The simple answer is that they sold them to merchants in their home ports.

In the seventeenth and early eighteenth century Caribbean there were several ports that functioned as centers of piracy. The most famous of these were Port Royal in Jamaica and Tortuga (La Tortue, in French) off the north coast of Hispaniola. There were several others, including Bluefields on the Mosquito Coast, the island of Providence (Providencia, in Spanish, sometimes called Old Providence) in the southwest Caribbean, the island of New Providence in the Bahamas and the Dutch ports of Curaçao and Sint Maarten.

Merchants in these ports stood ready to purchase pirate booty, plundered from Spanish merchant ships. However, significant amounts of plunder were in coin, which, after redistribution to the pirate crews, went into circulation in the shops, bars and brothels of the port. Some was invested, the Welsh pirate, Sir Henry Morgan turned the wealth he obtained from looting Panama City in 1670 into sugar plantations in Jamaica worked by enslaved African labor. Goods, including bullion, were purchased by merchants. From the late seventeenth century into the early eighteenth century, the British, French, and Dutch in the Caribbean suppressed piracy, with the last significant port, on the island of New Providence, put out of business in the 1730s.

The largest quantity of booty taken by pirates, however, was the seizure of the Spanish silver fleet in 1628 by the naval forces of the Dutch West India Company under the command of Piet Hein. The silver produced a 75 percent dividend for the company’s shareholders. (Most of the company’s business came from trading slaves, the capture of the Spanish treasure fleet was a product of the Dutch War of Independence [Tachtig Jaar Oorlog, in Dutch].)

The point of that last, and I have buried the lede a little, is that the boundary between the categories of “merchant” and “pirate” is somewhat fuzzy. So is the boundary between “pirate” and “official.” Henry Morgan was knighted and made lieutenant-governor of Jamaica for his success at harrying Spanish commerce and plundering an entire city.