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 Replies: 11 / Views: 912 |
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Pillar of the Community
United States
2335 Posts |
As part of my antique/junk business I buy and sell a fair amount of jewelry, flatware, & coins. I'm on social security and can only earn a set amount annually. In 2025 I hit that amount in August. I still buy items for future sale but stay away from anything volatile (precious metals). I had an interesting conversation with my refiner yesterday when I called to see about shipping some scrap sterling. That led to some research and I've come up with some observations. Here's my thoughts in no particular order.
The major factor in refiners not accepting scrap silver and 90%/40% is due to a spike in silver lease rates in October that is still in place. Best estimates are that won't change for 3 to 6 months. Silver lease rates facilitate the process of moving silver from sellers to buyers to refiners. You can google it for details.
There's still a market for scrap silver but it's heavily discounted. Buy offers at online dealers for 90%/40% are as low as 25% under spot. Sell prices are still over spot. Sterling buy prices are even lower.
On .999 bullion the buy/sell price spread is higher than normal.
Despite the shortage of silver, which caused lease rates to spike, it's harder now (if even possible for an individual) than it used to be to liquidate holdings at spot price.
I don't have 100% certainty or what will happen with prices in the future. Neither does anyone else. I am 100% certain that the unusual levels of volatility are causing destabilization of the silver market. If you believe in increasing silver prices stick to .999 if you might need to liquidate. Edited by trdhrdr007
12/31/2025 11:29 am
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Moderator
 United States
187446 Posts |
That is an interesting perspective and thank you for sharing it.  |
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Bedrock of the Community
United States
11880 Posts |
Silver lease rates are just the annualized rates for borrowing metals in the wholesale market. They are usually close to zero, but have increased recently because it is difficult to borrow metals. This is due to physical metal shortages and supply chain issues that make the delivery of metals and the industrial chemicals used to refine metals more difficult to obtain. Trade barriers in place and those soon to be in place are drivers of the current situation.
IN NECESSARIIS UNITAS - IN DUBIIS LIBERTAS - IN OMNIBUS CARITAS THE MAN IN THE ARENA, Theodore Roosevelt at the Sorbonne Paris on April 23, 1910: " It is not the critic who counts; not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." My coin website: https://fairfaxcoins.com |
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Pillar of the Community
 United States
2335 Posts |
I keep hearing that chemical shortages are the reason why refiners aren't accepting sterling and 90/40% silver. As far as I know nitric acid is the main chemical component in silver refining. I'm including a link to a report by imarc group, which provides research to Fortune 500 companies. At the top of the report it clearly states that in North America nitric acid is currently priced at 41 cents/kg. Below that is a chart showing nitric acid prices since June 2021. The prices range from 35 to 56 cents/kg. It seems to me if there was a supply issue prices would be above that range or at the very least at the upper end. I think the imarc group is reputable and my reasoning is sound but I'm open to other viewpoints. https://www.imarcgroup.com/nitric-a...icing-report |
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Bedrock of the Community
United States
11880 Posts |
Nitric acid is the main reagent in silver but there are many others. The imarc report says that the main use is for fertilizer, but it is also used to make explosives. As a result it is tightly controlled and regulated because you don't want someone to blow up a building with it. You may have encountered this if you ever tried to buy bulk fertilizer, because Tim McVeigh used a truckload of fertilizer to blow up a government building in Oklahoma City in 1995, So there are costs beyond just the price of the product. Imagine the liability for a chemical company that sells this product and it is used to hurt others. Then there is the cost of disposal after its refining use. This can all be done in China at a fraction of the price and that's why they have 70% of the refining market.
The report you linked says that nitric acid costs $0.24/kg in Northeast Asia while it cost $0.41/kg in North America. That is already 71% higher here for just this one input cost. It is also interesting to see that the price in Europe is just $0.27/kg which is only 12.5% higher than in Asia. I think a lot of these acids and fertilizer is produced in Eastern Europe as well as Asia. CCF member @Pertinax is in the UK and wondered why refiners here couldn't just buy more acid. It looks like the price in Europe for refining acids is much more reasonable and explains why UK refiners continue to refine sterling.
IN NECESSARIIS UNITAS - IN DUBIIS LIBERTAS - IN OMNIBUS CARITAS THE MAN IN THE ARENA, Theodore Roosevelt at the Sorbonne Paris on April 23, 1910: " It is not the critic who counts; not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." My coin website: https://fairfaxcoins.com |
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Bedrock of the Community
United States
11880 Posts |
There is a cost to refine silver. Taking in 0.999 fine silver rounds and smaller bars and pouring 1000oz bars that are exchange compliant bars costs the energy to melt and repour, overhead already being incurred. When you factor the transport of imported bars refined in China or another country to Chicago or London, you can remain competitive because of the West's proximity to the exchanges. For scrap, junk and sterling, you cannot currently be competitive, but if China restricts imports starting tomorrow, the calculation may change.
I asked google's ai: "what is the cost of refining an ounce of silver?"
The cost to refine an ounce of silver varies greatly, from potentially just a few dollars in processing fees (like $0.50-$1.00/t.oz. for high-purity scrap with some refiners) to a 5-10% cut of the melt value for general sterling, plus potential assay/handling fees, depending on purity (sterling, silver-plated, industrial scrap), quantity (higher volume lowers per-ounce cost), and the refiner's specific charges, often seen as a percentage of the final melt or a flat fee with minimums, like Dillon Gage's 5-10% fee.
Typical Refining Fee Structures:
Percentage of Melt Value: Many refiners take a cut, often 5-10% of the fine silver recovered for sterling items, notes Dillon Gage.
Flat Fees/Minimums: For smaller amounts or specific materials (like silver flakes), you might pay a flat fee (e.g., $30 assay fee) or have minimum charges ($250-$300).
Purity-Based Costs: Higher purity (95%+ silver) might have lower per-ounce fees, while lower grades (like 20-40%) incur higher rates or aren't accepted.
Market Discount: Some charge a market discount (e.g., $0.37 below bid) plus a fee for low-grade silver.
Examples:
Mid-States Recycling: Around $0.50/t.oz. for high-purity silver or sterling (with potential Cadmium surcharge), notes Mid-States Recycling & Refining and this page on their site.
Dillon Gage: 5% for >100 oz, 10% for <100 oz, plus a $30 assay fee (waived for clear coins/medallions), explains their FAQ.
Key Takeaway: Always check with the refiner for their current schedule, as costs are highly dependent on your material's purity, weight, and the current market.
Refining FAQs - Dillon Gage
Refining - Silver ... Lots having less value are not accepted. What are your fees on silver lots? If you tender more than 100 ounc...
Dillon Gage Metals
Sterling Silver Refining Schedule (80-95%) | Mid-States
Table_title: Sterling Silver Table_content: header: | Silver Metallics (80-95%) (Sterling Silver) | | | row: | Silver Metallics (8...
Mid-States Recycling & Refining
Silver Metallics (95-98%) - Mid-States Recycling & Refining
Silver Metallics (95-98%) ... *$0.50/t. oz. ... *Presence of Cadmium requires adjustment of treatment charge to $0.95/t. oz. ($300...
Mid-States Recycling & Refining
IN NECESSARIIS UNITAS - IN DUBIIS LIBERTAS - IN OMNIBUS CARITAS THE MAN IN THE ARENA, Theodore Roosevelt at the Sorbonne Paris on April 23, 1910: " It is not the critic who counts; not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." My coin website: https://fairfaxcoins.com |
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Pillar of the Community
United States
2335 Posts |
Refiners have always charged a percentage. That's not a new thing. The price of nitric acid has almost always been cheaper in Asia and Europe as shown by the chart. Refiners in North America didn't stop refining sterling when nitric acid was 56 cents/kg (36% higher) a couple years ago. In the most common method of chemical refining of silver nitric acid is the most used by volume and the most expensive chemical. Security issues didn't suddenly change in October when they stopped refining sterling. The only thing that has changed since then is the increase of silver lease rates from less than 1/2% to 30% or more. Lease rates increased due to demand. There's no doubt about that. They also became high enough that refining low % silver became unprofitable.
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Bedrock of the Community
United States
11880 Posts |
Maybe exploring why the lease rates increased would be helpful to you in figuring this out. They didn't increase because the sun rose from the east like it has every day for millions of years. Reignited global trade wars? That seems to fit the timeline of the runup in silver.
IN NECESSARIIS UNITAS - IN DUBIIS LIBERTAS - IN OMNIBUS CARITAS THE MAN IN THE ARENA, Theodore Roosevelt at the Sorbonne Paris on April 23, 1910: " It is not the critic who counts; not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." My coin website: https://fairfaxcoins.comEdited by numismatic student
12/31/2025 3:57 pm
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Bedrock of the Community
United States
11880 Posts |
Google AI:
Silver lease rates in December 2025 are primarily affected by a severe
physical supply shortage (a fifth consecutive annual deficit), driven by a combination of high industrial and investment demand, dwindling inventories, and supply chain disruptions. These factors have led to historically high lease rates, with spikes up to 39% at times during the year.
Key factors influencing silver lease rates include:
Persistent Supply Deficit: Mine production has largely been flat for a decade and is expected to remain so, while demand has surged, creating a significant structural deficit. Most silver is a byproduct of other metal mining, so higher silver prices do not immediately lead to increased production.
Strong Industrial Demand: Silver is critical for the renewable energy transition (solar panels), electric vehicles (EVs), AI, and data centers. This demand is price-inelastic in the short term, meaning manufacturers need the metal regardless of cost, putting pressure on available supply.
Dwindling Inventories: Physical silver inventories in major trading hubs like London, Shanghai, and COMEX have fallen to multi-year or record lows, indicating genuine scarcity of immediately deliverable metal.
Geopolitical and Policy Factors:
China's Export Restrictions: China's announcement of a stringent licensing system for silver exports starting January 1, 2026, has prompted pre-emptive buying and stockpiling, tightening the global market in December 2025.
U.S. Tariffs: The imposition of tariffs on imports from major producers like Mexico earlier in the year caused significant market disruption and a scramble for domestic supply. The U.S. Geological Survey (USGS) also added silver to its Critical Minerals List, highlighting its strategic importance.
Safe-Haven Investment Demand: Amid global economic uncertainty, high U.S. national debt, and expectations of Federal Reserve interest rate cuts, investors are flocking to precious metals as a hedge. This has led to massive inflows into silver-backed ETFs and retail purchases of coins and bars, locking metal away from the liquid market.
Logistical Bottlenecks: The metal in the vaults is not always in the form or location needed (e.g., large London bars versus retail coins). High refining demand has created backlogs, leading to temporary tightness and elevated premiums in specific markets.
These combined factors signal market tightness and genuine delivery stress, driving the high cost of borrowing physical silver. While lease rates have remained elevated, some reports in late December 2025 indicated a potential easing of the historic "squeeze" following a sharp price correction, though the underlying supply issues remain.
IN NECESSARIIS UNITAS - IN DUBIIS LIBERTAS - IN OMNIBUS CARITAS THE MAN IN THE ARENA, Theodore Roosevelt at the Sorbonne Paris on April 23, 1910: " It is not the critic who counts; not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." My coin website: https://fairfaxcoins.comEdited by numismatic student
12/31/2025 4:56 pm
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Bedrock of the Community
United States
11880 Posts |
This isn't a different perspective on silver. It is the same set of factors that everyone is currently looking at.
IN NECESSARIIS UNITAS - IN DUBIIS LIBERTAS - IN OMNIBUS CARITAS THE MAN IN THE ARENA, Theodore Roosevelt at the Sorbonne Paris on April 23, 1910: " It is not the critic who counts; not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." My coin website: https://fairfaxcoins.com |
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Pillar of the Community
United States
2335 Posts |
Those are all valid reasons why lease rates increased. It's also an entirely different conversation. The why is less important than the result. It's interesting to me that the last sentence of the Google AI clearly states that the squeeze will ease following a sharp price correction.
My position was and is that lease rates jumped causing refining low percentage silver to become unprofitable. That in turn caused dealers to substantially lower buy prices on sterling and "junk" silver while leaving sale prices high, leading to my suggestion that people avoid buying those items in case they have to liquidate in the short term. I don't follow the forum discussions closely enough to know if that's a perspective anyone else has mentioned. I have seen many members that are silver bulls talk about buying "junk" silver & thought that information might help someone else who's actively stacking.
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Bedrock of the Community
United States
10470 Posts |
As long as people are inheriting silver, desperate to pay bills, drug addicts, and thieves are concerned it doesn't matter how much under spot silver is being bought at, as long as they can cash in and get enough to support their needs. And I would bet these types of transactions are happening more than people would think.
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Replies: 11 / Views: 912 |
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Posted 12/31/2025 11:40 am
