Please do the math every time you buy: It's rarely a good deal

Discussion in 'Bullion Investing' started by myownprivy, Nov 11, 2019.

  1. myownprivy

    myownprivy Well-Known Member

    Please, please, when you are buying silver do not pay attention to the dollar premium. It will mislead you into thinking you are getting a good deal. "Only $2 over spot!" Do basic math instead.

    Information like that is irrelevant. You must calculate the percentage over spot to determine if you are getting a good deal. The price of precious metals will always change. Consequently, $2 over spot one day might be a great deal, another day an ok deal, and another day a ripoff.

    If your American Silver Eagle is on sale for $2 over spot, and spot is $16.80, that's a bad deal to pay $18.80.

    The math:
    Price divided by spot equals premium

    $18.80/$16.80=1.119

    That means you're paying an 11.9% premium! Please, do the math every time you buy.
     
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  3. longnine009

    longnine009 Most Exalted Excellency

  4. Rono

    Rono Senior Member

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  5. myownprivy

    myownprivy Well-Known Member

    Very transparent!
    That's quite the markup when you buy only $10 face of 90%, though. What's the deal with that?!

     
  6. Good Cents

    Good Cents Active Member

    Do you have a better way to buy ASE or a better place or a better "deal"?

    Here's an example - I've been waiting for Silver to go down for the past year but lo and behold, it went UP! I could have gotten a great deal had I bought those ASE for a $2 premium a year ago. Instead, I held out, waiting for a "better deal" but that never came and silver went up a lot since then. So what did I gain? Nothing! I lost lots of opportunity.

    You're either talking about timing the market, which we all know how well that works, or trying to get ASE at Spot, which, when you find a place to buy ASE at spot, well, please let us all know!
     
  7. myownprivy

    myownprivy Well-Known Member

    It's not about timing. It's about the premium at that moment. In fact, a $2 premium on an ASE today is much better than a $2 premium on an ASE a year ago.

    Nov 18 $14.42. $16.42 for an ASE then is a 12.2% premium
    Nov 19 $17.10 $19.10 for an ASE now is a 10.5% premium

    The premium is what matters most, not the total cost. The reason is because we can have no idea what will happen to the price of the metal, so buying based on the premium is the best way to protect our investment. The only thing we can know is what the price of silver is today. So the closest we can buy to spot, the better.

    I can recall plenty of times over the last several years that I purchased Silver Maples at premium percentages of under 6%. You just need to pay attention to JmBullion, Provident Metals (now the same company, unfortunately), and other online dealers.

     
    Good Cents likes this.
  8. Randy Abercrombie

    Randy Abercrombie Supporter! Supporter

    Back in the early 1970’s gasoline ranged from .25-.29 cents a gallon. My mother was poor. Her Sunday evenings (her only time off work) were spent driving a predetermined route to identify which station was a cent less than the others before she fueled up for the week. Now, mom was poor and she had to be thrifty. But from a practical perspective, her Sunday afternoon drives likely cost her more than that cent she saved per gallon.

    Now with PM’s I would bet most of us use our discretionary funds. I would hope so anyway. When a person is spending discretionary cash, buying PM’s are likely more of an impulse purchase. And if you are a smart PM buyer, you are hopefully making a very long term purchase anyway.

    My point is this. Yes, always make the best deal you can make. Myself, I want to keep the fun in my PM and coin buying. My life is busy enough. I’m not going to spend my Sunday afternoon shopping my best deal. And yes, I do recognize a fair deal when I see it. If it feels right, I am buying. My grandkids can worry about sell back values and such when I leave this party. It’s theirs anyway.
     
  9. Good Cents

    Good Cents Active Member

    I understand. Thanks for explaining.
     
  10. Good Cents

    Good Cents Active Member

    I'm with you on how I see it. You explained it well.
     
    Randy Abercrombie likes this.
  11. Collecting Nut

    Collecting Nut Borderline Hoarder

    So by your example it's better to pay a higher amount on the pm but get a 1.7% lower premium.

    I think I'll buy at the lowest price I can.
     
    GoldFinger1969 likes this.
  12. masterswimmer

    masterswimmer Well-Known Member

    Buying at the lowest spot price you can goes without saying. What @myownprivy is saying is that the market is going to dictate price. You have no control over that. You have no control over what the market will do in the future. What he's trying to convey is that the premium over spot is the only component of the final price that you have a minute modicum of control over. Not every seller has the same premium over spot.
     
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