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<p>[QUOTE=&quot;1970 Silver Art, post: 938267, member: 18828&quot;]If the price of gold and silver drop, then online and B&amp;M bullion dealers (with no hedge) will either </p><p>&nbsp;</p><p>1.) Withhold the PM&#039;s until the spot price recovers or </p><p>&nbsp;</p><p>2.) They will sell the PMs but with higher premiums since bullion dealers will not sell gold and silver coins and bars below the price that they paid for them even if the spot prices continue to drop. </p><p>&nbsp;</p><p>For example, Lets&#039;s pretend that spot is currently $18.00 and XYZ Bullion dealer bought 10 1-oz silver bullion coins from a person for $16.00 ($2 under spot) and puts them on sale for $19.00 ($1.00 over spot). That is a $3 over spot profit for XYZ Bullion dealer ($19.00 - $16.00 = $3.00) if he sells.</p><p>&nbsp;</p><p>A week later spot silver drops to $15.00 and the dealer stills has inventory that he bought at $16.00/coin and lets say that XYZ dealer drops his price from $19 to $17.00 to generate more sales. If XYZ Bullion dealer sells at $17.00, then that means that XYZ Bullion dealer is still making a profit but it is $1 spot profit ($17.00 - $16.00 = $1) instead of the $3 over spot profit and the premium increased from $1 over spot to $2 over spot ($17 price - $15 spot price).</p><p>&nbsp;</p><p>Another week later silver goes down to $12.00 and the dealer still has some remaining inventory that he bought at $16.00/coin. In order for XYZ Bullion dealer to not sell for a loss, that means that he would have to sell his 1-oz silver bullion coins at $16.00. If XYZ bullion dealer sells for $16/coin, then that means that he is breaking even but the premium jumped to $4 over spot silver ($16.00 price minus $12.00 spot price).[/QUOTE]</p><p><br /></p>

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