Why are the premiums on silver so high?

Hey guys,

I was checking out prices on American Silver Eagles from various retailers (including APMEX & JM Bullion) and I noticed that for some reason the premiums are insanely high despite the fact that over the last couple of days the price of silver has gone down.

I know that everyone was expecting there to be a huge influx of silver buyers this week but apparently that didn’t happen if the silver prices went down.

Yet for some reason JM Bullion is charging $12 over spot for an ASE and APMEX is even worse at $16 over spot.

What gives?

 

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I'm guessing twofold 1) they don't have that many and 2) some people WILL pay it.

 

But they can always buy more Monster Boxes no?

They didn’t used to charge such outrageous premiums so I’m just wondering why they started now?

 

From who? APMEX?

Because they can

 

Perhaps someone else will have a more sensible answer.

 

Look at recent ebay bullion sales much worse than this like 20 silver eagles are selling for $800-$1000 and monster boxes are much more worse I'm afraid this silver hype will last for months!!!

 

Prices will drop once all these jeff bezos go bankrup if that will ever happen not any time soon though most likely.

 

Because people will pay it.

 

From the US Mint silly goose. xD

APMEX is a licensed buyer. One of the very few actually listed on the US Mint website as authorized buyers.

 

Then why start just now?

If it's just because "people will pay it" they would've started along time ago.

 

That's crazy! I bought two tubes of 2020 ASEs from APMEX in November 2020 and I paid $655 each.

 

Hype and 'social media'. All it takes is a few to push a little water along and the next thing you know it's a tsunami. Goods and services sell for what people are willing to pay - if it's not worth to you then don't pay....apparently someone else will.

 

Well I mean APMEX may be retail but I don't think they try to price gouge.

If you want to see price gouging you should take a look at HSN.

They're trying to charge $199.95 for a 1921 Morgan Dollar & 1922 Peace Dollar and apparently people are willing to pay that yet APMEX doesn't charge close to that.

 

It's probably not a buyer's market right now anyway....not for me..I'll just hold.

 

Essentially it was a HUGE physical rush. Over this last weekend, people were ordering around 12X as much physical over the weekend from the online dealers. Most of the online dealers shut down their sites on Sunday morning until the opening of the Asian markets. There was a $2.00 spike at the opening and in fear of the prices shooting higher before they could acquire more physical, the online dealers adjusted the premiums up substantially. This was to slow down the online orders as well as hedge against the likely possibility (at the time) of a larger move up on the spot price. The online dealers were also having a lot of trouble trying to source physical from their suppliers. The ball rolls down hill from there.

So for now, the premiums are ridiculous and people are still willing to pay it. Once the demand for physical decreases and wholesalers start getting silver to the dealers, the premiums will start to go down. Unfortunately, it's probably going to be around April, before things start to normalize, assuming nothing happens between then and now.

 

Well that sucks.

Premiums go UP so buying doesn't make sense.

But spot prices go DOWN so selling doesn't make sense either.

It would be nice if silver hit $30/ozt and stayed around there.

I'm not trying to be greedy or anything but if the demand is really that high the spot price should go up. Spot price is only like $27/ozt but an ounce of silver will cost $35+. It doesn't make sense to me.

 

What we are experiencing is a separation of the paper and physical prices. The current "Spot" price is the paper contract price on the COMEX and other exchanges around the world. Most investors who are buying and selling on the exchanges are not taking physical possession of the silver, it's just a numbers game to them. Physical silver is tied to the paper price, but when supplies evaporate quickly, like we are currently seeing, the premiums rise. The rise in the premiums are to help stabilize and lower the demand for physical.

The paper prices are controlled by long and short contracts. As the short contracts increase, the price drops. As the long contracts increase, the price rises.

 

So then will dealers pay more for physical if they're charging higher premiums?

Or do they still pay the same as normal?

Like if a dealer usually buys ASEs for spot + $1 will they offer more than that now due to insane demand?

Generally speaking of course. I know every dealer is different.

 

dealers are paying higher premiums to their up-chain suppliers. My local dealer was paying spot +$3 for ASE's and spot +$2 for other generics. So yes, dealers are paying higher premiums as well. Although they are paying higher premiums up chain to the wholesalers than they are paying to average Joe bring in silver to sell. Because the amount of silver coming into a shop off the street is no where near enough to meet sales demands, they have to order from wholesalers. If they are paying wholesalers spot +$5, then they sell them retail for spot +$10 or higher.

 

I have the answer. Bet a teaser on the Super Bowl. Take Tampa +9 and over 50 points total. Then buy silver