If you look at the spot price of sat this moment, it’s somewhere around $28. Yet Apmex is selling a eagle at $38?
That’s roughly a 35% premium. A few weeks ago, I saw price at $27 and the price of eagles at $41. That’s a 50% premium.
You are getting gouged. Or are you?
If you talk to some people who sell 1,000 oz bars – there’s no shortage of them. They tell you, “come to my site and I’ll get you 1,000 oz bars all day long”. And when you look at the price they are selling for, you are still looking at a $31 an ounce, or about a 14% premium. They were calling out high premiums by dealers as insane – and playing the argument that they have no shortage of 1,000 oz bars.
When you look under the hood, and do they math, those sites were charting between $1.25 and $1.65 premium per ounce for those 1,000 oz bars.
What is “normal”? In times of “normal” conditions, I’ve heard experts state that you can get a 1,000 oz bar from the COMEX at $.10 to $.20 over spot. But if you go into these markets and listen to the people who are telling you bullion dealers are gouging you due to “fake shortage” are selling you a product they perhaps marked up 5-16x on premiums.
You are sort of seeing narratives out there by the evil dark lords and the like talking about “there is no shortage”.
At $28, no one is likely to run to the coin shop with grandma’s silver. and evil dark lords are smart guys and They know this, and their smugs and condescending tones to you is to convince you that this supply is available at any price point. It’s not.
Let me repeat. If you have constricted supply and massive demand, on a product that will increase in price and demand as price increases. When price is low, you’d think people would scoop this up. Silver and gold are the types of things that as price rises, people pile into it.
This is why they need “tampy tamp”. If they do not have this, silver would literally go parabolic inside of a few weeks. And – we might be getting to that point anyway due to the governor switch possibly going the way of Palladium soon. When Palladium broke the “tampy tamp”, then it went nuts. This potentially is what is in store for silver soon.
But lets’ get back to premiums. Let’s look at dealers. If you listen to the dealers, they tell you the supplies they get from the mints to sell Eagles and Kangaroos is very constrained.
Assume there’s 900m ounces sold of silver per year. What you find from these dealers is that the US mint only makes so many eagles. The US mint then slaps like a $2-3 premium on from THEM. This then goes to distributors who have a mark up, then get to the end dealer to sell. And they may have 10,000 available but 100,000 want them at $5 over. This moves price higher to meet that 10,000 available and find the equilibrium. Otherwise, they sell to you too cheap and they are out of products and out of business soon thereafter.
So what is given to the dealers from the distributor is very little supply, and a RAGING demand. The market essentially has the governor switch at the retail front end. Interesting – huh? We have a cheat code for that, by the way.
hey HAVE to raise prices to:
- slow you down from cleaning them out
- make money in the event you clean them out and they have no products to sell for weeks or months.
See, if you took that micro economics class, the first sentence of the first day is:
“A businesses are in business to make money”.
They are NOT in the business of running a charity. And, it is NOT their duty to give you a price that makes YOU happy, but one that sustains their continued operations.
Remember – at the same time those who deal with 1,000 oz bars are telling you “there’s no shortage, come here” and they have 5-16x higher premiums than normal. Anyone buying silver for 5 minutes knows that the larger the quantity, the lower the premium per ounce. But why would THEY have such high premiums?
They use the word “tightness”.
Let me translate. “At this price point, there is a lower than usual supply so I am being charged more.” This is exactly the same story the retail guys have, dude.
What are other options to drain the COMEX, so to speak?
- Buy PSLV or another ETF that you trust. PSLV is indeed draining 1,000 oz bars from the market.
- Buy OneGold – that says that it is allocated and a Sprott product. Supposedly, this is matched to silver in their vaults. If you want your silver, they cash you out to dollars, then you can buy at the best premiums on Apmex. You are then running into premiums twice. It is highly liquid though and you can get metal on the other end- provided Apmex is not out.
- Kinesis –, but you can buy KAG and mint silver there – which has them going out and draining silver from the market and putting into their vaults. You can take delivery of 100 oz bars, minimum of 200 oz. This is the best solution if you want to put some serious money into silver, yet down the road have the optionality to take delivery of your silver if you aren’t a 6 figure investor in silver.
The latest silver reports show investment silver at 500m oz, to include ETFs, yet price hasn’t moved since the summer?
If you want $100 and $200 silver. Continue to drain on LCS or retailer sellers, and when premiums come down on the left side, get some more shiny here and there. Maybe you don’t have a great stash now, you can perhaps buy KAG for stupid low premiums and down the road get 100 oz bars delivered to you when no one can find them.
The common mistake is just trying to go after retail. Look at the drip above that is going to dealers. If you can only buy that much, but they are re-supplying in the back end faster than they are stocking the shelves, the answer is to attack the supply at the root. And that’s 1,000 oz bars.
I’m also aware as supply is unlocked, it’s possible the refineries and others are hedging what they just bought to protect from downside price moves. That hedging in itself is potentially shorting on the COMEX and creating the downward price pressure they are trying to protect against.
What 1980 and 2011 did NOT have was PSLV, Kinesis Money, and OneGold. Meaning – as retailers see a flood of interested people over $30, high retail premiums would be the norm to slow the interest in buying. But now, we can filter a lot of those people towards other instruments, bypassing the “air brakes” of the trickle of the retail front end supply. If we continue to pound PSLV and those types of instruments, we blow through $50 silver like a hot knife through butter and continued pressure may make Palladium jealous of the results that come from this.
Thanks for addendum Natenfishpa
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