Buyers During a Price Spike

I know that in recent years silver had a pretty significant, but short-lived, spike in value. When PMs (gold or silver) shoot up in price like that, it seems like it would be hard to capitalize on because only idiots buy during a price spike, especially with something as volatile as metals.

Do coin shops and places like Apmex stop buying during those events? I know you can always find buyers on eBay, but that's not exactly like going to Fidelity.com and hitting the "Sell" button on your stocks.

Probably a simple question, I just have not been paying attention in the past and have no experience with it.

(I know that metals are a hedge and insurance, not a speculative investment. But if you are holding, and it spikes in price, then why not sell out and buy back in later?)

 

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I don't think any company stops buying when the spot price gets high. The spread should cover their behinds.
I bought many ounces of silver over the years prior to the most recent spike in price. One day, I called APMEX and got a price locked in, the next day the price started falling. They still honored the high buy price and I had my check within two weeks. I made a really nice profit on that high.
I don't do silver stacking anymore because I don't think I'll live long enough to see the next spike.

 

I do know that in Dec of 2010 when silver went up the $30, Provident was still buying. I sold a whole bunch of stuff to them.

 

The price goes up 10%. Is this a "spike", or part of a longer-term increase? You don't know, and neither does anyone else, absent insider info.

The problem with "selling into spikes" and "buying into dips" is that there's no way in general to distinguish transient from long-term changes. Some people think they can; I think they're deceiving themselves.

As for buyers (especially large ones), as long as you can maintain a spread -- buying at a lower price than you sell -- you can make a profit in any market.

 

@-jeffB Agreed 100%!
There was a lot going on with the last price spike....and every bubble for that matter. With housing and the stock market going down hill fast, the safest place to put your money was in PM's and once the big dogs did so, others followed suit which created a lot of demand.
So quite the contrary, when the prices spiked the "buyers" needed more inventory. Just look at all of the CASH FOR GOLD places that sprouted up during the boom. When Silver went to $40 it seemed like we were getting a flyer in the mail everyday from a different company trying to buy that old useless gold & silver that everyone has sitting around (LOL). There was a lot of money to be made if you had the capital to invest. Silver is still a lot higher than it had been for so long at only $5 an ounce, but depending on your level of confidence in paper money, $20 could be a buy point or it could be a sell point.

 

I'm not sure about gold, but I feel confident that if silver goes up, it's coming back down in short order. My plumb line is price paid. So if it ever hits $35 and I can lock in a sell price from someone like Apmex, I'd cash out, hold the funds, and buy back in when it drops. Whether or not I'd sell it at peak (or buy back in at bottom) is nothing but random chance, for sure.

Anyone managed to do this successfully?

 

It's actually the opposite for me. I've managed to consistently sell for less than I paid, but I buy for less than I sell.

Silver wasn't appealing to me when it was $5/oz. (Too bad for me) I didn't start buying until it was falling down from the 2011 spike. What I do to lessen the burden on some of my higher priced $30/oz purchases is sell bullion locally for more than I can immediately replace it for through Provident. There are some people out there who are willing to pay a small premium to be able to buy anonymously with cash instead of ordering online. I can spot them a mile away by the shiny hats they wear.

 

I have been around pm since the first spike and crash in 1980. When prices spike up, the buy discount spreads. When prices drop quickly the sell premium increases. Bottom line, physical pm buying and selling is much less efficient than electronic trading. Because of this, physical pm is logically a long term proposition. You hold long term to maximize your gain and minimize dealer transaction costs. As a side benefit, physically holding pm has lower carrying cost than paper. So, if you are in it for decades, always buy physical. If you wish to play short term, you are probably better off with paper contracts. I just bought another 100 ounces or so the other day of mainly half dollars on a whim. I just threw it into the sdb with the rest of it. I am not going to worry about short term activity, this will be for my sons.

 

Wait....You bought something that somebody was trying to sell? Say it isn't so...

 

Of course everything I buy someone wants to sell. But, the difference is I make up my own mind whether to buy, and do not rely on salesman pitches to decide whether to buy or not. Just like I am not going to rely on any commissioned salesperson's opinion only, I am not going to rely on anyone who makes a buck if I buy. Call me cynical.

I thought you were going to go a different way Peace, and accuse me of lying that I bought any silver, since you usually accuse me of being a plant of the cme/big banks/ tri-lateral commission, or someone. I really do not think you believe me I have been buying pm for longer than some members here have been alive.

 

I've never accused you of being a plant, unless of course mikem2000 is a sock puppet account of yours. I have accused you of being in love with Comex and stocks, you got me there.

Your first paragraph is basically insulting to anybody that reads this board. I know what it reads, but what it really says about all of your posts about salespeople is that you know when you're being sold, but nobody else does and you need to point it out to them. You also state that others rely on salespeople's opinions, as if a salesperson would never cite an actual fact.

 

Large market maker bullion dealers are NOT only dealing in physical. They have to protect themselves with paper contracts also. If pm is rising, and selling = buying, they are OK, but if selling is much larger volume than buying, they can buy a short contract and if the market drops it will make up any lost on the physical and then some, as the premium on short contracts decrease as pm goes up and Visa/versa if the buying is higher than the selling, buy calls. If you are big enough to move 10,000 oz silver a day, you need a paper man in the office, otherwise you are gambling like the "retail investor", with options you are protected from disaster.

 

Sometimes it is hard to believe that many of us are older than the Franklin half which cost 50 cents mint from the bank.

 

I don't pretend to know what any other member is thinking, but I don't see any insult in @medoraman's post.

 

It's insulting when I point out articles that do not disclose their biases? Sorry if pointing out inherent biases that many readers may know about upsets you so. It seems others here appreciate knowing WHY certain people are always bullish on pm, especially considering the historic pillaging that those who listened to this BS took in 2013.

 

6 Years ago it was jobs down, housing down, dollar weak, the end is near!!!

Now it is jobs are up, housing is up, dollar one of strongest in group, the end is near!!

I think in the near future one might find that a great time for buying PM miners for 2 years down the road has already passed, the end is near.

 

I'm sure they do...I'll come back Monday to read all about how mike loves your posts and you're a genius...

I'm not upset at all. Why would I get upset with a couple 1 trick ponies that follow each other at a carnival ride?

 

Like I have always said, please post your own unbiased articles about pm then. I am always willing to read. I continue to say that, yet the pm permabulls never do it.

 

Actually Peace, you win, you get your way here. I am done. There was no reason to attack Chris here. You started it as always, and as always you add nothing. I refuse to be a part of it any longer. You are a bitter angry man, and one of the stupidest people I have ever seen. You are broke, will always be broke, and deserve it.

Jim, no need to warn or ban me, I'll show myself to the door

 

Mike, the main thing I would say would be there used to be someone on this very board who I felt the same about. He would actually quote my post, then change what I said. I felt like quitting too, but where would that have left those who read here? I am sure there are those here who wish I would have left, but I stay here simply for those few people I may be able to educate and help.

It's the internet man, if the trolls win what is the value of anything on the internet?