Why are the premiums on silver so high?

The only people that make money on bullion Most of the time are those that determine the B/S ratio, the large banks and financial office that are part of the "Fixers", who from London sets the theoretical basis,If they start to lose , they will change the rules a little. Their B/S ratios are not the same as we get from the dealers as they add their 'thumb' on the scale for their share. The time to buy is when people start to lose interest. Honestly, and I hate to say it is to buy bullets, medical drugs, and firearms over gold, as people will pay more in a bad time. Jim

 

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The premiums are so high because people who don't think or research the ups and downs of silver prices continue buying. Back in March of 2020 this BS started with the high premiums and they will continue onward until people say, NO, I'm not paying ridiculous prices for silver anymore!!

 

I have been hearing a rumor that silver might reach around $50 an ounce within the next couple months if people keep on buying what say you?
.

 

What really forces the issue, since dealers will charge what they can, (as they should, they have expenses and need to eat too), is pm will cease being cool after a while. The new buyers move on, and then inventory starts to pile up on the dealers, since people always sell. Once the inventory piles up enough, they start cutting premiums competing for the remaining buyers.

Go to a show. Right now pickings could be slim. Watch as inventory grows after this stuff goes back to normal. I always find it interesting to watch such dynamics. Just by watching what dealers have to sell I can guess what premiums are doing.

 

don't be one of those people who buy high

 

Absolutely, as it stands right now, I wouldn't be surprised at all. The actual price of silver hasn't gone up that much at all. It's basically been around $24-$28 the last six months but if you go to buy, you're gonna pay $40 an Oz, that's insane!

 

I dumped all my silver that wasn't nailed down in April of 2011. The friend I sold it to couldn't believe I was selling with it going up (I sold him ASEs at spot $42 each). I asked him why he was buying - didn't he know what a bubble was? I replaced a lot of it when silver was in the $16 range.

 

I think of PMs as money. How many gallons of gas can I get for an ounce of silver, or a silver quarter.
When I was a kid you could buy a gallon of gas for a quarter.
Now you could buy a gallon almost 1.5 gallons of gas for a silver quarter. So, gasoline is cheaper now than in 1964.

 

Thats a good idea.

I do like British sovereigns, Guilders, Frances and all those old gold coins but they seem to be harder to sell back than say a 1/4 oz Gold Eagle.

But my safe is filling up with silver fast and I figure the best thing to do is convert some of it into gold to save space. Then restock silver and when it gets too full again convert that into gold.

It’s crazy how much wealth is in a 20 coin tube of 1 oz American Gold Eagles.

 

Well they have been considered money for thousands of years. Long before coinage or bank notes.

I think we should have a fractional bimetallic standard.

 

I prefer dollar-cost-averaging just like with stocks.

Buy a little bit every month regardless of if it’s high or low. In the end it averages out and you end up getting a good deal.

Even with silver prices up now and premiums through the roof I am still buying.

Silver is necessary to technology and the more technology we develop the higher the demand for silver will be.

 

no, you end up buying high and barely breaking even if you're lucky that way

 

That is just not true. Dollar cost averaging, if you are unsure of the direction of the market, mathematically will ensure a lower than average cost if you invest X dollars per month. This is assuming you don't know when to buy in at a low, and is not accounting for any bulk discounts of course.

 

That's not true. That's not how dollar cost averaging works out.

There have been MANY studies proving that it is an effective form of investment that minimizes risk while maximizing reward in the most mathematically effective way.

 

This is absolutely correct, as a bona fide investment strategy. The problem with your analogy is that you're conflating collecting, hoarding and stacking with investing.

Accumulating physical silver historically serves as nothing more than a hedge against economic failure and disaster. It hasn't proven successful in the long term as an investment. It throws off zero dividends, zero interest, and the stacker relies solely on growth to make any gains.

Spot silver has reached a plateau of $50/oz only twice in history. And those two times were separated by 30 years.

I do not tell people what to do with their investment dollars. When asked I provide pros and cons supported by facts and historical tends always followed by the disclaimer that past success doesn't guaranty future returns.

Additional disclaimer, I do own my fair share of over 50 years of silver stacking. So I do have a stake in the game. None of the bullion purchased above $16/oz. Numismatic and mint issues are another story.

 

I'm not conflating collecting, hoarding, and stacking with investing.

Yes I collect but my silver & gold bullion is something separate from that.

You're right about it being a poor investment due to lack of dividends, interest, etc., but that's why most financial advisors only recommend 10% of your portfolio be invested in precious metals.

The other 90% of one's portfolio is for dividends, interest, growth etc.,

I see my gold & silver bullion stash as simply a form of wealth preservation and as a form of physical wealth in my possession.

 

But you touted dollar cost averaging as an investment strategy for silver....

 

Its simple math though. If someone's to put X amount into a position over X time, and has no clue as to what the price may do over time, and absent things like bulk purchase discounts, then mathematically they will get into a position for cheaper using DCA than other methods.

Like I said earlier, if you DO think you know where the market will go, then use that knowledge. I have bought most of my silver cheaper as well, some of it at $4 an ounce, and I refuse to buy PM at these prices and premiums as well, I am just talking the plain math.

In 2011 and 2012 when newbies wanted to jump in with both feet at the height, I counseled DCA. Small investors have a horrible track record knowing when to buy, something DCA helps with some. Push out emotion, use math if you do not have any idea where the market will go.

 

Yeah because it does work with silver.

If you buy the same amount of ANYTHING over a period time it will average out over that period.

If you buy silver at $18/oz for 3 months
Then you buy it at $19/oz for 3 months
Then you buy it at $20/oz for 3 months
Then finally you buy it at $21/oz for 3 months.

Well in the end you end up paying ~$19.50/oz that year on average.

Then if you repeat that year after year it works the same.

Whereas if you try to time the market and only buy silver when its low you have a risk of missing out entirely.

For example the people waiting for silver to go back to $14/oz might be waiting forever. It might never even get close to that. Just like waiting for $300/oz gold would be risky because it might never go back to that.

 

Nope. That is not DCA. What you are describing will simply net you the average price of the market.

Try this:

Buy $100 each of those months you describe. Your example the average price would be $19.50. Buying a flat dollar amount per month would average out around $19.30. If you really want, I will put the spreadsheet together, but its late and I am on my phone. Do it and prove it yourself.