Silver Eagle pricing. I don't understand.

Yup. Doug got on the list immediately !! You're #2. I have to buy some invisible ink pens and fill out my paperwork!! lol

 

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What goes up must come down. These precious metals markets always obey the law of gravity.

 

The mint seems to have found a way to exercise their monopoly position with respect to U.S. coinage. Just about everything they sell now to the public is way over priced. The only way to buy it is in the secondary market years after the initial blush has turned to chalk. Once it has turned to chalk, it seldom comes back.

ASE's are all way over priced relative to spot. You only get a $1 per coin break on the old ones. Now they are priced like "numismatic items" except they aren't. There are too many of them. They are not rare or even scarce, and almost all of them are high grade.

The merry-go-round will stop turning eventually. The idea is not to be standing on it when it does.

 

I've only recently gotten interested in bullion and do not have much experience buying/selling, so my assumption might be born of ignorance. But, I'd assumed that the "premiums" on certain items (Eagles for instance) was universally applicable and not directly representative of dealer's margins. The premiums are high right now and expected to come down, in which case purchasing Eagles today would be a bad idea. However, the premiums themselves are not driven by dealer greed, it simply represents the premium cost. Or am I wrong?

To put it more simply: If the premium on Eagles is currently $15 over spot, but dealers are buying customer's Eagles for $13 over spot, then they are working with a $2 margin per ounce (which would be similar to the "Old Days").

Now, if dealers are paying spot for Eagles and selling them with a $15 premium, then that is a different story!

 

Its just simply the cost the market is applying to them for sales. The acquisition costs are also significantly up with high gas, higher taxes, higher shipping etc. The prices you see from big dealers online arent buying their inventory from walk ins

 

The new Merry go rounds are electric they never stop. JM Bullion has 2012 Proof ASE box and cola over 115.00. The eagles are still selling high as all get out. If they fell 40.00 OR FIFTY still be alright. I quit purchasing them 2019. I RECOLLECT that some say silver will drop back that has not happen either. To me at this point Silver still hovering in 19 to 20 range. showing staying power.. we'll see

 

This is likely the reality going forward.

My opinion: The big players in these metals' futures market love keeping the price right around 19-20 because their buy/sell algorithms are designed to play around in small percentages +/- fluctuation and make good money with the slight ups and downs on weekly/monthly cycles.

 

Okay that makes sense why it stays around those figures then if that's jump off point.

 

A few years ago I sold a bunch of 'em.
but then I realized I missed them and had to buy more.

I guess I'm just a hoarder.
But a hoarder at "fair" (in my twisted mind) prices and premiums.

I want to buy gold too, but anything short of 1oz now is a waste (or high premium).
When 1/10th AGE were in the $110 range I nearly started buying those instead of the ASEs. Oh well, I should have bought both. lol

But then I'm just a small hoarder of precious metals because I know I'll probably rarely sell any. even when I knew Silver was spiking a few months ago I thought about selling some silver .. but nah ... i'd just buy more back.

 

Gravity is never any match for mania. Manias do tend to come and go, though.

 

True, as, for example, it only took about 200 years for diamond mania to break.

 

Right, but assuming that "market cost" = "What people are willing to pay". Then where is the premium originating? Is the Mint selling to bulk dealers at spot? Or is the Mint charging them a $10 premium to begin with?

What I'm wondering is: If the high premiums result from market demand and price gouging, then who exactly is making all of the extra money?

The Mint?
The middle-middle man (buy bulk from mint)?
The Large-scale (online dealers) middle men?
And/or the Small-scale (local dealers) middle men?

If the Mint is originating the premium, then everybody in between can't really be blamed for that.

 

Good news, premiums have increased yet again on APMEX, now only 20 cents shy of 100% premiums on silver eagles.

Well, good news for me anyway because it's encouraged me to explore many different cool world gold and silver coins with low premiums that before I would not have given a second glance. Don't miss the Silver Eagle.

 

All of them or none of them and it's just 'the market doing it's thing'.

And I would caution you not to use the word 'gouging' in relation to a literal luxury good.

Silver bullion is never the same as bottled water after a natural disaster, for example.

 

True enough.

Not sure what the word would be, but something like, "Charging prices that irrationally outpace your investment just because you can".

 

That's pretty good and objectively unemotional.

 

The market sets the prices. Bullion has never been a good investment

 

Agreed. If anything, it should simply be a hedge against complete loss. More like an insurance plan.

 

When it comes to Spot Price, I also agree. But, I think we are all talking past each other to some extent in this thread when discussing price evaluations.

The things that I'm wondering about are separate from spot price. I'm trying to get some perspective on the relationship between Premiums and Dealer Margins. Are they one and the same? Do the margins account for some percentage of the premium at each step along the way? Or are they separate?

When I said, "prices that irrationally outpace your investment" in my previous post, I wasn't talking about silver as an investment vehicle (Spot Price). I was talking about the price that dealers pay for silver (their investment)...... and subsequently the price at which they sell ....... irrespective of spot price.

Edit: In re-reading my post, I think that I'm still having trouble clarifying. Here are the questions that get to the root of what I'm asking.

Assuming that the spot price of silver remains constant at $20 and the coin dealer-charged premium on Eagles remains constant at $15:

1. The people with the capability of purchasing Eagles from the Mint, what are they paying per coin?

2. I purchase an Eagle at an average coin shop for $20+$15 = $35. If I immediately turn around and sell it back to them, how much money should I expect to get?

 

The market. Bullion is sold for whatever the market will accept. If sales stop prices come down until they start selling again. If sales keep occurring theres no reason to lower prices. ASEs will never be spot or a dollar over spot again. You're probably looking at a minimum of 4 and more like 5 over even direct from the mint buyers with what the mint charges and how much more expensive all the logistics of it are now

The 10 that can buy direct from the mint pay a $2.35 premium a coin