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Succinct, thanks for this info

Posting this with permission of the dealer who wrote it. Some food for thought on the dealer side of buying silver.

Why we pay less than spot price (plain English)

I’ve been buying and selling precious metals since 1980, and the most important thing to understand is this:

Spot price is a paper price — not the price anyone actually gets paid for physical metal.

Here’s why.
1. Refiners are businesses, not charities
Refiners do not process silver at razor-thin margins. In normal markets, refining and handling costs for silver often work out to several percent, and in stressed or volatile markets those costs can easily rise into the high single-digit range.
If refiners didn’t charge enough to cover costs and risk, they wouldn’t exist.

2. Silver leasing and financing costs are real
Most large refiners are backed by banks. Those banks charge lease or financing fees for the silver while it’s being processed.
When markets are tight, lease rates rise sharply. Even a few dollars per ounce over several weeks adds up fast.
If refining takes:
6–10 weeks (which is common right now due to backlogs),
the financing cost alone can materially reduce what the refiner nets.
That cost comes out of the chain before anyone makes a profit.

3. Refiners have massive overhead
Refining silver isn’t melting scrap in a garage. Refiners must pay for:
Electricity (very expensive)
Water and sewer
Insurance
Payroll
Environmental compliance
Local, state, and federal taxes
Licenses and permits
All of that is built into the price they pay for metal.

4. Volume requirements and price risk
Many refiners require 1,000 ounces or more to lock in pricing.
If we buy silver but don’t yet have enough volume:
We take all the price risk
If silver drops tomorrow, we absorb the loss
The seller has already been paid
That risk has value, and it must be priced in.

5. Margins widen when markets are volatile
In calm markets, the spread between spot and physical transactions might be relatively tight.
In volatile markets — like we’re in now — spreads always widen:
Financing costs rise
Backlogs grow
Risk increases
That’s not greed — it’s survival.

Bottom line
Spot price is just a starting reference, not a payout price.
Between refining fees, financing costs, operating expenses, delays, and price risk, everyone in the chain has to make a profit — or the business simply doesn’t work.
We’re not paying under spot to take advantage of anyone.
We’re paying a realistic, sustainable price that reflects what it actually costs to turn metal into money.
That’s the honest explanation.

I was watching silver stackers last night on you tube, coin store was saying the smelters wont buy any 90% right now and they are not paying for bullion that they do buy, for sometimes months. Coin shops are being put in a cash flow vice. As customers we don't always see the whole picture that businesses face. Also Washington just passed a 10% sales tax on silver and gold. Customers are going out of state to buy to save 10%. Store will close. Most politicians are ignorant of what it takes to run a business.

Not sure what silver will do…but when I went to sell some Morgan and peace dollars to my LCS they said that they would only pay $35 a piece for them. At the time they melted for $70. Need less to say I walked out the door with them.

Tough to find Hudson’s like this. Congrats

Congratulations on the new addition!

Killer coin.