Silver Eagles 32.50…..Silver at 18.50?

Premiums essentially always go up when spot price drops since the sellers are always slow to lower the price on the way down and as long as people still buy a lot there’s not reason to lower it. Same thing happened 10 years ago. It’s nothing new and very predictable. Prices move up right away and are much slower to fall.

If you want metals that move with the spot trade in the etfs for the metal, but when physical are falling as long as things are selling sellers will hold the previous price and aren’t looking to lose money on them.

 

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if anyone is legitimately selling their ASEs at spot .. I'm listening.
LOL
premiums premiums premiums.
as long as demand is high their premiums go up.

I'm hoping silver spot keeps going down and short term thinking ppl start panic selling to preserve cash.

 

I understand. I have written about this on this site extensively actually. However, that is not what has happened here or in 2010-11. Then as well as now PM spiked actually, yet premiums also spiked. I think you have that normal thing going on, premiums increase when pm drops due to dealers not wanting to take a net loss, but what is more unusual is increased demand due to economic uncertainty. That spikes premiums because short term supply cannot keep up with demand until the unusual demand wanes and supply catches up. THEN it goes back to the old premiums go up for a bit when pm drops, until enough supply hits the market and the dealers are forced to mark their premiums down to sell.

Even though this is short term action, new members need to be aware this will abate. I have quite a few 2010-2013 dated coins I bought for $1 or less over melt, most likely creating a heck of a loss to the original purchasers, I bought around 2017-2019. Eventually pm markets settle down, spot and premiums decline, and its "boring". That is when the longer term holders of pm build our holdings, not chasing high premiums. I would say you should expect to lose, on a premium only basis, anything over say $2 you spend on an ASE right now. That is the expected long term premium over spot they will bring to buy, and you will receive less if you go to sell them. Just like stocks, newer and less informed buyers always lose with pms it seems.

 

I've seen you say this through a couple of cycles now, and you haven't been wrong yet.

 

A supply shortage means you can’t buy something. There’s been supply shortages in food, toilet paper, cleaning wipes, video game systems etc the last few years. There’s never been any shortage of PMs on the market and again you can buy them at any point you want on the stock market.

The premiums like before are simply a response to irrational buying behavior which we see a lot with PM buyers. When the spot falls they want more to “dollar cost average” when it spikes they want more to not miss out when they should actually be selling. The myth that somehow it’s preserves their wealth or would be useful if the world fell apart often drives the behavior.

Unless you’re taking about not really bullion versions of the coins the supply is more than there out in the market with 100s of millions of ASEs alone. The big sellers and suppliers pretty much make money whether the price is going up or down as they’ve hedged big positions. There’s just simply no reason to lower premiums until sales slow which they do after a while.

You are right that it probably will take longer for the premiums to come down as the behavior of thinking silver is a savior will likely last longer, but at the end of the day the ability to buy bullion has never really been a supply issue in the modern internet age, as long as people are willing to keep buying at strong rate it won’t matter how much comes to market in terms of price. There’s simply no reason to lower the price for something that’s selling well

 

You’ve nicely outlined my belief on this subject too. It’s all demand driven not supply.

 

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I would disagree but slightly. There was a supply shortage early on, premiums went up, and stayed up. Yes, I believe it's mainly demand spike that is unusual here, as it usually is in economic unrest. However, a supply shortage does not mean something cannot be bought, it means it cannot be bought at the previous price. If you have some corn starch at the price it went for the last decade, I would be a buyer for about 25 truckloads. I can buy it for much higher today all I want, but the industry demand has not changed, supply has. Supply has moved it upwards in price, but it's still purchasable for higher.

Again, yes demand for pm is up, especially ASEs. The mint could push premiums back down with additional supplies, but are unable/unwilling to do so. So right now it's demand curve moving rightward, which could be offset with supply curve moving right as well.

We mostly agree here, so no sense arguing over irrelevant academic points, yet I just did.

 

https://coinweek.com/us-mint-news/understanding-the-silver-planchet-shortage-at-the-u-s-mint/

Article just posted yesterday about the supply shortage of planchets, and how they have only made half as many YTD as last year, though orders are similar. Also talks about what I heard about Congressional inquiry.

 

Following

 

I've been wanting to buy silver bars but the premium is keeping me from getting those either. I think it's ridiculous to have to pay $4.50 premium per ounce on a 1 kg silver bar. If the premiums were more reasonable like they used to be, I would have placed an order for five or six but as it is right now I'd rather wait.

If anything, I've been buying a lot more gold because the premium on those are a lot lower, particularly if you ignore the American bullion and stick to Perth Mint, Britannia, and Krugerrand gold.

 

This premium irrationality has persisted for close to 2 years now.

I can't recall such a situation lasting this long before with PMs. Foreign stock markets, yeah. But not PM's and not gold or silver.

People must want and only want ASEs. If they want 1 ounce of silver, you have tons of choices including scuffed-up Morgans.

 

2011-2013 was pretty similar. Like I have said, boring periods of no news will drive down premiums eventually, they always have. I am mainly sitting on my hands unless I find an item I also find interesting numismatically.

 

And I'm sure it can remain irrational longer than I can remain solvent. So if I do go insolvent, it won't be from buying ASEs.

 

Alternatively, the irrational sticks around long enough to become the accepted market standard.

 

Sure, eventually it may be "different this time". However I have seen many times in my own lifetime that it wasn't different this time, and it was simply wasted money on the part of unfortunate buyers. So, make your bets and take your chances...

 

But that was right after a historic spike to $50/oz....this started with a pretty flattish market the last few years, save a rise from 2019-20. But nothing like the 2009-11 spike.

 

Gotcha, John Maynard !!

 

Some might say that explains gold.

 

And diamonds.