I was warned by a former investor that once we saw silver start to change in prices between paper and physical that we are in serious trouble. Right now I am seeing an oz of silver online go from $47-49 while the spot is $41.32. I also went to two of my local coin shops (3rd was closed for some reason) and they both had "raised their premiums" to $7 an oz, for generic!! (selling at $48.60). They are usually only selling about 4-6% over spot for generic… but about 17% over spot?!! Both dealers also told me that physical silver is getting scarce and the value isn't going down, the value of paper holdings are dropping. The spot price shouldn't be falling like it is. If there is any bubble it is not in physical silver but in paper. The real value of silver is in physical, not paper. I am not convinced by these charts as they are not accurately indicating the buying price of silver. At least not for me. Anyone else run into this when they thought they would buy some? Someone smart explain this to poor ol' me please.
This worries me. I just dont know what to do. I want it to fall alittle bit more so i can buy up more silver but not if people are just gonna up there premiums. I should just buy now before they do that... im on the edge of buying more now or seeing what tomorrow brings...
Just saw this article at the wall street journal.... called "Silver's Real Problem" http://online.wsj.com/article/SB10001424052748703922804576301363986445634.html But like you pointed out, the lack of a reaction in physical silver's price vs spot price is really weird... rising premiums and people on ebay still buying at a strong $47-48 per oz auction after auction shocks me... is everyone that optimistic that silver will rally back to the $50+ zone? That seems like a wild guess at this point, and I don't advise the blind to follow the blind like that.
I read that physical silver may soon cost twice the amount of spot price! How ridiculous would that be?
I was able to find prices at around 42.00 an oz but alas that website was... SOLD OUT! I am so glad I started actively buying again when I did. About a year-year and a half ago.
You guys ever see the movie "The Producers" (the original one with Gene Wilder and Zero Mostel)? That's the difference between "paper" and "Physical"......
Take a good look at the online retailers. The premiums they're getting for the actual product far exceeds the spot price for the paper stocks for silver, and the spot prices. Many of the customers are not standing for delivery for the futures contracts, they're taking cash with a % over the contract without taking delivery of the actual metal. Take another look at the 1oz items without the huge premiums, many of them have delivery dates for the end of May, or delayed delivery. Why would they take less of a premium for the actual goods than what people are paying? Heck, even some of the items with a ridiculous premium are selling like water in the desert, again why would they take less for the physical product when the demand is there.
The demand for physical is absurd.. and yet the spot prices have come tumbling down. The fact they won't take less for physical silver goes along with everything I was pointing out. If demand remains for physical premiums could skyrocket and people will continue to buy way over spot. Even then, it really is the demand for silver and the amount at which it is going for over premium that gives it its true value. COMEX is running out of silver and I don't believe the spot price can be taken as anything more than the value of paper silver. I think times are going to be changing as soon as the COMEX runs out.. and they will. From ZeroHedge: http://www.zerohedge.com/article/another-decline-registered-silver-brings-total-comex-physical-multi-year-lows That is a 62% drop in physical silver over the last 2 years!
The spread you are seeing is due to dealers basing their sale price on cost. If this is a sustained dip in silver all that is going to happen is these dealers will get stuck with a bunch of high priced silver inventory.
there are ALOT of weak hands selling on ebay right now. ive picked up 65 oz from ebay on this dip, all eagles and maples for an average of $44.13 a pop after the rebates.
^This. I would not read too much into the fact that dealers bought at X and want to sell for X+y. The early 80's were full of overpriced silver from dealers wishing to sell what they paid for it. I have said all along, before the current runup, that we will have to wait quite a while after any silver dip to actually be able to purchase based on spot again. Physical PM's are an inefficient market, with high acquisition costs and high deacquisition costs. Therefor the best strategy in such a market is long term buy and hold to minimize transaction costs. These serious market deficiencies are one of the reasons the paper market was created in the first place, to discover a price free of all of this inefficiency. A way to think of PM dealers is like a gas station. If the market goes up today they want todays price on their silver. If the market goes down they want what they purchased it for. Either theory is correct, but they want both halves of both theories when it benefits them. Short answer, since I am long winded, physical price will always diverge from market price in fast changing markets because human psychology and dealer profit margins are involved. I would be very leery of reading anything further into it.
I wouldn't buy from any dealer that openly tells me that, because thats a sure sign they aren't honest. Silver is more plentiful today than it ever has been. What they meant, but aren't going to say to you, is silver isn't at the prices they want to pay, and until they unload their other silver that they just took a loss on, but hope to make it up by telling you "it's hard to come by so you better buy at these inflated prices even though it's dropping", they aren't going to be getting more in until they can buy below melt and sell above. Make dealers be honest or take your business elsewhere. I for one don't play these games with them because I'm not an uneducated, bandwaggon jumping bullion investor, and they hate to see me coming. But, when this fad dies, like it always does, guess who they'll have to deal with in order to make a living? Not investors, but me. Guy
Apples to apples: compare the prices for taking delivery of 5 1000-ounce bars to the price for a futures contract. Tulving has 1000-ounce bars you can drop on your toe for overnight delivery at 49 cents per ounce over spot.
