The ability to determine the melt value of a coin in terms of its silver content plays a vital role in any successful silver investing strategy. The reason being is because it’s easy to overpay or to miss out on an opportunity to buy silver at below melt value if one isn’t in the know. It should therefore be important to silver investors, especially those who have developed a liking for silver coins, to know how to determine the melt value or intrinsic value of the silver contained in a silver coin(s).

For all practical purposes, we’re going to focus only on how to determine the melt value of silver contained in silver coins or coins containing silver. It’s after all no secret that most silver coins are normally made up of a silver alloy that consists of silver and other metals such as copper. We are however only interested in the value of the silver. This is not to say that a metal such as copper is not valuable, it’s rather to say that the successful silver investor prefers to focus on silver and silver alone. The value of copper and other metals used in a silver alloy, besides silver, although not determined now will be an added bonus at the end of the day.

What is the melt or intrinsic value of a coin?

The melt or intrinsic value of a coin refers to the value of the metal (copper, silver, etc.) contained in the coin. E.g. the silver melt value of a coin refers to the value of the silver contained in a coin.

What info do I need to accurately determine the melt value of the silver in a silver coin?

Metal composition, total weight, silver price and conversion factor(s).

You need the metal composition, total coin weight, silver price and conversion factor(s) in order to accurately determine the melt value of the silver in a silver coin. Metal composition refers to the ratio or proportion of a metal in relation to another contained in a coin and is normally expressed as a percentage (%). E.g. the metal composition of a silver coin can be 90% silver and 10% copper. The total weight of the coin refers to the weight of the silver coin in its totality and is normally expressed in grams. The silver price refers to the spot price of silver and is normally expressed in troy ounces or troy ounce (t oz / ozt). This makes it necessary to convert to grams when determining the exact melt value of the silver content. This is done by multiplying the silver price by a conversion factor of 0.0321507466 in order to make the conversion to grams. Depending on the info or data which are available, more than one conversion factor might have to be used.

In other words, metal composition, total coin weight, the silver price (spot price of silver) and a conversion factor(s) are the info that’s needed to accurately determine the melt value of the silver contained in a silver coin.

Troy weighting system…

The troy weighting system was originally used in Troyes in France to measure the weight of precious metals such as gold and silver. The troy ounce (t oz / ozt) is however the only measure of the troy weighting system that is still in use today.

1 troy ounce (t oz / ozt) = 31.1034768 grams

1 troy ounce (t oz / ozt) = 0.0311034768 kilograms

1 troy ounce (t oz / ozt) = 480 grains

1 grain = 0.06479891 grams

It’s important for the silver investor who wishes to accurately determine the melt value of a silver coin to know that 1 troy ounce of silver is equal to 31.1034768 grams of silver (or that 1 gram of silver is equal to 0.0321507466 troy ounces of silver). On the other hand, for rough estimates, it’s sufficient to know that 1 troy ounce of silver is equal to more or less 31 grams of silver.

More than one way to skin a cat…

An old saying has it that there is more than one way to skin a cat. The same notion applies to determining the melt value of the silver in a silver coin.

Accurate estimate

The silver investor, especially the silver coin investor, who wishes to accurately determine the melt value of the silver in a silver coin, can do it by using the following formula:

Silver Price (t oz) x Ounce/Gram Conversion Factor x Total Coin Weight (grams) x Metal Composition Factor (90% expressed as 0.90, 80% expressed as 0.80, etc.)

E.g. metal composition = 90% silver (0.90), 10% copper (0.10), total coin weight in grams = 14 grams, silver price (spot price of silver) per troy ounce = $18 per troy ounce and ounce/gram conversion factor = 0.0321507466
 
Thus, $18 x 0.0321507466 x 14 grams x 0.90 = $7.29

In other words, the accurate melt value of the silver contained in the relevant coin is $7.29. This is the value coin dealers normally use when selling silver coins at melt value.

Rough estimate

The silver investor can also choose to make a rough estimate of the melt value of the silver contained in a silver coin by assuming that 1 troy ounce of silver is equal to more or less 31 grams of silver:

Total Coin Weight (grams) x Metal Composition Factor (90% expressed as 0.90, 80% expressed as 0.80, etc.) x Silver Price (t oz) ÷ 31

E.g. metal composition = 90% silver (0.90), 10% copper (0.10), total coin weight in grams = 14 grams, silver price (spot price of silver) per troy ounce = $18 per troy ounce and ounce/gram conversion factor: = 0.0321507466

Thus, 14 x 0.90 x $18 ÷ 31 = $7.32

In other words, a rough estimate of the melt value of the silver contained in the relevant coin is $7.32.

Small difference…

It should be clear from the answers obtained by using the formulas recommended by Silver Bullion that there’s a difference of less than 0.5% between an accurate and rough estimate of the melt value of the silver contained in the relevant silver coin. This difference is small enough to allow the silver investor, especially the silver coin investor, to make an informed decision in spite of the formula used.

Be sure to make use of the online calculators located here to determine the melt value of the silver contained in official silver coins.

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