I recently visited a series of local precious metals buyers (one of which promotes their brand with a well-known, but dated celebrity) to get quotes on surplus sterling silver items that had been gathering dust in my basement. I had about a pound of sterling silver utensils and small serving items. (Knowing how to separate silver plate (or worse) items from sterling is an article in itself, or you can do web searches for articles that already discuss that topic.)
Retail Buyer A
After spending over an hour at the first buyer to have them weigh the pieces individually, then scratch each piece and test it with a solution to insure that they weren’t silver plate items masquerading as sterling, we arrived at the moment of truth – how much are they worth?
I had pre-calculated the following. Silver on the day I took it to be evaluated was selling at about $34 per ounce. 18 (standard) ounces X $34/oz. = $612, but I expected that there would be fees and costs that took 25% or more of that value away, so I figured I’d be offered something in the range of $400-$475.
Here’s where my education began. This buyer didn’t weigh things in ounces; they used pennyweights, which turn out to be 20 pennyweights per troy ounce. Troy ounces, the proper unit of measure for precious metals, however, is 12 troy ounces per 1 troy pound or 240 pennyweights. Additionally, 1 “standard” pound = 1.275 Troy Pounds, or 14.5833 Troy Ounces (not 16 ounces). So the mixed news was that while I actually had more pounds of silver, since there are fewer ounces per troy pound than per standard pound, I was going to make a little less than expected.
Anyway, it turned out that I had 292 pennyweights of silver and multiplied by a pennyweight price of $0.40 (forty cents) per pennyweight, they were prepared to offer me $116.80, which she generously rounded up to $120 even.
WHOA NELLIE, I thought to myself!! That’s only 25% of what I thought I should get!
I said no point in wasting any more time and started gathering my things to leave, at which point my opponent asked how much I thought I should get and I explained my lay person ($34 times 18 ounces) calculation. She did not bother to correct my inaccurate use of standard ounces rather than troy ounces, but did say, “wait, let me call my manager and see if she can do any better” (the long-standing car dealer maneuver to make you think you’re getting “special” consideration.)
In the end, their top offer came out to $0.80 per pennyweight or $16 per troy ounce (vs. that day’s market price of $34 per troy ounce, a 53% discount from full value. I suspected that this was still a relatively low ball offer, so I said thanks and goodbye.
Retail Buyer B
I went down the street to another retail buyer and basically said in a polite way, let’s skip the blather, I’ve got about a pound of sterling silver out in the car, another place did all the tests to verify that it’s sterling, and they only offered my $16 per ounce, when the price is going for $34. Can you do any better than that? “Not much,” the person at the 2nd place said. She claimed that the refiners, to whom they sell the silver that they purchase, were only paying her $1.10 per pennyweight, so the highest she could offer was $0.92 per pennyweight.
So I went home and did what I should have started with, web searches for things like: “silver refiners”, “how to sell your silver”, “what silver buyers won’t tell you”, and conversions of the different measures of weight mentioned above. I figured out that $34 per troy ounce = $1.70 per pennyweight. I also went back through my silver items, and found enough other items to get over 2 troy pounds of silver.
Mail Order Refiner
I found one Midwestern refiner who only accepts shipments by mail. Their quote started with 97% adjustment for shrinkage when the silver is melted down, then a 90% adjustment for sterling not being 100% silver (it’s actually 92.5% silver) and then another 10% discount for what they pay on. The net percentage that they pay on came to 78.6% of the current price. However, I was going to have to pay an additional amount to cover the shipping cost to get it to the refiner + insurance, and I wasn’t thrilled with the idea of sending my stuff off to an unknown entity and trusting them to do everything properly.
Customer of a Refiner
I also found a local refiner who does not do business with individual sellers. They referred me to one of their customers who does do business directly with the public through a suburban storefront. His quote was a 92.75% adjustment for sterling silver, and then he would pay 85% of that calculation. His net payment factor came to 78.8%.
Mobile Buyer
Finally, I found a buyer who will come to your home, office or other location and buy from you where it’s convenient for you. He was very direct and informative, but because of his transportation overhead, his offer would vary from 65% (smaller quantities) to 75% (larger quantities) of value, after adjusting for the 92.5% sterling silver.
Assuming the first B&M buyer’s offer comes in at 25% of full value, and his second offer comes in at 50%, and the second B&M buyer’s best offer is about 55%, here’s how the offers would line up for our five possible buyers of 30 troy ounces (or 600 pennyweights) of sterling silver, at an assumed price of $35 per troy ounce:
- Buyer (customer) of a local refiner – 78.8% X 30 oz(troy) X $35 = $827.80
- Midwestern Refiner – 78.6% X 30 oz(troy) X $35 = $825 (less your cost to ship)
- Mobile buyer – 70% X 30 oz(troy) X $35 = $735
- 2nd Retail Buyer – 55% X 600 dwt (pennyweight) X 1.75 price/dwt = $577.50
- Big marketing overhead retail Buyer 2nd Offer – 50% X 600 dwt X 1.75 = $525
- Big marketing overhead retail Buyer 1st Offer – 25% X 600 dwt X 1.75 = $262.50
As you can see, there is a huge range of prices, and given that the “big marketing overhead” buyer has over 50 locations in my metro area, lots of people must be selling to them at rip off prices. Either that, or they’ve determined that they don’t want the sterling silver business, and have priced that accordingly. I’d be surprised if their gold or silver coin purchases were as far below market as their silverware offers.
Be an informed seller, and educate yourself before talking to any professional. My suggestions are:
- Avoid buyers who calculate valuations by pennyweights (it’s like they are using a strange language to obscure the poor value of their offers.)
- Know the current price of silver (or gold) and be sure to ask EXACTLY when and how their quotes will change. Many places use the morning London fixing, but if prices are moving during the day, the buyer may or may not make an adjustment to their price and you need to ask SPECIFICALLY when and how they might change the price(s) that they are calculating values off of. In some cases, they might drop the price midday if prices are falling, but wait until the following day to raise prices if prices are rising. You might have to be prepared to risk returning the following day, or attempt to make the buyer think s/he’s going to lose your business to someone else if s/he doesn’t give you an acceptable offer NOW.
- If you have a lot of items (like more than 1 pound of potential silver), select individual pieces that represent most of the other pieces and take that subset of items around for appraisal. Find the best 1 or 2 offers and then bring your full set of items to them for a full appraisal. If the offer for everything is consistent with your initial sample, then I’d be comfortable completing the transaction with that buyer. Be sure to note down the calculations that they use in forming their bid, and be sure you understand how it works.