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Dyes were added in 1.2 not 126.96.36.199. Just covering myself in incase comments arise. To get the Silver Dye you simply need to get a Dye Trader in your world. He'll sell you Silver Dye for 1 Gold a piece and it makes alot of armor/clothes look quite good!
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Silver Dye can be bought from the Dye Trader for 1 Gold coin. It can be placed in the Dye Slots...