Silver prices

Ok, so I am new to buying silver. I have tried to begin looking for pre 1965 quarters as I have been told this is the easiest way to start. I have also been looking at buying silver bars and such. Here is my question: I have looked up the current silver price and done the math (correctly I believe) and determined that at current prices, 1 gram of silver is worth about $1.01, and 1 grain of silver is worth about $0.07. However, on places like Ebay, I am seeing 1 Gram bars selling for $6 - $9, and people are actually buying them. Is this common? Seems like it would be hard to justify silver as an investment if you are buying it at 6x and 9x it's value.

I apologize if I am asking out of ignorance, I'm sure I have alot to learn, and I thank you in advance for your input and information.

Kyle

 

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People seem to pay up on ebay for fractional PM. I don't know why but I suspect it is people paranoid that the end is near and that they want to barter with smaller amounts of PM. 90% Ag US coins would seem to be an easier way to do this if you ask me.

 

Kyle: The key is to buy as close to spot as you can. Premiums are typically inversely related to weight of the coin/bar. If you save up and purchase larger pieces, you usually will save on the premiums. TC

 

Your price indicates that you are using the avoirdupois ounce ( 28.35 grams per ounce) rather than the troy ounce that precious metals is measured which is 31.1 grams per troy ounce.

the huge premium on smaller amounts exist because the retail customer will pay it, and many do not know how much a gram really is. The expense of making a sale ( time, etc) is the same, but the relative proportion of cost is much higher for small amounts.

 

eBay is definitely on the high end typically, but it is also a truer market gauge because that's what people are willing to pay even if it is a reflection of ignorance to a degree. The big metals dealers hedge their positions so they will sell metal for a loss and don't care since their profits are only on the spread, and is not a true reflection of price being driven by demand. I prefer to take advantage of this disparity while it lasts.

Pre 1965 quarters are a great way to start. Be careful with bars and generic rounds because there are counterfeits out there. Government issue bullion coins such as American Silver Eagles, Canadian Maple Leaves, Austrian Philharmonics, etc. are more reliable because the dimensions are consistent and more commonly known.

 

I agree with the second part.

For the first part, first you are saying Ebay is high, but then turn around and say its more of a fair market price than the big dealers? I simply do not understand how it can be both. IMO, Ebay is about 9% too high due to the fees associated with selling there. Why, Inflexion, if the major market makers for a product charge XX, and sell a lot of it at XX, is higher prices at a site like Ebay, (somewhat similar to HSN or Littleton), the "true" market? Its like saying Littleton catalogs sets the market prices for coins.

 

I think people that can't buy an ounce of silver or gold buy these tiny novelty bars thinking " a little precious metal is better than none. " In reality they are paying way more per ounce than the metal is worth.

 

I originally bought into silver buying American Silver Eagles and they are good buys just try to get them as low a price as possible.
also another thing to look into also is buying limited mintage coins like lunar series and the canadian wildlife series and pandas too...but the key to it is to buy in at the beginning when the premiums is fairly low...

I bought 2011 pandas for $41 each and they just don't sell on ebay for under $45 same for 2011 year of the rabbit perth mint coins I bought in before the premium got up there and I bought canadian wildlife cougars, bears and wolves for at most $2.99 over spot and am in the black on these as well if I chose to resell

The key is buy at spot or for a low premium limited coins that have demand that will grow and grow.

 

I think what he's pointing out is that is a marketplace and there is a market price that is set there. It is higher than what you can buy for if you go to bullion dealers, lcs and other venues, but they do sell there for a higher price, and it is or could be considered market price. (even if it is high and not a venue most should play in) In the end, you're nitpicking his post.

 

Fair market price is whatever someone is willing to pay. Smaller size bars/coins are more desirable than larger bars. .999 fine is more desirable than 92.5% sterling, 90%, 80%, etc silver content coins.

 

Right now you can get silver proof state and park quarters around or under $6 each. I think that is one of the coolest ways to buy fractional silver near spot. As mentioned above, ASEs are a smart way to begin.

 

Look at it this way. Regardless of if you're buying rounds or bars, the cost is about the same to mint a 1/4 oz as it is 1oz. It takes the same labor and overhead, or very close, to produce a coin or bar or whatever it is in 1/4 oz, 1/2oz, 1oz or 2oz.

Junk silver is a very good buy, .999 fractional is more money for a reason. The big one is it's been produced recently and you're paying what it costs to make it in modern times, somebody else already paid for the old stuff.

 

Well, I like to have a little junk, however I've read an argument for ASEs instead: the buy-sell spread is narrower, so if you sell it back to that dealer, the ASEs will return you more of your money. His concluding sentence was, "They call it junk for a reason." Anyhow, like I said, I like to have a little junk, and I know that's only one scenario--it may not even be a general rule--however I was glad to have heard and considered it.

 

up

 

Ok if you feel that way. I thought he was trying to say that even though Ebay was higher than what people here know we can buy it for, it was the "real" market. Just like someone could say HSN was the "real" market for coins, (they sell a lot of them).

Just because something sells at a price, (Ebay), does not mean its the "market" price. The "market" price is generally defined as the price at which KNOWLEDGABLE buyers and sellers exchange goods at, which for bullion I believe would be large PM dealers/coin show prices. I thought it was an important point, but you of course may disagree.

 

SIlver is going to go way up

 

Why do you think that? How much is "way up"?

I have been just thinking about this since as I posted in another thread oil prices by some knowledgable people are expected to stay stable. I believe if you posted PM prices versus oil prices you would see an interesting relationship. Myself, I keep an eye on oil when I think about what PM prices may do.

 

Silver is going way way up to about 60 an once and gold is going to drop to about 500 an ounce.

 

Thank you all, I have gotten so much good information from this discussion. I really appreciate it. One question... and it may make me look stupid, but.. What are ASE's? Because in my world ASE means the fancy card in my wallet that dictates I am ASE certified.

 

Well, Chris would be happy. Sell off a few hundred ounces of silver and be able to buy quite a large collection of gold world coins.

I hope you are right.