Could I get somone with an education to decipher this response?

If you look at your broker statement, you will see a difference between the trade date and settlement date.

 

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DW-Coins & medoraman, OK, but that doesn't fit the definition of "well documented". It's anecdotal at best and is suspect in medoraman's case, 2nd hand as well. (based on guess of age) Given that, I would contend, as I have done consistently on this forum, that the events of 1980 have little bearing on what is happening today. It's an opinion that dealers might go to paying 50% of spot for silver, but that isn't a foregone conclusion.

I would also contend that we are not in a down market for physical bullion. Physical bullion buyers should always look at this as a long term investment and by almost any measure, we are in a bull market. If one's outlook on these metals is being measured in less than a year(s) yardstick, then one shouldn't be purchasing bullion. As the financial system continues to unravel like a ball of broken rubber bands, there are going to be short term eye watering gyrations in paper prices. It's irrelevant in the long run unless your investments are in said paper.

 

I was just throwing out an explanation of how Twinturbo's comment about liquidity is correct. Stocks cannot be turned into cash instantly. But in many cases, PMs can. It's a good idea to know in advance where and how you plan to sell PMs in the event this becomes necessary or desirable regardless of how much is owned.

 

LMAO if your selling to dealers who are only playing physical then your getting screwed over by some thieves and amateurs.
Look at apmex, tulving etc. all the bigger precious metals dealers, they play the physical game, and hedge it with the paper money game.
If they buy physical, they short the paper, sell physical, you go long on paper, at the end of each week, worst case scenario two weeks, you average out, any swings that occur don't effect you, your profit margin is based on the difference between buy sell. For example if I'm buying 90% at 21xfv, and selling 23xfv while playing the paper game as well, and I sell a $1000 FV bag, well jeez thats 2 grand profit.
Im a small time silver dealer and I play the paper game to average it out, I love buying during downs and ups, today even though market was in a tidy I purchased 100 ASE'S. 300 oz of .999 bars, and close to $800 fv in 90% and i don't have a storefront or anything.

As for shares it takes 3 days approval for any sale to take place, now if its privately held, it takes longer, if you own a significant stake (forgot the threshold percentage) it requires SEC approval for any sell off, and it must be made public.
If the stock takes a downturn or gets delisted which can happen very quickly, guess what not only could you not liquidate you paid for a bunch of worthless paper stock in a non-viable company.

On the other hand if you ever need to sell physical hit me up, I could care less for the price swings and all that crud. if your not getting at least spot for your gold your getting played. And at least $1.50 over melt on ASE'S
generic .999 rounds/bars go for $1 over spot, and are bought .50-$1 under spot.
Margins are tight but if you play it right you can't lose, you increase orders/amounts, you increase profits.

PS if you don't believe that stocks can get delisted, look into all the chinese stocks that got slammed this year and went to being toilet paper in a matter of hours. and yes they're listed on the NYSE

Correction "were" listed LOL

 

Your dealing with thieves, amateurs who don't know how to balance the physical and paper markets. these guys are crooks, and if they pay you 50% you deserve it for dealing with them, make an effort to find the bigger players and even smaller players who know how to leverage the market, its all about supply for us, the more the better, silver could tank to $6 tomorrow and I could care less my profit margin is the same, I would still buy at 90%
Read the above post and you will understand why...

 

Lets put it like this have you ever heard of russian roulette? you know blindfolded stab the knife between your fingers?
Leveraging is similar, you run your hands over a landline or IED, how many times till you blow your whole hand off? first time? Never? doesn't matter risks are too great, and as a military man to another you know what I am talking about, avoid leveraging, one bad play will cost you your life.

 

But only if there is still a relationship between the two. Physical PM and paper PM are not the same markets. You cannot really interchange them, bags of 90% cannot be made into paper, and most paper is not receivable, and in such a scenario wouldn't want to be anyway. If physical demand goes away, meaning the buyers have lost huge on their holdings and new demand simply isn't there, dealers who expect the market to decline further and cannot move what they have now, simply cannot offer such high prices for PM.

It very well could be that we will never again experience such a market, I am simply pointing out that physical PM is affected by forces that paper is not, and vice versa. They are NOT the same, which we have seen in recent years where dealers have increased their premiums if they believe the market is too low, or offered below market on price spikes. Do you know of any dealer paying much over 29x face when silver spiked to $49? I called national dealers and that is what they were paying. I was simply warning people, many of whom have not experienced a down market being new to PM investing, of what can happen. Just because the silver price is $25 does not guarantee you can exit your position for that, based upon these factors I listed.

Btw sir, were you a buyer and seller in the 80's? I was just curious your experience if you were. I have always loved silver, so always paid attention to what was happening at local coin stores and shows regarding prices. I was at the state show in the early 80's and all of the dealers were offering around 70% of market for silver, I think its a little unfair to say, "all of you deserved it". It was a different market than today sir, like I described.

Chris

 

I don't have the know how or disipline to play the leverage game. It reminds me of the online poker spinners. They would make millions of dollars playing high stakes online games, but would never cash out. The rush came from being in the game. Eventually they would play until reaching burnout and lose everything they had. I could see the chase for leverage money becomming an addiction. Like the other guy said, his friend made a killing the first year, and ended up washing dishes the next. The guy in the left of this video won and lost over 6 million in a matter of 3 weeks time. When his identity was uncovered, it turned out he was a 19 year old Sweede living with his parents.

[video=youtube;KEExq26bSrA]http://www.youtube.com/watch?v=KEExq26bSrA&feature=plcp&context=C2fd57UDO EgsToPDskIZ0074kMgzhFltL9UnJw-U[/video]

 

Certainly futures (paper) can detach from a commodities physical (cash) market. Call it anecdotal if you want but I can give you an example of such as case happening not long ago this year. Back in early June rice current futures was trading at around $14.80 cwt on the board while the cash price being offered for physical delivery to the big boy’s facilities was just over $9.00 per cwt.
Why such a big spread you may ask – well the big boys just didn’t want to enter into any new contractual obligations at the time. The flood on the river had taken a significant amount of elevator capacity off line. Even after the flood waters receded most of the capacity had to be rewired. Also barge traffic was backed-up due to the fact the Mississippi River was closed into New Orleans for a period of time. So empty barges were also in short supply. The winter wheat crop was going into harvest and what elevator and barge capacity that was available had to be diverted here to cover and handle their standing contractual obligations for this crop. So basically the cash price you were receiving for a new contract reflected a normal profit plus the cost of default of a standing contract plus a great big nuisance fee.

 

Let me explain this to you in simple english since you dont understand...
When you purchase physical your essentially betting that silver will go up. Same with paper if i buy then im betting it goes up if I short or sell physical im betting it goes down.
So what smart dealers do is if they buy 10000 oz of silver, theylll short the papermarket.
If they sell off physical then they go long pn the papermsrket. Your essentially betting ot will go up as well as down.
Sounds retarded but it balances and allows me to be non-vurnable to price swings. Lots of dealers do it.
Physical and paper always move opposite largely.
Where were you When silver was $49? I couldnt get enough and I was paying 33xfv

 

Are you kidding me? For most coin shops and such making a single transaction which produces enough scrap silver to back a futures contract is a once in a lifetime event. I am not sure many such businesses purchases enough scrap silver in a month's time to back a 5000 ounce contract.

 

I understand perfectly well what you are saying. You are the one not understanding that I am telling you that this action MAY NOT protect you, and to say it will always do so is a fool's paradise. They are two different markets, and most of the time will move similarly since one references the other, but I have simply laid out times in which they haven't. I already assumed as common knowledge what you are trying to say I cannot comprehend.

You are talking about a trading position to minimize market risk, and what you describe is simple and will take most of the risk out most of the time. However, most here are PM holders, not traders, so your trades wouldn't help them anyway. My only point is that PM physical pricing can, and has, deviated from paper pricing in the past. They are two markets, related, but not the same.

Chris

 

Trading the futures market to offset your business in order to eliminate losses and thus play the spread seems to be common practice with the big bullion dealers. However the MF Global situation left all their customers doing that up a creek without a paddle. That's why Ann Barnhardt shut down her cattle futures business the very next day. It's a smart way to do things, but with such a market precedent it's far too risky of a play for a lot of people. It's all fine and well until it happens to you.

 

Me thinks Twinturbo doth protest too much....!

 

At this time - I consider MF Global to be more on the level of an extraordinary event.

 

While I hope you are right, I suspect you are wrong. Take a look at http://newsandinsight.thomsonreuter...d_the_great_Wall_St_re-hypothecation_scandal/ where they state:

Goldman Sachs has re-pledged $18.03 Billion,
Canadian Imperial Bank of Commerce re-pledged $72 billion,
Credit Suisse sold or re-pledged CHF 332 billion of assets,
Wells Fargo re-pledged $19.6 billion,
JP Morgansold or re-pledged $410 billion, and
Morgan Stanley re-pledged $410 billion

 

I think twinturbo makes perfect sense. If you are a business person and you have to make capital purchases to stay in business (physical PMs) then you will want to do it when prices are down. The notion that dealers won't pay decent prices for silver in a down market is nonsense if you accept that simple business concept. They will pay decent prices because it makes business sense to acquire this capital when prices have dropped. You don't do this by thumbing your nose at the silver sellers and only offer them 50% spot.

 

You do if you are in a market where PM has been going down steadily, most of your customers had lost a lot of money on PM and were no longer buying, and your expectations are for further declines. In any such market, I don't care if its PM or not, how strong would the buy prices be? Turn it around and go back to when silver dropped below $10 a couple of years ago. Did ANYONE manage to physically buy at that price? I went to a large show then and the sell prices were all still predicated on $12-14 silver. The dealers expected the paper market to rebound, (correctly), and had strong sales of bullion at higher prices, so they did not need to lower their physical prices to the paper market. Look at when silver spiked to $49. I called Kitco and other national dealers and asked them their buy price, it was 29x. I was looking to sell a few thousand ounces at the price of the paper market, but all of the dealers were trailing it. Why? Because they expected, (again correctly) for it to correct. Let's say we have a meltdown in Europe and on US debt, and everyone starts running to the local coin store to buy bullion. Do you really think, if people are beating down his door to buy, and no one is selling, that the dealer would not charge well above the paper market? These are the recent situations that prove to a smaller degree what I said about what happened in the early 80's, that the physical market does not always track the paper market. It can be higher or lower, depending on a lot of things like dealer sentiment, physical supply, dealer sales volume, etc etc. If a person is unlucky in his timing when he needs to get out, (or conversely he could be lucky and sell into a great market), its possible he may not get what the paper market is saying minus normal discounts. That's all.

What twinturbo says makes sense, and would work maybe 95%, 98%, or 99% of the time, IDK, but my only point is its not a perfect relationship between the two. Anyone who has been around the physical market for a long time knows this.

That's all.

Chris

 

Opinions and unverifiable anecdotes are not counters to a sound business argument. Backing the case by saying "Anyone who has been around the physical market for a long time knows this." is a red herring attempt to discredit the party making the argument. It would be nice if you actually discussed the point made instead of using these kinds of tactics.

My money is with Twin-Turbo's very sound approach.

 

Have a nice day, I am sorry I unblocked your posts.