A Tale of Two Bullion Markets:

Discussion in 'Bullion Investing' started by SilverForLife, Apr 16, 2013.

  1. SilverForLife

    SilverForLife Member

    A Tale of Two Markets: At the same time that the speculative COMEX spot and futures market for silver has been slammed down hard, the physical market for silver has been so frantically bought that it hard to find any pre-1965 "junk" silver or 1-ounce silver rounds for sale. Nearly all of the wholesalers are reportedly sold out of bullion coins! They've all been snatched up by eager buyers. Reader Diana V. wrote to mention: " The local shop I use sells any face amount of junk silver. Up until about two weeks ago [they charged a premium of] 3 percent over spot for dimes, quarters or halves. Last week the premium was 5 percent for dimes and quarters and 10 percent for halves. Well, today it is a 15 percent for dimes and quarters, and they had no halves available... It is scary that the spot prices really don't have anything to do with actual supply and demand." JWR Adds: This leads me to ask: If silver is presently such trash in the eyes of the big investors then why can't I find any for sale at a decent price? Clearly there is a huge disconnect between the spot/futures market and the real world. http://www.survivalblog.com/
     
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  3. cmilladoo

    cmilladoo Keepin it Real

    because dealers are liars and have silver tucked away in the back room in the hopes that spot price will rise as opposed to selling in relation to the actual spot and losing money. If it stays down for a few weeks then they will find their inventory. They are just playing it safe for a few days and saying they are out is easier than the truth. IMHO because that is what I would do in this situation.
     
  4. medoraman

    medoraman Supporter! Supporter

    I must be a psychic, since i posted here many times this would happen. Maybe Diana Warwick has a spot for me.

    Seriously, always happens. Heck it happened just a few years ago. That time pm popped back up. That is not guaranteed. Pm can go up or down from here, but basis always changes in maajor market moves, nothing new.

    Funny how pm sites no are concentratint on this, and not being honest and just admitting buying pm this year has so far been an epic disaster.
     
  5. SilverForLife

    SilverForLife Member

    I know local dealers who think the same as to OP article.
     
  6. Rono

    Rono Senior Member

    Howdy,

    It's a classic example of Econ 101 Supply/Demand curves when prices are controlled or artificial. Either supply dries up or the price differential is closed through increases in premium, markup, vigorish or ignored on the black market. It happens quite often actually. A few years ago to pm's as medorama notes but remember when Nixon put price controls on gasoline? All of a sudden lots and lots of gas stations were Out. Indeed, they felt that the official price was less than what their gas was worth, so Sorry, I'm all out.

    How about credit market today? The Fed has kept interest rates artificially around zero making 30 year mortgage rates around 3.5%. That's great!! Oh joy. Wait, no banker on the bloody planet is going to loan you money at 3.5%. Sorry, they're all out today. The interest rate, or Price of money, is below what they think it should be. Now if you want to pay 5-6% for a 30 year fixed - Come on in. Maybe I can scrape up some money for you. This is called a Liquidity Trap and it's what we've been in since 2007/8 and why none of those QE$ ever circulated to the economy and why the velocitiy of money is zero and why inflation is so low.

    What is happening right now with pm's is the paper price set by the markets is being kept artificially below the street price of physical bullion. The greater the divergence and the longer the duration, the more you'll see either supplies dry up and/or premiums increase.

    And so it goes,

    peace,

    rono
     
  7. FryDaddyJr

    FryDaddyJr Junior Member

    survivalblog??
     
  8. scyther

    scyther New Member

    This is temporary. It tales a while for cheap new supply to come to market. If the price stays here for a few months, premiums will have to come down.
     
  9. vpr

    vpr Active Member

    This has convinced me that prices will drop further. Feel silly for picking up 80 oz a couple of days ago.
     
  10. scyther

    scyther New Member

    I must admit, I'm sorely tempted to buy... maybe I can make a little on momentum... but I know its a terrible thing to buy long term.
     
  11. FryDaddyJr

    FryDaddyJr Junior Member


    I bought a bunch saturday. should have waited
     
  12. scyther

    scyther New Member

    Is that why you're being so Edited, Please read the rules against substituting symbols for letters in curse words.
     
  13. FryDaddyJr

    FryDaddyJr Junior Member

    no I'm good. saturday's price was pretty good too
     
  14. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    If there is 2 markets ( which I don't accept), I know the price on the comex, so what is the price on the 'physical' market at the moment? Where did you get it? I could ( but not in this forum area) offer 90% silver, but only if the 'physical price' is over 33X. Too high you say? if so then where is the point you would buy $100 face of 90%. That is the problem. The 'physical buyers' want it at the comex price anyway, so where are the 2 markets and the 2 pricing structures.
     
  15. Rono

    Rono Senior Member

    Howdy,

    I bought some silver Monday. Not a huge amount and stuff I wanted to buy anyway. Couple of hocky pucks, the new libertad and a brace of wood bison.

    rono
     
  16. westcoasting

    westcoasting Active Member

    Yeah, spot price looks weak ... no real traction upward, but, can instantly drop big downward. There's a few more 2013 mint issued silver bullion coins I'd like to get (hobby cash is standing by), but, going to continue to watch the spot price & dealer price... and online vendor inventory level.

    Called the local coin shop yesterday to ask about latest prices over spot for silver bullion coins and the owner said none for sale at this time because he now can't get any from his supplier. Is he lying? don't know, but, it doesn't change the fact that he's not selling any at this time. He said he can still get gold bullion though... no problem there.
     
  17. vpr

    vpr Active Member

    The comex price is for physical delivery, so the doomsdayers are, for the lack of a better term, BSing. The comex contract is for delivery of 5000 oz of silver. You can buy 1 contract, hold it to expiration and take delivery of 5000 oz of silver. 90% silver and other forms of retail silver are a tiny tiny part of the market. If you want the best pricing and liquidity and have the cash to buy 5K oz and are willing to take delivery of 1000 oz bars, then there is a very large supply of physical silver trading on comex.

    How do I know this? I learnt this from my job. I work for the parent company of Comex. : ) Not kidding.
     
  18. medoraman

    medoraman Supporter! Supporter

    Then our firms do some business, and i am a (small) shareholder of your firm as well. :)
     
  19. vpr

    vpr Active Member

    if you held stock for the past couple of years, you haven't done well on it. I have a bunch of stock and stock options that have underperformed. :( I've stopped selling and have been adding through our ESPP. When interest rates skyrocket, the stock's gonna go wild. Our biggest products are interest rate contracts.
     
  20. Inquisitive

    Inquisitive Starting 2 know something

    Apmex buy price for 90% silver - $18.62
    Melt - $16.77 (based on 23.18 silver)
     
  21. westcoasting

    westcoasting Active Member

    For Eagles & Maples, I see the quoted buy price assumes a minimum transaction amount (10 grand?)

    And, besides the cost to ship them the PM, are there any other types of fees (like handling/stocking fee) they deduct from a seller?

    I'm not selling, but thinking I should enter these 'buy prices minus fees' instead of the spot price in my Quicken financial software for more realistic tracking purposes.
     
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