Why are premiums so high? Anyone doing much better on the buying end??

I love bullion, and due to the economy I can't afford to buy a roll a week of silver every week or two. I would like to buy 2-3 ounces a week for now as a base and extra stuff if I have extra money. It's hard to buy because at coinshops, prices are just so far gone its not even funny anymore. Ofcourse tax is added. I like to order from big coin and bullion outfits online because the prices there have been the best. Problem is with shipping, you really have to order a dozen coins so the cost divided runs about 50 cents extra per coin, and its not bad. I do that when the stars line up with a few of my buddies and we can all afford 4 ounces each. That doesn't happen often though. Lately my best shot is the coin guys I know that sell at the flea markets in the local southern CA market.

Yesterday I was able to buy four 2003 Choice BU non proof silver Libertads for $35.00 each. I think that was more than fair. My buddy got 3 generic ounces for $34.00 each. Thats about as good as it gets for now?? Any one doing much better???

 

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Just run an ad on craigslist or the newspaper advertising "paying full value for 1 ounce silver bars and rounds".

People usually cannot get full price for bars and rounds, so they make money and you get them cheaper.

 

Your purchase sums it up. I used to purchase at $2.00 above spot when it was $12.00/oz.

 

I get ases for 4 dollars over spot, no tax, and I have a deal with a dealer that whenever he gets billion in, he sells silver to me at spot or 1 dollar over spot

 

Bullion at a buck over spot is sweet.

Also, if you do CL, take reasonable precautions.

 

The hidden aspect is the perceived volatility. Dealers have to be comfortable in replacing/selling their inventory levels, and if the volatility is such that silver is moving 50 cents or more a day ( either direction), the volatility factor becomes visible. If it is upward, delaers tend to raise premiums, if downwards, lower premiums or stops buying. Buying/selling PM is risky and premiums is the way to manage inventory. That is also why margins exist in futures, they exist to protect the exchange and maintain a balanced buy/sell ratio.

 

I guess it depends on where you live but around me, that's an invitation to burglary.

 

You may want to consider saving up to buy a larger quantity every month or every three months. I don't think you will miss out on much by waiting until you can purchase an economical quantity. Also, many websites will sell without sales tax which offsets the shipping.

 

Thank you!!

I appreciate the responses. My guys that I get silver from at $1.00 over are dry at the time. Since silver is down 3 dollars from the recent high, I figured $2.50 over +/- was fair. Yes, every now and then If Im doing good or made good money on a weekend antique show, i'll buy a quantity to get a better price.

Craigslist is ok, I do buy / sell on craigslist from time to time, and of course the best of the best is being approached by a willing seller. I was approached by two in the last couple of months and made a great purchase. Some of my finds of which were posted here.

I will just take it a day at a time, and buy when it makes sense.

 

Are premiums (a percentage) “high”? What's the baseline for that thinking : +20% higher than ‘average annual premiums’ on a given Silver product/coin? Or purely subjective opinion (druthers)?

Assuming the Spot Price was USD$ 32.33 when your friend paid $34, his premium was 5.17%.
Now look at the WSJ 'Cash Prices - Silver Coins Wholesale $1k Face' http://online.wsj.com/mdc/public/page/2_3023-cashprices.html
Where POS was $31.95 (10/24/2012) and the $1k FB is presumed 690 Troy Oz Pure Ag, that scrap rate was $33.79 : that's a 5.74% wholesale premium.

Coin premiums at retail should be higher. All things considered, your friend's 5% premium sounds LOW to me. He got a good deal.
But I'd have to see a chart of retail premiums going back ~5 years to have any sense what 'high' or 'low premium' really means, at market: those are relative terms after all.
(Bottom-feeder bids, liquidation moments, deep discounts, hot merch, sweetheart deals and blue-light specials aren't 'normal' prices/premiums to base anything on, either.)

I think premiums will RISE with volatility, so the complaint rings hollow now. But that's just my two cents.

 

I just had a similar conversation with a local B&M buddy and he quoted it like this;

"The ASEs I receive don't come directly from the mint, they go from the mint to the distributors and from the distributors to me. The way it goes right now, the mint doesn't sell these at melt to the consumer, there's always some sort of premium they charge to make a profit. So the price I pay from the distributors is always a lot more than what I would like to spend. And as a retailer, I have to put my markup on them to make money to run the store. Sometimes, all the added "middlemen" makes it difficult to turn any profit on BU or Proof ASEs."

Needless to say, myself and the other customer proceeded to look at the junk silver and collectible slabbed stuff. Sometimes the actual market fluctuation has little to do how on how much a dealer sells ASEs for, the simple addition of a "distributor" makes this dealer's silver bullion priced a lot higher than some others who can order direct from the mint. The $42 per 2012 BU ASE was way too much to spend from him, my other B&M has these for $5 less.

 

Help me out here, kookoox10. Why would it be otherwise? How could anyone stay in business over time, just charging cost or nearly what they paid, no markup at all?

Yesterday I posted a link to a refiner's price (Melt) and compared the Silver Price (Spot.) When the POS was USD 31.61, .925 Silver was $29.24 and the Refiner's BID, net all costs was just $19.33 per Troy Ounce. The refiner's Melt (Bid) has to be below Spot (~Ask) or he's goin-outta-bidness too. Other refiners may offer a better 'Melt rate' but the WSJ shows Handy & Harmon's industrial bullion price (ASK) was $31.685.

Why anyone would even expect that (Wholesale, Industrial) or Melt (?!) from retail dealers is beyond my ken. Don't get me wrong - I love sweetheart deals too! - but do you really think an 8% premium for a finished retail product is onerous and unreasonable?

 

It's not at all unreasonable to those who don't mind paying for it. I think buying it at a markup is justifiable for one or several pieces. What I have observed over the years buying and selling is that dealers have a wide range of prices for example, ASEs. How one dealer buys it through the distributor system (or not) will largely affect how much they will in turn sell it to the consumer. Which is why I've seen the wild price swings from $36-mid forties for basic BU ASEs.

And ask any dealer, they would prefer to sell collector type coins instead of bullion. They don't make money on the bullion products that they do on the numismatic stuff.

 

I buy 90% junk silver coins and I never pay more than 5% over spot.

 

Yes but the POS fluctuated, too. In the last three years, Spot was as LOW as $16.33 and as HIGH as $43.61. That range says nothing about the premium itself, btw, which should be driven by a particular Supply/Demand for any given product (ASEs, in your example.)

And for the two Spots just given above, respectively, a '$1 over' and '$2.67 over' is the exactly same 6.12% premium. In reality, I'm sure the premium changes with the market ... but it's not evident how much by your (or the OP's) example.

 

Which seems perfectly reasonable, at purity AND by weight.
Not necessarily by Face, however, on 90/10 coins that can be 10% > -16% underweight (as more and more junk Silver is.)
That's the part that makes me leery of FBs.

 

I don't buy worn down crap, I pick out the nicer stuff. Most of the junk silver I've bought either commands a premium over melt due to numismatic value, or is AU/BU.

 

No. Not "bullion", billion. Billion is 90/10 alloy. When POS is USD$ 31.95, that's 31.95/.9 + $1. = $36.50 per Oz Troy pure Ag. That's a current 14.24% premium on Scrap. Ouch!

And(for Libertads? back in 2006; Late 2008?!) '$2. over Spot @ $12.' was clearly a 16.7% premium. Now I REEEEEALLLY cannot understand why would someone complain about a 8.25% premium as "high" -- that coin premium has fallen 50%.

I'd call that a great deal, premium-wise.
Pity the dealer, first!

 

I consider the 1 to $1.50 I pay over at the coin shop for "junk" silver to be for my guy inspecting the silver coins to make sure they are legit and the selection.