Hi all. I just wanted to air this out a little bit. The spot price for silver is based on 1000 ounce bars in US dollars. It costs money to take those bars and make them into pretty coins, bars, etc. So don't feel bad when you have to buy silver over melt...just try to get it as close to spot as possible. And when you go to sell, use this reasoning to get your premium back, unless you have to sell cheap, like to a dealer. You can't make a 1000 ounce bar into a thousand silver eagles without a good outlay in expenses. What thinks ye?
For one thing you must remember that if you purchase Silver, coins, boats, cars, cans of soups, etc. you are a customer. The dealers or sellers of those items work on a profit margin. If you purchase Silver for about $20/ounce, you'll have a real nice time trying to sell it for that unless you too are a dealer. So regardless of the present prices of Silver or anything first ask yourself if you can find a buyer.
Buy at a premium, sell at a premium, that's my philosophy. There are plenty of ways you can sell silver without the involvement of a dealer. You can sell for a premium on local classifieds (craigslist, kijiji), eBay, and even on CoinTalk. I'm sure you could also sell silver at a premium through coin clubs and other places online.
Yeah, some folks think that if they're paying over spot, that they're paying too much. The US Mint can't even afford to sell at spot. And of course, dealers have to make a profit. But, when something is 25-40% over spot like some gold items, that seems really high. You can't buy processed and minted silver without paying a premium, in general, on the open market. But, you can buy 1000 ounce bars all day long at spot plus shipping, unless you can pick 'em up from the refiner. Sorry, I'm just rambling here.
I'm new to coins and PMs so it did take me by surprise to see the differences between spot price and what items were actually selling for. It doesn't take much thought to realize, though, that there are indeed costs involved in creating the varying items we purchase (as has been mentioned) and that coupled with dealer spread makes me a bit less concerned about paying premiums...although I do look for the lowest ones I can find. I suppose it also depends on what you are purchasing the metals for. If it's just a hedge against inflation and have the cash to buy 100oz Ag bars, you'll save a little bit. If you are a silver eagle collector, you are adding a bit more for the collectable numismatic value and the fact that even if silver went to 0, you'd still have a dollar to spend. It's sort of like you are paying for that dollar up front. I figure, if I buy low and sell high, I don't really care about the premiums because everyone else is paying them too!
Junk 90% silver coins like '64 and earlier that trade close to spot are a pretty good deal compared to other forms. If selling them, expect less because I believe more refining is involved to 'purify' them.
If buying and selling in most traditional ways, you have to hope spot goes up if you have any chance of making money. It's the game we play.
Especially true when you have multiple shipping charges and fees involved in various transactions. I definately advocate physical possession for true investment purposes/ SHTF scenarios. If you have some extra cash and like reading trendlines (or just gambling for that matter!) it can also be fun to play on Bullion Direct's Nucleo program and Kitco's pool accounts. If the world comes crashing down tomorrow, just don't expect to take your physical from them.
