Silver Stackers' Playbook

I am talking about established businesses, not a personal sale. I am not saying eBay prices are justified premiums. Yes, at the end of the day something is worth whatever someone is willing to pay for it, but when I say premiums are justified if people are willing to pay it I am talking about dealer premiums that the average consumer will either accept or reject. The justification stems from whether the business remains profitable at that level or not. If it does then it is justified, if not then the consumers will go elsewhere. There will always be extremes on both ends of the spectrum with person to person transactions.

 

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Actually I think the current premiums are justified. The reason I say that is I believe folks are getting Physical Silver confused with Retail Silver. Now, all Retail Silver IS Physical Silver but not all Physical Silver is Retail Silver. So while it is clear there is NO shortage of Physical Silver, the fact remains we are seeing a shortage of Retail Silver. We also have a strong demand for this Retail Silver, so it is a classic case of too many dollars chasing too few goods and the market reflects this with the high premiums.

Now since there is no shortage of Physical Silver it should be obvious that Retail Silver will soon "catch up" and premiums will return to normal, but you just cannot deny the fact that the free market is at work here. I just wouldn't call that this currrent high demand is driven by the "Smart Money"

Mike

 

I think you hit the nail on the head Mike. However it remains to be seen whether retail silver will be able to catch up to the buying pressure at current prices. I do not have a guess as to whether that will be the case or not, just saying we don't know yet. It would have to be unable to catch up before we would be looking at a potential broader silver shortage. The metal is only as available as it can be brought to market afterall.

 

And to be fair, it was a good move in 2008 to pay the higher premiums to get an ASE for $18. Fair point. If silver pops back up to mid thirties, those who pay high twenties today are going to do well. How I view it is there are 3 possibilities, higher, same, or lower. Paying high permiums will be fine if silver goes higher. If it stays the same or goes lower, paying a high premium today simply magnifies the loss, since I believe in a few months of steady prices premiums will decrease to historical levels.

So yeah, if you "know" its going back up into the thirties soon then buy today and pay today's premiums. I just don't like the odds, but I VERY WELL could be wrong. I never claimed to predict the future, just have an opinion like everyone else.

 

I figure that if I get it for a pretty good price now it will not hurt too much if it goes down a little. It might hurt if it goes down a lot however. I didn't buy at over about $30, so I didn't get pinched too hard until recently. This drop to $22 was surprising, but it wouldn't have been if I had listened to some of the other posters who kept saying that it would drop to $22.

 

For every person predicting $22, there was another person predicting $100. You just never know...

 

I would simply say be careful of giving too much "credit". The human mind is funny, we quickly dismiss predictions that do not come to pass, yet latch on to predictions that seem to come true, thinking about them over and over.

I have seen tons of predictions around here. Most do not come true. Whether high or low, I am simply saying do not give too much credit to the one predicting it, as it very well could have been a fluke. PM "gurus" live on this fact, making endless predictions and then repeating over and over when one happens to come true.

Think for yourself. Listen to everyone, but make up your own mind. If I predicted silver would strengthen to $28 by September and it came true, should you think I have any special knowledge? You shouldn't.

 

On the surface that is 100% true but it is certainly not a coin flip. While we never "know" for sure, it is really more of an odds thing. When silver was in the 30's is was 50% overvalued vs. the cost of production, we were in a low inflation period, equities were rising, folks were gaining confidnece in the equities market, and the economy was improving.

We were in a situation were the likelihood of silver going down was just higher than it going up. So in my opinion, it is just a matter of being on the correct side of the odds. Do this enough times and hopefully you find find your self on the right side of the equation more often than the wrong side.

 

True, but then you're not just listening to what the price predicting people are telling you it should be, you are analyzing the information on your own and coming to your own conclusion. Which of course is a good thing. :thumb:

 

Today I was in Allen's Coin Shop in Westerville, largest shop in central Ohio.

TONS of Libertads, Philharmonics, and Maple Leafs, all at $6 over spot, ASEs at $8 over spot. Robust prices but certainly no shortages. Did not see junk silver on display, and forgot to check the price.

I overheard customers discussing discounts on 100 bullion coins, etc., "sorry no discounts." Plus sales tax.

 

Maybe someone's buying them at those prices, but not me. I suppose it wouldn't hurt to ask if they're buying at April 11 prices too. :too-funny:

 

Since someone else is buying at those prices it'll be difficult to find it any cheaper.

 

Allen's hasn't hung around for 40 years, and become the biggest LCS, by mis-reading the market.

Interesting, there was no one at the "Sell" window during the 20 minutes I was there.

 

I am sure they became the largest by selling what their customers want, taking extra profits when able, and I would wager had the exact same higher premiums every single time the bullion market went down the last 40 years. Its as regular as clockwork.

Back in 2008 what was the premiums on ASEs?