Is it just me, or...

I got tired of waiting and started buying into PM 4 months ago to diversify some assets. I'm not going to gripe or worry about paying $28 then cause I do feel better finally holding some physical PM. I think we're in very strange economic times and I get a really bad feeling about where we're headed. I guess what lies ahead for us as a nation has me more concerned than what my PM is currently worth in fiat money. Excited about falling spot? no, not really... when considering the bigger picture... however, I have been buying some into the falling spot price and plan to continue until better diversified.

 

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I agree. It seems like it stacks the deck against (smaller scale) silver investors. And I don't remember the premiums on either 90%, or ASE's, being this high even 5-10 years ago.

In Jan. 2006 I bought a roll of ASE's for $224 shipped--$11.20 each. (I should've bought a "Monster Box" then!). According to kitco silver prices that month were between $8.75 & $9.75. Somehow the premium then, even if high on a percentage basis, didn't bother me. I don't know the silver price on the day I bought them, but say it was $9.25--that's a premium of $1.95, far better than $3.25...

 

It's usually political or economic fear that leads people to overpay for PM, near a top. They then rationalize it by saying, their $$ are only ​"fiat money", anyway, so what does it matter?--Their $$ will be worthless, soon enough.

I've been around for quite a few decades now, & I've always paid my bills, bought & sold houses, cars, groceries, etc. with "fiat" $USD. And there've always been traumas & huge concerns in this country, & reason for fear: WWI, the Great Depression, WWII, Korean War, Viet-nam, Watergate, Nixon, huge inflation in the 1970's, on & on & on. Honestly, if you just study the crash of 1929, & the ensuing Great Depression, or even the horrible Recession in the early 1970's, these "economic times" don't seem nearly as bad......

 

My only responses Mike would be ASEs are sourced as prepared blanks of certified US silver with high technical specs. Most people do not complain about the quality of circulation coinage but scream about ASE quality. Then they have to make dies for large coins on special production runs. Between all of that, and the wholesaler middleman "authorized purchasers" then the retailers, I am not so sure THAT much profit remains. Maybe $2 per like Woody describes is adequate for production, markups, and retail profits, but still the point is some FLAT number is simply a conversion fee. Analyzing a fixed conversion fee on an percentage basis can lead to some very incorrect conclusions. Maybe the best analysis would have both a flat and variable component, but I simply find it easiest to take a single flat number, since its my assertion most of the markup is static conversion fees.

Put it this way, what would the premium on an ASE be if silver dropped to $1 on our two models, lets say it sells for $4. For me, it would be purchase price minus $1, (lets just say $3). For you, you would say its 300% markup. Lets change the price of silver to $100. My assertion is it should still be $3, but for you it would be 3% markup. Kind of different ways of looking at the same numbers, no?

 

Sorry if you bought when it was $30 - I placed stops when it hit $6.50 and sold most of it when it was at those highs.

 

Well, I think there is a bit of a problem with that line of thinking since if we were are to use your model, a Gold Eagle should sell for $3 over spot instead the $60 it demands. That is the final salvo from me on that though, I got nothin' more

I do admit though, on the low end it gets skewed a bit as there is a "cost to convert" and when you bring it down to extreme levels, this cost will come into play. In reality, the truth may lie in the middle.

 

Lol, doesn't it always lie in the middle. These dang markets would be pretty easy to figure out if everything was black and white.

 

I think that you do need to be careful but I don't think that silver will go below $17 for very long. The CPI has doubled since 1986 and a $8.50 purchase is now a $17 purchase. I think that silver was flat over 20 years during the internet revolution and finally corrected in the mid 2000's. It overheated for a few years but should stabilize soon. It is my opinion that it will return to its stable self and appreciate slowly over the next few years to about $30.