Hey Im new to this whole silver thing..

Whatever???

 

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No, the spot price of silver and gold are not "largely" paper prices, they are the actual prices paid for physical delivery in the real world. It is irrelevant that few people choose to take delivery of their silver or gold through the futures market, and to state otherwise is to misrepresent the nature of the market. While few people take delivery of any commodity on the futures market, one may do so, at spot. Spot is what is paid for physical delivery in quantity, in the futures market or not, and this is set by the market, whether you "condone" it or not. GATA's endless repeatitionof the claim that the price should be higher than it is doesn't make it so.

If you want to provide evidence of shortages in the real world, disconnect between the paper and the spot price, or of defaults in the futures market, or answer any of the points that I made in response to these rumors, then do so, otherwise, vague remarks about failure to do "analysis" do little to further the discussion.
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Since the vast majority of speculators purchase or sell futures contract with absolutely no intention of delivering or taking delivery of metal, the spot price is not a true indication of the real price. It makes no difference that some people buy and sell at this price. The market is dominated by the speculators. You might consider this to be irrelevant. I don't. Buyers and sellers who never complete the transactions in the physical world obviously aren't as interested in the economic value of the metal as they are on trends and basis. Obviously we have different standards for analysis, and that's okay.

I've been watching the inventories of silver shrink for years. For the past year or so the supply and demand seem to be in balance -- perhaps due to the recession and a couple of new large mines coming into production. We won't know for some time yet. There won't be a "shortage" in the sense of the absence of silver as long as the market price is permitted to adjust. Instead, the price will rise. The numbers are there for you to look at. So is the London silver default. It really doesn't matter to me if you choose to do the analysis or not or use a different approach. I just want to point out to others who might read the thread what I think is important to watch.

 

I did a search on google for "London Silver Default," and I came up with nothing. Could you post a link, please?

 

After 25 years of not collecting coins since I was a kid, I got back into it when I decided to start buying some gold and silver in the last year. I too was outraged at the premium I had to pay for the SAE's. However, the more I read up on them, the more I realized that premium will largely stay with them. So, if I ever some day sell them, there will most likely be a premium to me over spot. Although, I would never bank on anything as a sure thing....

I found a good way to buy silver in addition to the SAE's is to buy the 1964 Kennedy's in bulk. They are largely in excellent condition, easily recognizable and you can get them at a much tighter premium to spot price.... IMHO It's probably better to diversify your gold and silver, anyway. I buy junk coins, modern gold and silver Eagles, Buffalo Gold, and various pre-1933 gold, walking liberty halves, etc.

My strategy, however, is that I don't pay too much of a "numismatic premium". I really enjoy looking at coins, and TO ME an AU-55 to MS-60 coin is pretty damn nice, and they don't demand too much in the way of a premium for many of them. I'm able to enjoy coin collecting, but also invest for an uncertain future.

I'm much more interested in hedging against inflation, or outright market collapse than I am for numismatic value, investing this way allows me the best of both worlds....The person who buys the MS-65 Walking Liberty Half for $3000 is in it purely for collecting. Whereas I would buy an MS-60 for $100. If the "stuff" hit the fan, which I really think it will in the next 10 years, what do you think both of those coins will be worth? The exact same amount!

 

I never saw it mentioned on the internet.

 

I "collect" junk silver and have a full set of Franklins, most of the Washingtons & Roosevelts & about 3/4 of the Walkers and Mercs..... not to mention Barbers. If you buy alot of junk silver you can come up with low to mid grade collections for spot. You can also make money (above spot) on the 'bay, people like coin collections in old Whitman books! If silver moves up a few bucks I'll dump a bag and wait for the dip.

 

I agree. A nice "short set" to assemble are all of the silver roosevelt dimes from 1946 to 1964. There are no key dates and it is inexpensive to assemble, and nice to own.

 

If it has never been mentioned on the internet....then how do you know about it? You ask us to do research. How do I go about that...to the local library? What source should I look for to substantiate your talk about a silver default?

 

You are correct. You probably can't research it, so your best bet is to assume the information is incorrect for now. That's what I would do in your position.

 

Yeah, Whatever???

 

Search on Warren Buffet and what he did to the London silver futures market by demanding physical delivery futures that he owned. (late 90s) It completely exposes the fact that gold and silver prices are being driven by paper trades and not supply and demand of the real physical stuff. They did not have enough physical stuff to cover his demand which could have been a disaster for the futures exchanges, but he let them off the hook for a 50 cent/oz ransom.

If you want one that is closer to home. Look at the attempted takedown of gold over the last week and especially over a few minute period on Friday because a lot of options expire this week. I believe that if gold closes above $1100/oz it forces the physical delivery of a significant amount of gold.

 

I too would like to see a link to the "London Silver Default" as it sounds interesting.

 

You are blurring the issue here. It is not some people who buy and sell at this price, it is everyone who buys and sells at this price if they are buying in quantity. That includes me, whether I want to take delivery of a futures contract, or whether I want $1000 face from Tulving tomorrow morning, or whether I'm ordering silver for industrial purposes because I make cell phones. If this weren't a "real" price, as so many who want the price higher argue, then I wouldn't be paying it, I would have to pay more. It works in the other direction as well. See if you can get substantially more for your silver on the industrial or any other market, except if you are selling small amounts to investors. You can't.

One might say that all markets are currently dominated by speculators. What is the real price for a share of stock in Citigroup? It is whatever you can sell it for, despite the fact that the bank is worthless and insolvent. Some of the speculators happen to be people with substantial positions in silver and gold who want the price to move up, such as those at Le Metropole who have been whining about "manipulation" for years, while attempting to talk the price up (manipulation) by spreading rumors.

Evidence? Shortages? London silver default? Similarly, I would like to point out to others who might read this thread that you have implied that anyone who disagrees with you is lacking in research and analysis while failing to provide any evidence for your claims aside from hinting that you have inside information which no one can research.

 

Regarding your first comment, the point is that for every ounce of physical silver sold, approximately 20 ounces of paper silver changes hands. In that situation, how good do you think the resulting price is at matching physical supply and demand?

Regarding the second comment, you are correct. Very little trading in any market I can think of takes place based on fundamental analysis of intrinsic value anymore. Everything in the institutional world is based on trends, spreads, benchmarks, hedges and black box techniques of all kinds.

Also, I've said elsewhere on this site that nobody should invest based on anything they read here, including what I write. You are free to reject it, accept it, or research it to your own level of satisfaction.

 

Sorry, for may be silly question, but is there any way to buy silver bullion's direct form the mint? I would like to avoid an additional costs, like postage etc.

 

Wow!

I have heard many theorists say "it is somewhere on the Internet, you just have to search hard enough to find it." but the whole; "it is not on the Internet", is a new one for me.

You can find anything on the Internet...mostly made up stuff.

 

The mint only sells the bullion versions of the Silver Eagles to certain distibutors.

 

I see. Thank you.

 

Welcome to CoinTalk. In this case, I made a statement that I can't back up with a link, so it should be treated as an error unless or until it can be verified.