Don't buy at these premiums, are you nuts?!

Discussion in 'Bullion Investing' started by myownprivy, Mar 19, 2020.

  1. myownprivy

    myownprivy Well-Known Member

    If silver is $12.13 an ounce and you miraculously find Silver Eagles at $16.50, you buy. Go view many other threads in the bullion investing section from March 16-19. View the silverbugs reddit page for similar results.

    Yes, silver is $12.13 an ounce.
    Yes, no one seems to be respecting this spot price.
    Yes, if is difficult and near impossible to find Silver Eagles, Maples, and other government-issued silver bullion for less than $17 per ounce.

    But, it is a terrible idea to buy a Silver Eagle for $16.13 an ounce if you find one. SPOT IS $12.13. DO I NEED TO SAY THAT AGAIN? SPOT IS 12 BUCKS! Do you really think paying a 25% premium is a good deal? Dear god, people. If you buy at this price you need silver to rise 25% to sell for spot. Don't be foolish!
     
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  3. medoraman

    medoraman Supporter! Supporter

    Real money drives the spot, small investor money drives physical. Big players selling to raise cash to cover margin, be in position to buy on the upside, etc. Small investors panicking and trying to hoard pm like toilet paper.

    Not a bad time to sit on the sidelines eating popcorn watching people do all kinds of irrational stuff.

    If anyone on CT are personally affected, my deepest sympathies and wishes to get better.
     
    ripple, HaleiwaHI, spirityoda and 5 others like this.
  4. masterswimmer

    masterswimmer Well-Known Member

    I couldn't agree more.
    Paying these premiums is no different than paying $16 spot with $1.50 premium.

    If spot was $16 today, like it has been for the longest time, would there be a frenzy to buy? Not for me it wasn't, and still isn't.
     
    ripple, spirityoda and Bob Evancho like this.
  5. fred13

    fred13 Junior Member

    Most astute post i've seen in a while
     
    ripple, Santinidollar and Stevearino like this.
  6. Clawcoins

    Clawcoins Well-Known Member

    did someone say NUTS
    upload_2020-3-19_10-45-48.png


    platinum 1/2 ounce eagles were $900
    spot is $600 for a full ONE ounce
    when I checked yesterday.

    They are buying based on Panic buying. People are not looking at the premiums and buying anyways.
     
    yakpoo likes this.
  7. TheFinn

    TheFinn Well-Known Member

    The low prices you see is the paper ETF silver price. You can buy silver at that price as long as you don't want physical delivery.
     
    Gilbert likes this.
  8. Collecting Nut

    Collecting Nut Borderline Hoarder

    It's all panic buying just like every thing else.
     
    baseball21 likes this.
  9. Packrat

    Packrat Active Member

    While I don't like the increased premiums, I understand that those who purchased at a higher price do not want to sell at a loss. Only the government can do deficit finance and continue in business for a long period of time. Buyers and sellers in the marketplace will determine the correct price-whether it be high silver and low premiums or low silver and high premiums. When I am buying from individuals I always tell them "I don't set the market. I just follow the market." We will get through this. It's not a time to panic.
     
    ripple and Stevearino like this.
  10. medoraman

    medoraman Supporter! Supporter

    Mostly correct. I believe if you pay cash for a contract upfront on the exchange you can take physical delivery. So, if you have enough cash, you can buy it at that price.

    I would wonder what industrial prices are doing? You know, the real users of pm like solar panel manufacturers who might buy a million ounces a year. I am curious what their premiums are, if any. I would suspect they are paying the market rate.

    Sorbic acid is basically only made in China nowadays. There is a worldwide shortage of it right now. However, since I buy 20 truckloads a year of it, I am getting mine at regular commercial pricing. If you need to buy a pallet of it from someone, I am betting you are paying twice what I pay for it at a minimum. That is the difference. Those who are the bigger players always get their material at market rate, the small fry have to pay what the market will bear unfortunately.

    Btw, no, sorry, I do not have any sorbic to spare in case anyone is wondering...
     
  11. MeowtheKitty

    MeowtheKitty Well-Known Member

    Meow was going to buy some ASEs and Maples but the price seemed too high compared to spot so Meow passed on that thought. Bullion was cheaper than it is now when spot was $15. What the heck?
     
    ripple likes this.
  12. losthomer

    losthomer Active Member

    If I understand this line of reasoning, spot is tied to physical unless the bottom drops out?
     
  13. CaptHenway

    CaptHenway Survivor

    Will buy all of yours at $12.13 an ounce.
     
    imrich and cpm9ball like this.
  14. -jeffB

    -jeffB Greshams LEO Supporter

    OK, I'm intrigued. :)
     
  15. cpm9ball

    cpm9ball CANNOT RE-MEMBER

    Let's face it. There are just too many cheapskates that want something for nothing except when it comes time for them to sell. ~ Chris
     
    BigTee44 likes this.
  16. medoraman

    medoraman Supporter! Supporter

    No, spot IS the "market". Physical long term is tied to spot, but when people get crazy inventory is depleted and premiums get jacked up. I am sure Costco could have increased prices of toilet paper and hosed everyone, but they didn't, they showed integrity and sold at standard prices until they ran out. Bullion dealers do not show the same moral fortitude.

    Just like my analogy earlier. I am "the market" for sorbic acid. I buy tremendous quantities. A month ago if someone wanted to get a bag of it, they might have paid $1 a pound more for it than I pay for it. Today, that same person looking for one bag might have to pay $8 a pound more for it than I will. Is the tiny buyer looking for inconsequential quantities "the market" or am I? "The market" for pm are jewelers, solar cell manufacturers, chip makers, and others who order in hundred thousand dollar increments and higher. Someone wanting to buy $100 of junk silver or a single ounce of platinum is NOT "the market". They are an incidental market who will get hosed when the dealers feel like.

    If my dealers for sorbic acid tried to jack up my cost 30% during this time, they would lose tens of millions of future sales to a major consumer. That is why they do not do that. I am pretty sure large users of PM are the same, they will ruin any distributor who tries this by never ordering from them again. However, a bullion dealer looking at selling you 10 ounces of silver? Heck with you, they can hose you all day long without fear of affecting their long term business.

    Everyone here looks at the spot versus physical market wrong. SPOT is "the market", physical buyers are incidental purchasers who do not REALLY matter long term to the miners. Just the truth.
     
  17. -jeffB

    -jeffB Greshams LEO Supporter

    True, a single individual isn't "the market" (unless it's 40 years ago and his name is Hunt). But what about all the individuals, together?

    I'm pretty sure the silver-bug market is vanishingly small compared to the industrial market, but I don't know what the breakdown is.
     
  18. Collecting Nut

    Collecting Nut Borderline Hoarder

    You tell me, which would you rather buy silver at? Silver at $15.50 spot an ounce plus $1.50 markup for a total of $17.00 an ounce or silver at $12.00 spot and a dealer markup of $5.00 for a total of $17.00 an ounce? Personally I don't see any difference.
     
    TheFinn likes this.
  19. MK Ultra

    MK Ultra Active Member

    I guess I was fortunate to find almost 40 ounces at spot on Saturday the 14th. Except for the two 5 ounce bars, everything else was foreign coins. I was happy to get it. Debating to venture out and buy what was left.
     
    -jeffB likes this.
  20. MK Ultra

    MK Ultra Active Member

    I'd rather buy at the $1.50 premium. If I had to sell, the market is closer to my price than the premium I paid that I can't get back.
     
    mynamespat and -jeffB like this.
  21. myownprivy

    myownprivy Well-Known Member

    And that is why you have no idea what you are doing, with all due respect. The percentage premium counts for everything in bullion. It is on the margins that dealers make their living and individuals lose their shirt.
     
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