Three prices to distinguish
A quoted silver price is a reference point, not a complete retail transaction. The price of a physical coin or bar can include a premium above its metal value. A dealer's buyback quotation may differ again. These terms vary with the product and transaction; neither a universal premium nor a guaranteed buyback relationship should be assumed. The CFTC encourages buyers to establish all charges and ask what they would receive if they sold the metal back, rather than focusing solely on the headline price.
Follow one hypothetical ounce
Suppose the reference price is USD 30 per troy ounce of fine silver. A 20 per cent purchase premium makes the price USD 36. Assume the future buyback offer is always 5 per cent below the reference price. At an unchanged USD 30 reference price, the proceeds would be USD 28.50. The investor has paid USD 36 for an item that could be sold under these assumed terms for USD 28.50. No market-price decline is needed to create that initial gap.
Solve the break-even hurdle
For buyback proceeds to equal USD 36, the reference price must reach USD 36 divided by 0.95, or approximately USD 37.89. Relative to the starting USD 30, that is a rise of approximately 26.32 per cent. In general, with premium p and resale discount d measured against the reference price, the required rise is (1 + p) divided by (1 − d), minus 1. Simply adding 20 and 5 gives the wrong answer because the resale discount applies to the later, higher reference price.
Read the assumptions
This calculation excludes storage, delivery, insurance, taxes, commissions and currency changes. Including extra costs would alter the result. It also assumes the resale discount stays at 5 per cent, which is a modelling choice rather than a market promise. A dealer's written terms provide a concrete basis for comparison: product, fine-metal quantity, total purchase cost and the method used to quote a buyback. A rise on a silver chart and a profit on a specific physical purchase are different outcomes.
Sources & further reading
- CFTC · 10 things to ask before buying physical gold, silver or other metals ↗
- CFTC · Customer advisory on precious-metals purchase costs, 2020 ↗
Sources checked 14 November 2026. Reference organisations do not endorse this website. Price examples are hypothetical and educational.