Dealers Buying?

Frazzle:

I see your point but am wondering why now is any different in this regard than what we have seen over the past few months. Was this an issue when silver hit $30? $40? If not, then $50 is just another price point.

Dealers may well become wary of being over-stocked on silver just now. The last thing they need or want is to have a large inventory on hand when the price drops below what they paid for their stock. I would think that inventory management would be critical just now for this reason.

My local coin shop sells ASEs for spot + $5. I raised an eyebrow at this price but the dealer just shrugged and said that he can sell all he can get in at that price. Guess that the local market has decided that this is a fair price, although it looks a little high to me.

I think there is that adjustment period, where many of the masses has to get there mind geared to buy 50 plus dollar silver per oz., but in time they will find new reasons to buy, as long as they believe it has the strong potential to continue to increase, as all signs point to it doing just that, esp those thinking long term, say 10 to 30 years....

Like me, I felt crazy buying those high dollar lunar coins a month or so back, but recently I have added the rooster an goat on at 72 an the other at 74, and seeing as how silver is nearly 50 bucks an oz. it does not seem that crazy to me now, esp since they bring that type of money, and much more down the road....

When silver hits 52 an oz, most of the bottom of the barrel rounds and bars will be going for right at 60 total on ebay....

This will effect larger pieces perhaps, but they will sell as well, and do every day in many different facets....

I bought a super rare 12 oz Ben Franklin 100 dollar note which is a nice 1 troy pound of silver which was 400 bucks. That was back when silver was just over 30 an oz, so when silver hits 50 it would have 600 of just spot silver. One could try and ask say 800 for an item that nice and rare, and if it sold which is a big if at that high price, but if it did that would be double the return. Items like this may take more time to move, but don't fool ones self into thinking there are not many out there with much dollars they are looking to convert into something else than dollars such as pm's, and they are all around the world....

If silver was the only thing climbing it would be a different story. With commodities in general on the rise people want out of dollars and into something of value. The mindset is different this time. In the 80's people were dumping silver(myself included)because it was an opportunity to make some quick cash from something many of us already had laying around. This is a protection of wealth move and that is really a different perspective.

The biggest coin shop in town is buying all day long at 92-93% of spot. You know why? it's because they are turning around and selling for over spot. They had very few 1 oz bars and rounds when I was there Saturday and they told me that there have been some very large purchases. Even if silver drops $1/day for a couple of days, they are covered by their buy price and being stuck with inventory is not an issue as they could always unload it to APMEX, Tulving, Dill and Gage or another bigger player. So it shouldn't be an issue for any decent dealer.

Assuming you're talking about coin dealers and not PM dealers, a smart coin dealer will attempt to balance his supply with his demand, otherwise, he becomes a silver speculator. If his demand tapers off, he would probably lower his buy price to reduce supply and average cost. Hedging would be a practical solution, but outside of shorting ETFs, I'm not sure how many dealers would go this route. They probably should if they have high exposure. Farmers learned how to a long, long time ago. Anyway, at some point I think they tone down buying in response to lower local demand. And I think that lower demand (in ounces, maybe not value) comes as a result of people needing to buy gas, food and pay mortgages and not having the remaining funds to buy PMs.

I know my dealer, and they are primarily a silver dealer has commented a few times they might have to suspend buys due to the recored amounts of silver they are taking in. My last visit they said they had bought over $30K in junk silver so far that day, another day it was about $40k. I am not sure how each state is regulated but here they have to hold it for 1 week before unloading, at least that's what I was told. But, they must be doing fine as they bought another $4k off me just a week ago.
In some ways this is good, we can unload excess junk silver but then on the flip side we will pay higher prices for any coins we need that have any silver in them. I knwo I have switched to completing my Roosie and non-silver Quarter collection. If silver remains high I will have to get used to paying high prices for silver.

I'm a small time "pocket" antique dealer & buy/sell a fair amount of gold & silver. The majority of my business is buying sterling items & gold jewelry that I resell sell directly to a refiner. That involves delays between the time I buy & when I can actually sell due to shipping & processing. Whenever there is a run-up in prices like we have seen over the last few months I am very cautious about buying. I don't like to be hit by a 5-10% drop during transit, although it has happened several times over the last 2 years.

The reality is that silver increased in price by 80% last year & is up over 60% year to date. IMO anything that jumps in price like silver has could drop just as quickly. I read some of the threads about silver prices & am amazed......people seem to think a 5-10% weekly increase is sustainable over the long term. Really? That's the kind of statements I heard on a daily basis before the tech & housing bubbles burst.

It looks like America is selling their silver this morning.