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 Replies: 11 / Views: 1,071 |
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New Member
Canada
36 Posts |
Is the premium over spot price a percentage or a flat rate?
For example, if the spot price of silver is $10.00 and the flat rate premium is $5.00 then the percentage of spot will be 50%.
However, if the spot price is $20.00 with the same flat premium then the percentage of spot will be only 25%.
Is it different for collector coins than for bullion coins?
Seems to me that the value (buying power) of silver is very close to historic lows. The price was half what it is now ten years ago, but the dollar has been devalued so much that the real world value is about the same.
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Pillar of the Community
United States
2373 Posts |
A few years ago when silver was around $10 you could actually buy it from different mint suppliers for $11. The spot and premium ratio is crazy at the moment. I just hope the price closes in on the premium rather than the premium coming down to the spot or katie bar the door.
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New Member
 Canada
36 Posts |
Ah, I didnt know the premium was so variable.
Why is the premium so high right now?
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Pillar of the Community
United States
2540 Posts |
because the dealers/traders can't get inventory.
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Pillar of the Community
United States
2602 Posts |
Because so many people bought silver when it was $15-20.ounce. They don't want to sell it at $10 for a loss, so they are just holding onto it. Silver coins are in "stronger hands". However, if silver stays here around $10 for some time, some of those strong hands will weaken, particularly if the economy gets much worse and they need the cash.
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New Member
Canada
36 Posts |
Would you guys agree that silver is at its lowest value in history...in terms of real buying power?
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Pillar of the Community
United States
3294 Posts |
No, back in I think 2002 or so, silver was at like $4.50 or $5, and prices have not doubled since then, not even gasoline (any more).
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Pillar of the Community
United States
2734 Posts |
Quote:
Telfer: "Why is the premium so high right now?" 1. A large number of people believe that the 'spot' price for silver is artificially low, and that the 'spot' price will rise dramatically once the perceived 'chokehold' is broken (ie: COMEX going into default on delivering physical silver). If you believe this, you'll hold onto your silver with a 'deathgrip', whether you bought it for $20/oz. or $5/oz.! 2. The 'spot' silver price was hammered in the recent stock market decline, because all kinds of paper futures were 'dumped' to pay for margin calls (even OIL futures, that's a big reason why our gasoline prices dropped so fast recently!). The demand for physical silver only increased as the spot price was dropping, mainly because of many people's belief as stated above in #1. 3. Silver Bullion coins in particular are subject to 'unique' supply shortages that don't affect other forms of silver. American Silver Eagles are specified to be made from newly mined U.S. silver, which means that they can't just buy raw 1000 oz. bars from COMEX and melt them down to make more A.S.E.'s in times of large demand. The world's other silver bullion coins face similar supply restrictions. 4. The shortages in silver bullion coin supply naturally lead to shortages in other sub-1000 Oz. forms of physical silver, because of the very strong current demand. The spreading shortages in 'small' physical silver likely are creating even more demand! Everyone does have to remember that falling industrial demand for silver in a slowing world economy is a valid reason for declines in the 'spot' price, and that the small-scale bullion market is a lot different than the industrial market. We might yet reach a point where the 'tail may start wagging the dog' in the world silver market...  |
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New Member
Canada
36 Posts |
Is that also why the dollar is so strong right now...people selling their commodities futures for the cash they need to cover other investments?
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Pillar of the Community
United States
2734 Posts |
That's one reason. Also, foreign entities having to pay back debts in U.S. Dollars, the specter of 'deflation', fear of further decline in the Dow Jones Industrial Average, etc. etc.
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Pillar of the Community
United States
581 Posts |
Let's not forget that the dollar is up against most currencies - not 50% or anything, but it is stronger.
So, silver would normally be less if all other things did not change. In addition, a stronger dollar creates confidence and gives an alternative place for governments, etc. to keep your money besides PMs.
It's very hard to put in a formula, but the dollar has been weak for so many years (yes, years), it isn't on many people's landscapes.
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Pillar of the Community
United States
533 Posts |
Quote:
Is that also why the dollar is so strong right now...people selling their commodities futures for the cash they need to cover other investments? I would say it is mostly because the deflationary effect of the contraction in home prices, and the US economy as a whole has far out weighed the inflationary effect of the FED cutting interest rates to all time lows. Thus making inflation lower then expected and helping to strengthen the USD... In a nut shell. |
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Replies: 11 / Views: 1,071 |
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Posted 11/21/2008 02:50 am
