Excerpts from an AI chat.

*”I just want to understand how 80% to 90% dore bars and or concentrates is more profitable to refine that the higher silver content of sterling silver?”*

It seems counterintuitive, but for an industrial refinery, the

purity percentage is less important than the chemistry of the impurities and the volume of the contract.

Here is why 80% mine dore is more profitable to process than 92.5% sterling silver scrap:
1. The “Cleanliness” of Impurities
  • Mine Dore: The “impurities” in gold/silver dore are typically just the other precious metal (e.g., a gold bar with 20% silver). These are easy to separate using standard electrolytic cells or the Miller Process at large facilities like the Royal Canadian Mint.
  • Sterling & Coins: These are intentionally alloyed with copper and other base metals to make them hard. Removing large amounts of copper requires massive quantities of nitric acid and creates hazardous chemical waste that is expensive to neutralize and dispose of.  
2. Predictability vs. Sorting Costs
  • Industrial Scale: Mining companies provide uniform, massive batches (bars weighing 50–100 lbs) with a known chemical profile. A refinery can put these straight into a furnace.
  • Scrap Chaos: Sterling scrap includes forks, jewelry, and coins. This material often contains solder, plating, or stainless steel springs (in watch bands or clasps). These “contaminants” can ruin a multi-million dollar batch of silver if not manually sorted out first, making the labor costs at refineries like Asahi prohibitively high for scrap.
3. Financial Velocity (The “Float”)
  • Lease Rates: Refiners don’t usually “own” the metal; they “lease” it to maintain liquidity. Because scrap takes longer to sort, melt, assay, and chemically strip, the refinery has to pay high silver lease rates for a longer period.
  • Turnaround: A refinery can process mine dore and get it back on the market in days. Scrap can sit in “work-in-progress” for weeks, eating all the profit in interest charges.
4. Contractual Stability
Miners sign multi-year exclusive contracts that guarantee a steady stream of business regardless of the market price. Public scrap is “fickle”—it only floods the market when prices are high, which is exactly when refineries are already at maximum capacity. Refiners prioritize their consistent mining partners over one-time scrap sellers.
*It appears that this type of information, if it would become widely understood by the investing public, would be very disruptive to those precious metal coin and bar dealers wanting to sell those products to public.*
You’ve hit on a major “hidden” risk in the physical metal market. If the public realized that their “highly liquid” silver assets could face a 3-month wait or a 20% haircut during a price spike, the

“buy-and-hold” narrative used by dealers would be severely challenged.

Wide public understanding of these bottlenecks would be disruptive for several reasons:
1. The Collapse of the “Spot Price” Myth
Most retail investors believe Silver Spot Prices represent what they can get for their metal. In reality, during a refining glut, the “bid” price from a dealer often disconnects from spot. If investors knew that refining capacity—not just market demand—dictated their exit price, they might opt for Silver ETFs (like SLV) or PSLV which trade based on institutional-grade bars that never need re-refining.
2. Disruption of the “Junk Silver” Market
For decades, 90% “junk” silver coins (pre-1965 US quarters/dimes) have been marketed as the ultimate survival currency. However, as you noted, these are the first items refineries reject because they are low-purity (10% copper). If the public understood that these coins are the least desirable feedstock for a refinery in a crisis, the premiumsdealers charge for them would likely evaporate.
3. Dealer Inventory Gridlock
Most local coin shops rely on a “turn-and-burn” model. They buy from the public and sell the excess to wholesalers or refiners to get cash to buy more.
  • The Trap: If refiners stop taking scrap, the dealer’s cash is “locked” in physical silver they can’t move.
  • The Result: Dealers stop buying from the public entirely, or offer “low-ball” prices to compensate for the risk. This creates a liquidity trap exactly when investors are most desperate to sell and lock in profits.
4. Shift Toward “Primary” Products
If this bottleneck became common knowledge, savvy investors would likely shun sterling and junk silver in favor of .9999 Sovereigns (like Canadian Maples or American Eagles). These products are easier for refineries to “melt and recast” without complex chemical stripping, making them more liquid in a stressed market.
The “Silent” Counterparty Risk
The investing public generally views silver as having no “counterparty risk.” However, the refining industry is the ultimate counterparty. If the “pipe” is too small for the “tank,” the physical metal becomes an illiquid commodity rather than a liquid currency.
*Got gold?*