Silver has recovered to preStayatHomeOrder levels. Will the premiums return to normal?

Discussion in 'Bullion Investing' started by myownprivy, May 20, 2020.

  1. myownprivy

    myownprivy Well-Known Member

    At the beginning of March, Silver was about $17.50 per ounce. In March states began issuing Covid19 guidelines.
    In March/April/Beginning of May, silver traded at very low levels and shortages resulted in massive premiums and high order minimums from major online bullion dealers. It hit its low of $11.64 during this time.

    Silver is now back to trading at its preCovid levels. The question is: how long until the premiums return to normal levels of a few percent over spot?

    Looking at the JMBullion homepage I see 2020 Britannias are $4.19 over spot (that's a disgusting 23% premium).
    A random year American Silver Ealge is $26.81 (spot is $17.61). That's more than 33% over spot. My head is going to explode.

    It looks like the big dealers still think you're a bunch of idiots.
     
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  3. -jeffB

    -jeffB Greshams LEO Supporter

    It looks like the big dealers are still getting their asking prices. If inventory starts piling up, they'll drop premiums.
     
  4. Tuco

    Tuco Active Member

    What's the latest on the West Point Mint? If full production resumes I'd think the dealers would only be able to get away with sky high premiums for a couple more months.
     
  5. chungt

    chungt New Member

    Let me start by saying I am new to this. But I went to a local dealer today and found they were selling the American Eagle for +$25 and +$1 overs spot on Gold and silver respectably. Is there a reason for me take precaution or reason it is better to buy from a big dealer?
     
  6. medoraman

    medoraman Supporter! Supporter

    They will charge it if they can get it is the correct answer. EVERY time during such events premium spike, "we have the risk of it going down..." excuses from dealers. However, then they do not GIVE UP those premiums for like 6 months. During those 6 months enough new product hit the market to force premiums back down. Heck I could have predicted this. Always happens with physical market, one of the reasons why, as a market, it is so inefficient. Dealers take most profit potential away from buyers.

    Btw, not talking trash about the dealers. Buyers put up with it, and I would do the same if I could get away with it.
     
    -jeffB likes this.
  7. -jeffB

    -jeffB Greshams LEO Supporter

    Those premiums are much lower than premiums from big dealers at the moment. They're low enough to trip my "possibly too good to be true" alarms. Having said that, it depends on the dealer; I've known pawnshops to accidentally sell things below melt, and also to accidentally (I'll give them the benefit of the doubt) sell fakes.

    I still wouldn't buy at those prices, because I'm a cheapskate who looks for PMs below melt. (Of course, I rarely find them.) But if you want to buy now, you'd have a hard time finding a lower price.

    Welcome to CoinTalk!
     
    medoraman likes this.
  8. chungt

    chungt New Member

    Called the dealer today and he now tells me that uncirculated ase are +5 over spot. He said he would sell me +1 for buffalo silver coins. As i am starting this as an investment, my local dealers recommendation was to just get the 10oz or whatever silver i can buy closest to the spot. It makes sense but why are people head over heels for ase then? I understand they are the most popular but is it worth it or should i accept his advice and just buy the cheapest silver?
     
  9. myownprivy

    myownprivy Well-Known Member

    Yes, that's good advice. $1 over spot when silver is $17.40 an ounce means you're paying $18.40/$17.40 or a premium of 5.7%. However, if you sell that generic buffalo round back you will likely sell at least 5% under spot.
     
  10. FryDaddyJr

    FryDaddyJr Junior Member

    why would you be in a position to have to buy much right now?
     
  11. Santinidollar

    Santinidollar Supporter! Supporter

    The premiums will stay as long as buyers are willing to pay them.
     
  12. FryDaddyJr

    FryDaddyJr Junior Member


    there isn't enough inventory for anyone to start to get competitive
     
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