Gsr Swap - I Put My Money Where My Mouth Is..

Great questions!

... so first let's talk about premiums....

Rule #1 is if you can reduce the amount of money you have to pay where you're not getting anything for it.. the better...
So look at your sources of supply for silver and if possible find some with the lowest premiums.

Now I just recently looked at my LCS... spot at this very minute was $25.51 (Canadian funds) and they're selling silver (Standard SML's) for 29.05 a piece for counts under 100.

-Bars and basic rounds would be cheaper but my LCS doesn't always post those prices..

This means for me the premium would be 29.05 - 25.51 = $3.54 per round.. So the LARGEST premium is around 12% of the purchase price.

So let's say for sake of things you buy 100 oz @ $26.50 plus a $3.50 premium (for a total of $30 per oz) This means the total cost of the metal will be 30 x 100 or $3000 dollars.

Now let's just say the time of purchase the GSR was 80:1 (this would put the price of gold at 26.50 x 80 = $2120)

Now let's just say the price of silver rises to the point where the GSR is 45:1

So let's just say for simplicity sake that gold remains at the price of $2120 but the price of silver went up to meet a 45:1 ratio means price of silver would now be 47.11

You sell your silver for spot price w/o any premiums which means you now have 100 oz x $47.11 = $4711

You then buy gold at that price. $4711 (premiums are generally around $50 per oz.) Which will net you 2oz of gold (technically 2.2oz) and cost you $100 more in premiums

Now let's just say the price of gold still remains the same at 2120 per oz but the price of silver drops and the ratio goes back to 80:1. You Sell your 2 oz of gold and you get $4177 and buy silver which now would be back at $26.50

Assuming that there's still a $3.53 premium you will now have 139 oz in your pocket after paying premiums 2x for the silver buy and 1x for the gold buy.

So swapping at 80:1 then at 45:1 and back again at 80:1 will net you almost 40% more in hard metal.

Now you can sometimes sell the silver yourself slightly above spot but still undercutting your LCS premiums and you'll get buyers. Conversely you can purchase silver privately at around spot minimizing premiums. (just know what you're buying and beware of fakes)

On your point of "semi-numismatics" ... I really hate that term! If your LCS is willing to sell you a piece at X but only buy it at Y ... you really should be scratching your head!

I think of buying gold and silver like buying any other commodity or equity. Numismatics are a different ball game completely!!! Don't mix the two and don't let someone convince you of some grey area that combines the two. Perhaps right now there's hype for elephants or pandas or some other type of "semi-numi" but you can't say that "premium" will hold 5,10 or 15 years later. But for .9999 fine silver.... you ALWAYS know it will follow the price of spot! So if you want to buy semi-numis that's great.. but buy, flip, rinse and repeat but that's a completely different ball game than PM's and GSR swaps...Not saying you can't make a profit from semi numis... just saying the market trends on interest which is harder to track and predict.

Hope that helps and clarifies your questions...