What would the spot price of silver have to go to in order to profit from selling?

Discussion in 'Bullion Investing' started by Kevin Dore, Sep 10, 2018.

  1. Kevin Dore

    Kevin Dore Active Member

    I have a very small stack of silver in my collection. Definitely less than 2% of my savings, and I'm currently adding to it slowly. I have to wonder as a buyer, at what price would silver have to rise to in order for me to break even on my investment. Of course I have to pay a premium on every ounce I purchase, and one day when I may decide to sell it will be at a discount. What I do own I purchased for near or even at spot price. I select items that are not really collectible and therefore do not have a very high premium. I also have a good portion of my silver in the form of 90% junk silver.

    So just assuming I averaged 15$ an ounce for my purchases (just to make the math a little simpler) what would you say the spot price would have to rise to for me to break even or profit from my investment? What tips would you give for somebody selling silver? It seems LCS would be a good place for quick cash and a descent deal as far as not loosing very much from the discounted rate. Ebay would be a good choice if I wanted to put in some extra work to sell at spot price or possibly even receive a bit of a premium back myself, but it also seems risky as you could always loose money if you don't have your prices set just right or can't find the right buyers.

    Like I said, I am currently a buyer. I think the current prices of silver are great right now and it feels like a buyers market to me at the moment. I believe in averaging in to a market as the prices go down, and averaging out as they go up. I do wonder what target prices I should look for in the future to know that if I do sell I will surely be making a profit.

    Also, what are your suggestions for selling if I do ever sell off my stack. Do you think I have it right when I talk about selling to LCS or ebay? Or are there other options you would suggest, and why?

    These questions could also be asked about other PMs, but all I am invested in for now is silver, and speaking in terms of percentages, I'd have to guess that the answer to these questions concerning gold of other PMs should be very similar. I would like to invest in gold as well, and some day I may. It's just hard to get enough money together at once to buy a piece of gold large enough to keep my premiums down. I may someday soon start saving the money I'd spend on say 10 ounces of silver each month or two and save to buy that ounce of gold when I have enough saved.
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  3. CoinBlazer

    CoinBlazer Numismatic Enthusiast

    Don't sell to LCS unless it is an emergency speed sell off.
    Kevin Dore likes this.
  4. Collecting Nut

    Collecting Nut Borderline Hoarder

    No offense meant but if I have to answer that question for you, you shouldn't be buying silver.

    It all depends on how much you paid!
    TheFinn and Kevin Dore like this.
  5. DUNK 2

    DUNK 2 Well-Known Member

    I was going to say the same, but I thought maybe I was missing something.

    Using the OP’s assumed $15/ounce purchase price, he would have to sell at something above that number plus (a) the costs to ship, (b) selling fees (i.e., EBay fees) and (c) whatever his time is worth.
    Kevin Dore likes this.
  6. BooksB4Coins

    BooksB4Coins Newbieus Sempiterna

    I'm sorry, but this is foolish advice.

    What matters is the price offered/paid and not the type of establishment. Even if such shops will often pay less than some alternatives, there are always the exceptions and this doesn't even take other factors into consideration. The wise will leave all their options open and then make their decision based upon what best suits them personally.
    myownprivy and Kevin Dore like this.
  7. Kevin Dore

    Kevin Dore Active Member

    I take no offense. I rarely ever do. But I'm trying to get a better sense for a real percentage of what is acceptably paid in premiums plus what is generally acceptable as a discounted rate when selling. I know my original question was quite simplified which is why I spent the time going into detail as to why I was asking. I'm no where near a point that I want to sell anything. I'm quite happy just holding the silver I currently own for quite a long time, but I know the day may come where if like to sell and I'd rather educate myself now than wait till the last minute and rush into a sell just to find out I missed out on any good advice that could have made me a better profit.

    I do know that there are tons of silver rounds for example that fetch a much higher premium, but I don't know enough about the market to know which investments would be better than others which is why I'm sticking to things that out at or very near spot prices.
  8. tommyc03

    tommyc03 Senior Member

    There really is no good advice for this question. You should be keeping strict records of all your purchases and only then will you know when is the right time and at what price you are comfortable with. Now is not the time, at least for me. With silver in a slump it is a hold position until stocks or the dollar take a different turn.
    Kevin Dore likes this.
  9. Kevin Dore

    Kevin Dore Active Member

    I think I could have asked my questions in a better way but my thought process started out with that simple question and then ballooned into many other questions so that's how I approached it when I made this thread.
    Collecting Nut likes this.
  10. Collecting Nut

    Collecting Nut Borderline Hoarder

    Ok, now we understand a little more about what you are asking. As a general rule but not always the case, you will pay $2.00-$4.00 over spot for an ounce. The same for selling, you can expect to receive $2-$4 under spot. It depends on a lot of factors, dealers, where you live, what's happening in the market, etc.

    You should keep good records so you know what you paid. You can lower your price per ounce by averaging.

    As an example, if you paid $16.00 for 1 ounce and the price dropped to $14.00, buy another ounce. You now have 2 ounces of silver at a cost of $15.00 per ounce. This only helps in the future as you are assuming the price will go up in the future. If the price does rise, then it doesn't have to go as high in order to break even.

    PM's are a risky investment and you must be willing to hold for long periods of time. Forget percentages and you actual figures. 10% of $16.00 is $1.60 and 10% of $14.00 is $1.40. That's a difference of 20 cents. 10% of $15.00 is $1.50. Averages do not work on a percentage basis when trying to figure when to sell.

    I don't know of any dealers that charge a percentage of spot. They all change a set fee. Some take less, others more.
    Seattlite86 and Kevin Dore like this.
  11. Kevin Dore

    Kevin Dore Active Member

    You're probably right that it's not an easy question to give advice for. I do keep very strict records of what I've paid for what I have, so there is a start. Let me ask what I want to know from more experienced investors of PMs in a different way:

    When you pay premiums then sell for discount, what do you find is the general range you have to cover to break even? Assuming that you try to buy silver such as the cheaper silver rounds and bars, and 90% junk silver that does not have that collectors value that raises it into higher premiums . What I'm looking for is a general percentage.
  12. Kevin Dore

    Kevin Dore Active Member

    Thank you, that's exactly the sort of information I was looking for. I completely understand the price averaging aspect of it. I suppose if I had asked my question in a better way to start it would have been easier to answer. I get your point on the percentages which is what I was trying to look at. I'll concentrate more on the actual figures.
    Collecting Nut likes this.
  13. Kevin Dore

    Kevin Dore Active Member

    The LCS where I live pays $1 per ounce under spot for silver bullion which doesn't sound very bad to me compared to other prices I've seen and heard of.
  14. tommyc03

    tommyc03 Senior Member

    I did not mean there is no good advice in the literal sense but said that because it is different for different people. Collecting Nut has some good advice above for example...cost averaging. But the problem really lies in that we are not investment experts ( although some may think they are ) and we each do this our own way. There are doomsayers everywhere and the last thing (I) would want to see is someone saying sell now, it can only get worse or buy now as the market is about to go way up. And another reason why we do not practice religion or politics here. It can be a very touch and go proposition. As long as you have kept good records and check in on Kitco every now and then to keep an eye on prices will you really be able to answer this for yourself. But never try to "play" the markets. Get in or out when you are most comfortable.
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  15. Prez2

    Prez2 Well-Known Member

    If you got most of your silver stash at face value (as I have through roll hunting for literally 2 years some time ago) then anytime is great to sell. If not then of course it would depend on what you paid and how much you're willing to let it go for. Totally up to you.
    Kevin Dore likes this.
  16. Kevin Dore

    Kevin Dore Active Member

    You're right, we each have different reasons and methods. I know I am not anywhere near a financial expert, but I like to learn. Sometimes I learn by asking the wrong question, then I learn what the right question to ask is. I've done enough market speculation in other fields to know what I'm comfortable with risking, and that starts with knowing what I'm risking. With respect to us each doing this our own way, I understand completely. I'm all about diversification. Trying to get into markets when they look down, and hopping out while they're up. If it were just that simple, everybody would do it of course. Even when it comes to silver I like having different things. I like the numismatic value of old coins including those junk silver coins. I also like having physical silver bullion in hopes that I can turn a profit if and when the market rises in the future, but I have no intention of selling tomorrow unless the market gives me a price I just can't refuse.
    tommyc03 likes this.
  17. tommyc03

    tommyc03 Senior Member

    I did omit something that just came to mind. In 1980 when the Hunt Brothers tried to corner the silver market, the Wed. before the crash, my mother in law asked me a favor. She just wanted me to roll up her big jug of change, take it to the bank and give her back the face value. I did this and wrote her a check for around $500.00 and when I got home I decided to go through it all to see what I really had. In addition to filling many holes in my Mercury, Roosevelt and Washington quarter albums, I ended up with around $200.00 in 90% silver. On Thursday I took the rest to my local coin dealer and got around $50.00 an ounce. I did play the market just that one time and got lucky. Late that Friday, as I recall, the market collapsed. My dealer went belly up over the weekend and folded the next week. I bought her a very nice Christmas present. I miss that old time coin dealer though, he was a really nice guy, but he played the market and lost.
    Kevin Dore likes this.
  18. Kevin Dore

    Kevin Dore Active Member

    Wow! Yes, sometimes we do get lucky. That reminds me of my experience with cryptocurrency. I hope that's not too much of a taboo subject here, but I bought into the markets over a year ago for about $400 in bitcoin which I treated just as if I was gambling at the casino. I had full expectation of loosing the investment in hopes of "hitting it big". Fortunately I cashed out $1000 when the prices skyrocketed near the end of last year, but I held the rest which tanked quite quickly. Could have cashed out another $2000 but I held it and lost big figuring I'm in the profit no matter what happened. So in a way I both won and lost on that one. Who knows tho, maybe I'll make even more than that 2k back if it spikes again.

    I guess in a way all coin and bullion dealers are playing the market, they are taking way more risks than the average investor, plus they have overhead to pay, so I am always grateful that they are around. I really don't care much for the staff at our LCS but I respect what they do and their prices are always fair, even if their staff isn't very friendly or helpful so they still have my business from time to time.
    tommyc03 likes this.
  19. Kevin Dore

    Kevin Dore Active Member

    I do love to CRH and most of my collection was made through that or coins that my mother passed down to me, but it is so hard to find any silver these days. Problem with that though is that sentimental value. Some from the coins I've inherited, some from the hours I've spent looking through change, which makes me feel like that quarter I could sell for $2 is worth more than the time it took me to find it. I do get lucky once in a while. Lately tho I've been just purchasing silver. Cost a lot more, but it's way easier.
  20. Collecting Nut

    Collecting Nut Borderline Hoarder

    I dealt with a really great coin dealer years ago. About 20 years ago they sold the business and retired. One of the things those 2 great guys told me was simple. "You can make good money in this business. You can also go broke. Don't ever try to time the markets. You'll lose your shirt."
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  21. Santinidollar

    Santinidollar Supporter! Supporter

    One of the things that has to be considered with any financial asset: WHAT PRICE will give me a profit that I will be satisfied with. There is a tendency for many investors to hold on too long in a up market (as well as continuing to buy in a price spike) then aggravate the problem by continuing to hold as the price goes down and hoping the price will reverse.

    In short, you have to be willing to sell at the right time of your choosing. That might sound easy, but often it’s not when prices are rising.

    If you sell at a profit you are successful even if the asset continues to rise, IMO.
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