I notice the current premium (cash price, not including shipping) at APMEX to purchase a single AGE is ~6.5%. This seems a little high to me. Any of you gold buyers out there have some perspective on this?
Not gold related but have you seen premiums on some of the other stuff like the 2012 Silver Kookaburra? I understand that it took a while to stock or rather get them but damn, almost a $10 over spot! Not to mention the 1 oz 2012 Lunar Dargon Proof which is going for around $800 or so. The sky must be falling or someone smoking something really good!
Yeah, I was at a coin show this past weekend an noticed the supply of bullion for sale being very thin. What there was there had a huge premium on it. One of the dealers was selling ASE's with a $9 hit on it. He had a few Kookaburra's for sale at breathtaking prices. I left that coin show with only the fiat confetti that I walked in with. Gold was selling at the effective rate of ~$1800 - $2000/oz. (I think there is a lot of excessive hype right now about the Lunar Dragon. It's a warning to me to avoid it.) It makes me wonder if the physical market has totally separated from the paper market because real world prices on PMs seem to have risen sharply in the last couple of weeks. (or rather when the paper selloff happened, the physical didn't come down as much)
I believe it's started to. Online dealers are starting to set the bar by place huge premiums on coins that they know will sale. Usually the local dealers are the ones doing the pricing but it's changed now. The market manipulation is starting to get played out bad, so bad that they have to try to hit it where it hurts. For example, the margin hikes that have been lately raised on commodities such as platinum, copper, and of course silver and gold.
Thanks for the personal on the floor observations. I find that when the PM market declines dealers are unwilling to take as big a decline as the market took. Sharp corrections usually lead to a much greater spread than normal. Either the market stays down and the spreads narrow, or the market goes back up. I would not be surprised at all of many dealers either were not displaying PM, or didn't even bring them to the show. If dealers think PM is going back up they don't like to even display it since the prices they are asking can upset some collectors, its better to simply be "out". If the market stays static, I would expect spreads to narrow and much more product to be available. Maybe there is shortages or excessive demand right now, I am simply ssaying its way to close to the major decline to really know for certain yet. Chris
But sir, margin hikes really only affect those who wish to use margin to play markets to the upside for excessive gains. It has no bearing on you if you wish to go to the market and pay cash to take physical delivery. If there are buyers at $35, they can go to the market today and get a great deal, right? Nothing is stopping anyone from buying on the exchange for physical delivery at these prices. The fact that there is not a huge, mad rush to do so, and therefor push the prices higher, shoudl tell you that maybe the current prices are the market clearing prices. Think they are too low? Then go buy some for physical delivery on the CME.
The other thing that I forgot to mention. Many many of the tables said they were buying gold & silver anything and from the few trades that I overhead, they were paying decent prices. If it had gold in it they were ready to talk and especially if it was coinage or bulllion. It's an odd business position if they were sitting on a lot of unsold bullion.
Very fair. Its very likely they are putting their money where their mouth is and feel the prices are going back up. I never claim to know their opinions, and being closer to the public their judgment is very much better than ours. I am simply relating from past experience knowing that dealers, if they do not wish to sell at certain price levels, will be "out of stock" since that upset people less than what some would term "gouging". I related an experience before when silver hit $4 a major dealer I knew was "out" of morgans in his storefront. When I told him I would pay $6 a piece and up for morgans he had hundreds in the back I went through. He said many people simply got mad that he refused to sell them closer to bullion value, so he simply did not sell them to the general public. You very well could be right sir, I was just putting forward another possibility that I have known to happen during market changes. Like I said, for me its too close to a major market correction to be sure just on some observations. If markets stay the same for 6 months and premiums do not come down, that would be more telling. Another way to look at it is if $40 is your buy price for ASE and even with a high premium it is below that, go ahead and buy. Absolute price of your PM should be in people's thoughts, not simply premiums. Like Cloud I believe once said, better to buy at $15 and a $5 premium than at $25 and a $2 one, (I am sure the numbers are wrong, but the general idea).
I still feel that way - the price is more important than the premium or discount to spot. If I was a buyer of silver today [I'm not], I would set a maximum price that I felt confident would generate decent returns over the next few years, say, $40. Then I would try to buy at a price below $40 regardless of the spot price. I would rather pay $36 when spot was $30 than to pay $38 when spot was $37. The absolute price is more important than the spread IMO.
The only gold I ever purchased was back in February around $1350. There was a 5% markup on 1/4 oz coins from my local dealer which was a better deal than the online shops at the time. Some other local shops were closer to 10%, but again this is 1/4 oz not 1 oz which should have lower premiums. 6.5% for a 1 oz coin does seem a bit excessive to me, but a lot has happened since then as well.
