After seeing the response I have gotten from the sub $20 thread, it made me think are some people waiting for it to go below $20 before they do a big purchase or does it not matter? As of right now your talking about $1.80 away from getting under that magic number. Some people stated they may start buying again if it does go below. So the question is if people are afraid to buy now thinking it will drop and don't want to miss the boat on a better deal, or it really doesn't matter about the $1.80 difference? Think about it, the market has been so unstable as of late that right now could be your purchasing chance at a good deal. Like most people, trends tend to make people do impulse purchases. Is this one of those times with so much uncertainty?
Most investors have a buy/sell number in mind and stick to it. If you are just hoarding, $1.80 seems pretty insignificant long term.
It is not just $20 that is a magic number...... Some folks are waiting for it to go below $14. For those with short memories and believe $20 silver is cheap, It was only 4 short years ago Silver was trading at $9.
Everyone has a strike price in their head. This price could be at where they believe pm is at fair value, or a certain amount below fair value. Myself, going back and looking at inflation and oil prices, I believe silver is fairly valued between $18-21. I simply believe this is the range that is supportable and equivalent profitability as it was back in the 20's and 60's. Do I necessarily wish to buy only at fair value? Not necessarily. However, I believe everyone should do their research and come up with what THEY believe the fair value would be, and then act on that knowledge. To me, the WORST strike price would be one based upon emotion. Yes, silver WAS in the thirties, and you might BELIEVE it will go back there. However, from those emotions to assume then that $25 or similar is a "deal" I believe is dangerous. The $25 value should have some kind of mathematical basis to it, and not just based upon the past. Like always, do your own homework, and never rely on those whose job it is to sell you pm. That is the equivalent of walking int o a Chevy dealership and suddenly coming to the conclusion that a new Silverado is way undervalued and you would be a fool to not buy it, right?
I agree. Of course a lot of other people might get emotional around the 17th and drive the price of silver up, or it could result in deflation in which case it tanks back to $9 again. Hard to tell what will happen. That's why I think of silver as an insurance policy. It's great to have in case it gets nasty, but it's okay to hold onto if it doesn't. I figure if silver is at $50 for any extended time then the price of bread, milk and gas will be double as well, and we'll lose on that end. I'm waiting until I retire in 5 years and then when we need it we sell it. I'll keep buying if it gets under $20, but I'll be okay if it doesn't.
I think it has a lot to do with the volume purchase we are talking about here. If you're talking about going in and buying a silver eagle, then a $1.80 is about what I have in pocket change at the moment or a soda from the gas station. Big deal. If you are talking about a monster box, then that $1.80 turns into $900.00.
True. If I find $40-50 FV of junk silver at a good premium, and I like the coins, buying in this market doesn't bother me. However, for a monster box or similar, I would be taking money out of another investment to purchase it. They are somewhat different decisions.
First of all, 2008 was 5 years ago, and second there was very little retail physical silver available when it dropped to $9. (retail as in 10oz size and less)
That is fair. There was not a lot available because the price decline was so steep. I would postulate that had it lasted longer at $9 there would have been plenty of inventory. Short spikes downward always lead to increased premiums short term. Still, fair point about physical buyers not being able to buy at that price level. Kind of make you think, though, that given this inefficiency of the physical market, an investor might be much better off buying SLV or another silver derivative instead of physical silver in a major price decline. There are distinct, GOOD reasons why the silver market was created. Physical buying and selling is a pretty inefficient market.
I'll agree that the silver market isn't like going to a grocery store to buy bread, as the demand for bread is pretty constant and consistent. The inconsistent demand is what makes it inefficient. At the same time, a very large portion of physical silver buyers would never consider buying SLV or any other silver related investment vehicle, and they'll state the counter party risk as their main reason for buying physical vs stock or other investment vehicle. (IE, you don't hold it, you don't own it)
Yes, its a quaint little catchy catchphrase I am sure was thought up by physical PM sellers. I would never own a long term position in PM on paper, as I believe the carry costs too high versus me buying it physically and holding it. However, if I were strictly a pm buyer, (don't care about coins), and wished to efficiently profit from what I viewed as a short term correction, I believe the math would tell me I would need to do that with paper. Why on earth would I pay $7-8 premiums for ASE's, (what they were running at the time), when I could buy SLV at $9, pay no premiums, and wait for the correction and for when premiums are back in line to swap out the SLV for physical? That is my thinking at least. If there is ever a sharp downturn and premiums ballon again, (in many ways this is simply sellers wishing to have higher profits, which by definition lowers yours), I will be looking at derivatives instead. When markets either stay there or go back up, trust me premiums will go back down, and I will then swap out the paper for physical.
I don't think SLV has much physical silver, but it's better than anything else on the stock market (with the possible exception of SLW) I would rather have physical silver, but for my measly retirement account something backed with silver is better than the rest of the choices.
