Over the weekend I was looking around in the ebay. I was really surprised what buyers were paying in price for single to ten count one ounze bars, and five ounce bars when the shipping and prices were added in. I'm a little baffled at their total price and the price silver would have to be at for just a break even scenario. I'm not sure what the fees are at ebay these days, but I don't see where this is a big bonanza for the sellers either. That is after they pay all the ebay fees and Paypal. I guess if they have had the bullion for a long time when the price was down they would do okay, but it seems to me they could do better somewhere by shopping around to sell. It didn't appear to me they were low profit offset by high volume sales. Am I missing something here?
Eh...I'd say all you're "missing" is the context... What you're seeing is, imo, the last sign of the impending pullback, or bubble burst, or correction, or whatever you wish to call it, of the price of silver. It happens EVERY single time either PM makes a wild run to exciting highs. There is, imo, a pretty well defined "process" by which silver does this...and the last few steps seem to ALWAYS be: Craigslist starts going nuts Ebay starts going nuts The dude/chick at work who normally won't speak to you starts asking your advice because (s)he heard silver's going up, and wants to get in on the action, and "everyone says you're the silver dude" Those last two usually seem to happen within 24 hrs of each other ime...and signal that it's time to get out while the getting's good. ============ Just for the record... Saturday, craigslist in my area had over 4 TIMES as many ads mentioning the word "silver" as it normally does You saw what you saw on e-bay And guess what happened to me at work today? Gee...anyone seen the price of silver today. *heh*
If I understand what you are saying then to you silver is overpriced or close to being overpriced riding on a bubble that is soon to burst. I'm certainly not knowledgeable enough to say you're wrong, but there are some factors I think one may consider regarding this. The stock market crash of '29 was based purely on speculation with stocks way over bought. If I can remember what I read in '29 before the crash RCA had a P/E ratio of 70 to 73 and Montgomery Ward was around 60 or so. Again as far as I know this was all based on pure specualtion. From what I read people were borrowing as much as they could to put in stocks. This debt that could not be repaid influenced the deepness and length of the Great Depression. I'm sure we all remember the ".Com" bubble a few years ago, again this was based on pure speculation. People who had no idea what were doing were jumping in and I know a few people who lost everything they had becoming "professional" daytraders. Then we come to the real estate debacual we are now in . IMO this occurred for two primary reasons. First, speculation by many that did not have the financial resources to weather any storms in the market. Second, backed by many in Congress, giving mortgages to people that never should have gotten the loan in the first place. I will say for those buyers it was the idea of home ownership that drove them to purchase, not greed or speculation. After saying all this I finally get to precious metals. I have to say to me they really have some concrete factors other than just speculation to support these prices. Off the top of my head these would include: 1. The economy is in bad shape. People are bombarded daily with bad news or good news they don't believe such as the recession is over. 2. Too many people have burned too many times in the stock market coupled with many thinking it is all rigged for the rich. 3. People don't have faith in the banking system as they did previously. Our banking system appears to me as operating as a speculative operation. 4. The lack of faith in our government, unhappiness with our elected representatives, and our national debt. 5. A feeling of no place better or safer than precious metals to put there money. Of course there are speculators out there, but I think, and may be wrong, people are trying to protect what they have. I'm sure it has occurred, but I haven't read of people doing a lot of borrowing to buy precious metals. I think the precious metals will certainly have ups and downs, volitility will occur more likely with silver than gold. But, silver also appears to be more affordable to many rather than gold. There are sound reasons to me why people like me (Joe Snuffy) own precious metals.
I think your assessment of Ebay silver sales is correct. I recently sold thirteen silver eagles at auction, and though they all brought in a good price, after shipping costs, pay pal and ebay fees, I just barely broke even. However, I was okay with that because I'm using the money for an upcoming coin show. So this was my way of trading. I guess that I might have done better just taking the ASE's to the show and making trades, maybe I will try that sometime.
That is a correct assessment of my position, as far as it goes. More below. I'd be inclined to agree with the basic idea here. I'm sure many of us could discuss the Depression at great length (and likely have) elsewhere...suffice to say, however, in the context of this thread/forum, we agree here. I was a heck of a lot closer to this one than any of the others, as I worked in the industry (indeed, for one of the companies that exploded, and later fell apart, as part of the tech rush) AND was heavily invested in the tech sector at the time. Thankfully I was also lucky enough to recognize the .com boom for what it was, and get out just in time. I think this one is probably the "most typical" of what you're saying. Very specifically what drove me out of a tech mutual fund was researching Fidelity's "40 Top IPOs of the next 6 months" one day. I was baffled to learn that of the TOP 40 upcoming IPOs, according to Fidelity, 38 of them had LOST MONEY the previous year. That could not, i thought, be justified by ANY sort of rational thought. Businesses are in business to make money. That's their sole purpose in life. When 95% of the supposedly "most promising" ones Fidelity could find had FAILED TO DO THAT, one HAD to wonder what was going on. Thankfully, I saw it around me every day...business leaders throwing tens of thousands of dollars at "technology", without having a clue why they were doing it, or what to expect/demand in return. It hit me that this was a microcosm of the market...people were throwing money at anything "cool" without knowing why. It made for a market that HAD to collapse. I had no idea when, nor any clue how to figure out when, so I figured the fund had made me quite a bit of cash, I'd do as the Eagles suggested. Blind dumb luck made my decision an incredibly timely one. Anyway, if i'm reading you correctly, that's what you're saying about the rest of these bubbles...that people are/were throwing money at things because they're the cool things to throw money at, without thinking about why. Yep, and yep. the wife and I were offered WAAAAYYYY more house than we needed, or could RATIONALLY afford, when we bought 10-ish years ago. Thank GOD my mother had taught me well in my youth, when she made her living as a real estate agent. One of the lessons she passed along was that a house isn't valuable because it's a house...location, construction, and suitability matter over the long term. Bless her, as we sit today in a house we MAINTAIN a great deal of equity in, on a fixed rate mortgage payment well within our means. You are dead on, however...again, a market built upon a false idea (housing will always go up!) that made throwing money around the "cool" thing to do. While we might quibble on a few of the details, we're essentially in agreement. I agree that there are solid market factors that support PM at record prices for the long term. HOWEVER, I would submit that there are also concrete market indicators that suggest that SILVER, right now in the SHORT term, is EXACTLY what the markets we discuss above are...oversold on hype. 1) Look at the volume. It's spiked to UNHEARD of levels in just the last 3-5 days. Record volumes are ALWAYS the result of a mad rush by the latecomers to the party, and NEVER sustainable. To use one of your own examples, take a look at the number of new mortgages written in 2007-2008, compared to 1998-2002 or so. for example. 2) Take a look at the link earlier in this thread. LINES of people, desperate to dump vast amounts of physical silver onto the street, like we haven't seen for 30 years. People that, 4 or even 2 weeks ago probably couldn't have told you how much silver, if any, they even HAD. 3) History. Pick any month in silver's history (or gold, for that matter) that has seen the same percentage increase as this September did...and then check the price at the midpoint of the following month. =================== Do I think silver will "crash"? No....for most of the same reasons you mention. We might quibble about details here and there, but fundamentally silver's price will always benefit from heavy handed and short sighted government interference...and there's not likely to be a shortage of that any time soon. I do however think that the CURRENT price of ~$22, AT THIS TIME, is simply a function of a legion of neophytes rushing to join the party because "OMG! SILVER'S EXPLODING! JUMP ON THE BANDWAGON BEFORE IT'S TOO LATE!" IME, by the time the public is frothing at the mouth...it's already too late...and "serious" investors A) Have a BUNCH of physical silver on hand (see the PM field report) B) Will quite happily sell it to the latecomers $20-$22 an ounce all day long. I said 2 weekends ago when asked at a flea market...I expected $23 an ounce this past week, and $19.50 this week. I stand by that. I think silver will hold on to SOME of the gains it made in Q3, for exactly the reasons above...but I also think, at the MOMENT, it's well overhyped. So...like you, I (another Joe Snuffy) will continue to own silver and gold...but I'm quite happy to make a few bucks on this current run as well, since I don't think we'll see such a high SHORT TERM potential again for quite a while.
One thing that is always easily forgotten about silver is the lack of a legit substitute for it in industry. Silver continues to constantly reinvent itself in industry. As the demand for it in photography decreases....the demand for it in reflective coatings has increased. The future of silver is brighter than the metal itself. Its well known anti bacterial properties are being utilized in new state of the art devices in hospitals as well as many water purification systems. It is superior to lithium ion batteries as it holds a charge for far longer.....and the list goes on, but my typing does not because I`m tired and hungry. (I won`t even get into the investment potential of it) Sure silver could dip back to $19.....but gone are the days of $15 an ounce. I could kick myself for not going at a frenzied pace back then like I so often pondered, but the past is past and I have no intentions or REASON to stop pulling the trigger on silver anytime soon.
Agreed. Like I said...I'll continue to buy and hold silver until I see some compelling reasons not to. I'm just going to use some "spare junk" as it were to pad the Christmas fund a bit here on this run, and figure it's just about time to do so. I suppose to clarify, I think laying back bullion for the long term is a sound move. I also think that the last couple of months have been a rare opportunity to make spectacular profits in a very short period of time, and that THAT opportunity is nearing an end.
I sold a few quarters recently and got a little better than 15x face + shipping. It's better than me selling to a dealer even after the fees. I used that money to buy supplies and computer gadgets. When prices drop, I will buy some Silver lots. Break even is great ! But not all trades must show a profit. Just a return great enough to keep my hobby alive.
