I have noticed that there has been a rise in premiums on silver and gold lately. The thing I don't get is that usually when silver or gold goes up, the premiums balance out a bit more. Maybe I am reading this wrong, but shouldn't silver and gold be closer to spot when the prices rise? I noticed a lot of bullion being treated as if it's numismatic. I understand the selling points for companies trying to run with the higher interest in buying bullion, but I feel this could lead to a slowing in buying if the high markups continues. What are everyones thoughts on this? To pay double or triple the value for the bullion in my mind makes no sense. Plus these mints have been minting limited amounts to make them more valuable.
I don't see that as the issue, more like the Perth mint stuff as well as the Pamp. Also there are alot of other world coins that have been way higher then they should be. Let me give you a example, I got a phone call from Govmint.com about the 2013 special minted 1 kilo australian rounds. They were asking almost 3 times the value because they were limited edition proofs.
Premiums are, to be blunt, "what dealers can get away with". Not against dealers at all, they will sell for whatever the market will bear, as they should. So, premiums are a function of where people believe the market is going. I was just talking Saturday with a local dealer. He says everyone is wanting to buy silver right now, since the market is going up. I shook my head, as did he, since a few weeks before I bought some junk silver off of him when prices were lower and noone wanted to buy. Human nature is just weird, prices low and no one wants it, but let the prices jump up 20% and now everyone wants to buy. I simply think people believe silver is going back up to the $30's and want to buy, so dealers can charge a little higher premium right now. It cuts both ways SCFY. In the 80's when markets were going down dealers would only offer maybe 80% of spot for junk silver, since they didn't want to take the downward risk. My question to anyone buying silver now would be "where the heck were you all summer?".
Well then you're not talking about bullion. If something is 3x the melt value, it's not bullion. Pamp Snake bar prices are falling as more US retailers are getting them in. Ebay is starting to get flooded with them. The trend for those is the same as the 2012 dragon bars. I paid $44 for some dragon bars in 2012; last week I picked up a handful for $35 shipped. It's not so much the price as the direction. Better to buy stuff as the price is rising rather than falling.
Not sure about better, but that is what is driving the premiums. Maybe I am just old, but I would rather buy when no one else is paying attention to it, and be able to acquire at my own pace, with low premiums. That is what I was doing this summer, paying around 15 times face. I guess I am just old fashioned, and don't like chasing what is hot.
I've heard this a lot, but let's tease it apart a bit. How can you tell a price is rising? It's higher now than it was. So, if you buy "when the price is rising", you're actually buying after the price has risen. Similarly, if you try to "sell when the price is falling", you're actually selling after the price has already fallen. What people generally mean is that you should buy when the price is going to rise, and sell when the price is going to fall. That's absolutely the most sensible approach. All you need is to be able to predict the future. Sure, there are trends and inertia -- but when you have an active, liquid market, full of people trying to guess at the same things you are, the net result is quite unpredictable. Otherwise, it wouldn't be a very good market.
You can almost look at premiums like a 200 day moving average. In an up swing premiums contract, in a down swing premiums expand. I can only talk about bullion ASEs. At the bottom you're looking at a $5.00 premium, at the top you're seeing less than $1.50 premium. The amount of time it stays high or low slowly erodes the premium, but we're talking it being flat for a couple of years for it to average out to a little over $2.00. The mint sells ASEs to retailers at spot plus 2, so in a flat market you should be seeing about a $2.25 premium.
I haven't noticed much in the way of high premiums, at least concerning regular bullion. Today I bought three philharmonic 1oz silver coins for $27 each. Seeing as spot is near $24 I thought that was reasonable, and about average.
Perth Mint is notorious for premiums, but not all their stuff. For example you can get a lot of old date kookaburras for cheap now that they've been reminted years later with absolutely no difference in the design since not every year hit the mintage limit. Pamp bars are also generally high priced. I'm not seeing anything unusual in premiums. Nothing like we saw at sub $20/oz.
hi all, some of my local retail guys were saying that there has to be higher premiums based on the fact there isn't any silver left.... lol.... they were just holding. it's just an excuse for not wanting to sell to stall and see where the market goes. they really really think the silver market is based on already minted old silver coins instead of industrial needs but the average consumer doesn't know the difference. After this current leveling out most of them realize the old "SILVER IS GOING TO HIT $50.00" myth is played out. So I've seen the B&M guys hoodwink the public about premiums. just my experience.
