As prices go down do the online dealers lower their prices or do the premiums just essentially increase on a percentage basis
Eventually the prices come down. Right now mintproducts.com is selling them for around $5 over spot if you buy a roll of 20.......
Human nature and part of business, no one wants to be the guy who takes the loss. As spot goes down, those who own PM attach higher premiums when selling. Until they can get out from under the high price they paid, premiums remain high. Once they can average out their cost by buying low themselves, then prices come down. But if they own a lot, to get capital to do this, they must sell first. They will hold off as long as possible, hoping the stacker or collector is willing to pay out a higher price. Then when prices become bullish, they can tout about low premiums because they make it up on higher spot prices. If you want to buy PM's, you have to be the escape goat for their high inventory costs. If you try and wait them out, you may never buy at the low; loosing your opportunity to maximize your investment. Lets face it, if your active in this market, you may not have the patience to wait that long. Buying one or two rounds does not make you a trader. More of a dabbler.
I do notice the premiums are a bit higher than they were a few months ago, but one can't help but think that most investors (myself included) are going to shop around to make an informed purchase.
Premiums expand on the way down and contract on the way up. It takes a few years for premiums to shrink when it goes flat. I resisted paying $14 when spot was $9 after it came down from $20. Cost me a couple of bucks an ounce when I bought back in at $16 and I still paid almost a $5 premium. When I sold I only got about $1 of premium back but I did double my money. Don't get too concerned with premiums, cost averaging helps level it out. I'm upside down from my last couple of buys, but the stack is a lot smaller. It may be time to start building again but, I expect it to be a long time before we see the ride like the one we just had again.
Someone mentioned about catching the falling knife. I am in it long term and will dollar cost average in. I am new so I have some building to do a tube at a time. For me I think the legacy is most important. I want to leave my family something tangible and valuable.
Its amazing to me that people are still paying up to $27 per American silver Eagle on Ebay. I have been trying to get some around the $25 mark but you always get that 1 guy who is willing to over pay and does not care about spot prices. Thats why pamp is still selling around $33 per 1 oz bar, and the dragon bars sell for about $44.
If you buy in bulk, you can beat some of the premium issues your speaking about. Some people prefer to buy in small amounts, but if you buy a bulk order you can get much better deals from some wholesale dealer sites.
I think many people just go right to ebay out of convenience or laziness. Just like people going straight to Wal-Mart expecting the lowest prices, when many times it is not the case. I feel that if you buy on the web, you have no reason not to find a good deal.
You could run full page ads all day long about the price of silver and gold. Someone will always overpay for them. That's why eBay attracts so many people. The smart one's have plenty of dumb ones to score on. By shear numbers alone, you will find a Rufus.
