spot price is $17.55 when you’re calculating. Your bar would have a silver melt price of $175.50.

Precious metals products carry a premium when you buy them. This premium is included in the price you pay and consists of any additional costs beyond just the spot price of a precious metal and often includes the cost of business, as well as other factors such as a low mintage, special minting technique, packaging that may affect the overall collectibility of a product overtime. The premium is the difference between the spot price and the total price of a bullion product. The silver premium over spot is often a critical factor when choosing between specific silver bullion products.

Buying Gold and Silver at Spot Price

If you’re buying gold and silver at spot price, then consider yourself lucky. There aren’t many ways to do this consistently. The easiest way is to wait for a special from a large bullion dealer. With the way the gold spot price and silver spot price can change, this is a scarce opportunity.

Understanding Precious Metal Weights

A Troy ounce is the standard unit of measure for precious metals. A Troy ounce is 31.1 grams.

Grams can be converted into Troy ounces if necessary. Just remember that a Troy ounce is 31.1 grams.

Grams and grains can be tricky. In fact, the grain unit is obscure even in the precious metals market. Most reputable dealers intentionally avoid giving weights in grains because of the confusion it tends to cause. Be wary of products listed with their weight in grains.

Fractional coin sizes are self-explanatory for the most part. The standard for fractional coin sizes is to express their weight as a fraction of a Troy oz. For example, a ¼ oz. American Gold Eagle contains ¼ Troy oz. of gold.

For more information on Precious Metal Weights, check out this handy guide.

A convenient weight chart:
1 ounce troy 31.1034768 grams
1 ounce troy 20 dwt (pennyweight)
12 ounces troy 1 pound troy
32.1507 ounces troy 1 kilogram
1 ounce avoirdupois 28.349523125 grams
1 ounce avoirdupois 18.2291 dwt (pennyweight)
1 ounce avoirdupois 0.9114 ounces troy
16 ounces avoirdupois 1 pound avoirdupois
35.27396 ounces avoirdupois 1 kilogram

Buying Precious Metals in Bulk

MCM Pricing Discount Paying attention to a few simple things can make or break the value you receive when buying precious metals in bulk. One of the simplest things to do is buy a large quantity of a single product as opposed to one each of a variety of products. This may create a quantity discount. In addition to this strategy, check to see the price difference between the available payment methods. It may save you a considerable amount on large purchases.

For example, here at ModernCoinMart, we are proud to offer both quantity discounts on bulk purchases as well as discounts for wires and e-checks on select inventory. Just look for our "Add to Cart" button and see if any discounts are offered for the item your keeping an eye on.  

Shipping costs are also something to keep in mind as you search for the best options to buy silver and gold in bulk. While the price you are getting per ounce of silver may be cheaper, if the shipping costs are exorbitant, your once great deal, may not be as cost effective as previously thought. ModernCoinMart is proud to offer our customers free shipping on all domestic orders. For more details, see our shipping policy here.

ModernCoinMart® is a retail distributor of coin and currency issues and is not affiliated with the U.S. government. The collectible coin market is unregulated, highly speculative and involves risk. ModernCoinMart reserves the right to decline to consummate any sale, within its discretion, including due to pricing errors. Prices, facts, figures and populations deemed accurate as of the date of publication but may change significantly over time. All purchases are expressly conditioned upon your acceptance of ModernCoinMart’s Terms and Conditions (www.moderncoinmart.com/terms-conditions.html or call 1-800-362-9004); to decline, return your purchase pursuant to ModernCoinMart’s Return Policy. © 2019 ModernCoinMart. All rights reserved

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About The Author

Brian Comp Jr. Brian Comp Jr. is a coin and bullion expert from Pennsylvania. He attended his first coin show at the age of 8 with his father in the late 90s. Brian has been working as a writer since 2011 and specializes in content that helps customers make good decisions. In his free time, Brian enjoys reading, checking out new coins, lifting weights, and drinking coffee. He’s always ready to answer questions, just email him at bcompjrservices@gmail.com.

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