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

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

  1. -jeffB

    -jeffB Greshams LEO Supporter

    Still no extra charge for condescension, eh?
     
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  3. medoraman

    medoraman Supporter! Supporter

    Fair point about collective demand. But it collective and transactional. A bullion dealer is not risking 10 years of profits by overcharging a small random customer. A large customer, like a solar cell manufacturer, will remember for a long time, and refuse to do business with you, for a long time, if you hose him in a crisis. I have lived it. I still have vendors I prohibit buying anything from, in categories my firm buys 20 million dollars worth a year.

    So, the large, daily users of a material get best price/best service. They pay market price. A group of 25,000 small buyers who come and go into the market frequently will always get the short end of the shaft. This is simply because even if a dealer takes care of them, there is no guarantee that buyer will buy every month for years. I am betting that HSN and others who buy ASEs every month from major dealers are not paying such premiums right now. So even in the coin market, there are major players getting normal prices today, but the small fry are getting taken to the cleaners on premiums.
     
    Rono and ripple like this.
  4. Collecting Nut

    Collecting Nut Borderline Hoarder

    It makes no difference. You're still losing money. Yes you're closer to the spot price but you still paid the dealer markup. In order to show a profit you must sell above spot andvyhe dealer markup. Anything less is s loss.

    No matter how you slice it you're still paying $17 per ounce regardless of the spot price. The percentage premium is nothing. All that matters is the price per ounce with all markup costs. Over the years I've made a lot of money in pm's.
     
    ripple likes this.
  5. HaleiwaHI

    HaleiwaHI Active Member

     
  6. MK Ultra

    MK Ultra Active Member

    How can you write that it makes no difference? One was a premium of $5 and one was a premium of $1.50. That's $3.50 per ounce difference! One is a premium of 9.67% and one is a premium of 41.67%! That's a HUGE difference. Huge I write.
     
  7. myownprivy

    myownprivy Well-Known Member

    It's very simple.
    If silver spot is $15.50, it is more likely to reach $17 than if silver is $12. An increase in spot of $1.50 is more likely to happen and to happen faster than an increase of $3.50.

    So, paying $1.50 premium on $15.50 equates to a better and faster opportunity to break even at $17 than paying a $5 premium on $12 silver to break even at $17 spot.
     
  8. BigTee44

    BigTee44 Well-Known Member

    Want $12 silver? Go buy the paper contracts(assuming you can afford a 5,000oz contract) and then wait for the premiums to come down and sell off the paper when the premiums come back down. If you wait for the supply to come back(some sites not shipping for 5 weeks!) the price could be back to $17oz before you get anything on back order gets delivered.

    I'm in Michigan where I just heard we're looking at 4-8 week lock down once the national guard is in place. Just closed Indiana from what I heard, many states will be following suit. Went from 110 cases in Michigan yesterday to 336 confirmed today. No one is selling, everyone is hoping to buy silver at spot plus $2-3, not happening.

    Do you think the USPS/UPS/FedEx is going to be delivering your silver while everything is shut down? Doubtful. If you don't hold it, you don't own it.
     
    medoraman likes this.
  9. rte

    rte Well-Known Member

    PRIVY.
    Why are you so concerned with how other people spend their money?
    It stimulates the economy, you should be as happy with that as the rest of us.

    But but, its shiny and I need it.
    WHAT??? I don't need it?
    OH, it's a want then...then who am I to say how someone spends their hard earned money ?

    Carry on Privy,
    I still think your chaneling a modern school teacher or drill Sargent from a previous life.
     
    Mr. Flute likes this.
  10. Collecting Nut

    Collecting Nut Borderline Hoarder

    I'm sorry that you don't get what I'm saying.
     
  11. rte

    rte Well-Known Member

    It's the bottom line on the receipt that matters. If you even get a receipt.
    $12 silver with a $5 premium (equals $17) $15 silver with a $2 premium (equals $17) $17 silver with No Premium (equals $17)
     
    ripple and Collecting Nut like this.
  12. losthomer

    losthomer Active Member

    I have to agree with collecting nut on this one. I have a buy price and do not buy above said price. The spread is irrelevant. But I sometimes get stuck on principle when spot is way below the sell price. Since there is currently nothing to buy it is a moot point.
     
    Collecting Nut likes this.
  13. baseball21

    baseball21 Well-Known Member

    Essentially yes. Every time metals drop people start claiming it's just cus of the ETFs and can't get physical there or it'll come back etc. Same claims were made at $40 then $35 then $30 etc after the last big spike.

    If the fact that metal spot price has tanked during an actual global issue isn't proof against all the hedge and doomsday claims nothing will ever convince some people
     
    Last edited: Mar 19, 2020
    slackaction1 and Collecting Nut like this.
  14. Collecting Nut

    Collecting Nut Borderline Hoarder

    Exactly! All that matters is how much you paid! All the associated costs have no bearing. What does is how much you paid when you opened your wallet.
     
    ripple, slackaction1 and Jeffjay like this.
  15. Santinidollar

    Santinidollar Supporter! Supporter

    Any kind of market now is being driven by irrationality, fear and bad decision making, which one might argue is the definition of panic.

    Gold premiums are equally idiotic. The spot price tonight is $1,488. Apmex will happily sell you a 1 Oz AGE for $1,646 on eBay. Premiums on their site are, at best, more than $100 over spot.
     
    Last edited: Mar 20, 2020
  16. MK Ultra

    MK Ultra Active Member

    So is the other side of the coin is would you rather buy silver at $17 when the spot price is $20 or when the spot price is $25?

    I get that if you pay $17, you pay $17. But I'm fortunate enough to have a couple of stores that I can buy, provided they have coins (foreign), at melt. For domestic I pay a multiplier that is slightly higher due to wear. So if you tell me I have to pay $X premium, I'm rarely buying, and never at more than a $2 premium for proof coins.

    So when I go to Fran J Jewelers, and they tell me it's a $5 premium, I leave. But when I go to LCS and buy at spot, I spend.
     
    slackaction1 likes this.
  17. baseball21

    baseball21 Well-Known Member

    I'd rather not buy something with little upside that crashes during the time where it's supposed to sky rocket and save everyone
     
  18. slackaction1

    slackaction1 Well-Known Member

    When some of you bought silver below 10.00 or so, did you have to pay a premium back then too or did they sell it close to spot price?
     
    Last edited: Mar 20, 2020
  19. -jeffB

    -jeffB Greshams LEO Supporter

    Not sure that's a useful comparison, because it sat at low prices for many years. Over time I expect the premiums to drop. Eventually sellers figure out that it's not a "dip", and that if they want money they can actually spend, they need to sell at a price people will pay.
     
  20. myownprivy

    myownprivy Well-Known Member

    Look, I see this is still not making sense to some people.

    Suppose on this day in history silver is $13 per ounce. Suppose your dealer charges you a $4 premium. $17. Suppose tomorrow you have to sell your silver. Dealers will buy at spot. That means you lose $4.

    Suppose on March 1 silver is $16 per ounce and your dealer charges you a $1 premium. $17 silver.
    Suppose the next day you have an emergency and sell your silver. Dealers will buy at spot. That means you lose $1.

    This is why the premium you pay matters. This same example remains true if you sell your silver 1 month later, 1 year later, or 10 years later. Premiums matter less the more time passes, of course, but premiums matter because the lower premium you pay the less time is typically required for you to reach a break even point or a profitability point when reselling.

    Any questions?
     
  21. masterswimmer

    masterswimmer Well-Known Member

    I totally, 100% agree with your assessment of buyers premiums.

    The problem with your writeup is the condescension and vitriol in your approach to speaking to everyone.
     
    Mr. Flute likes this.
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