Premiums on Junk Silver

[Recyclersteve]

I'm curious what everyone is seeing in terms of premiums for 90% junk silver (U.S.) these days.

I just spoke with a coin dealer friend of mine today and he was charging Spot + $1.50 to $2.00/oz. x .715 for silver. He said that was basically the retail going rate for a good long while. He says that now instead of a premium of $1.50 to $2.00/oz. the premium is a whopping $7.90/oz., which is a whopping 54% over spot with silver at $14.62/oz. Wow!

Even the dealer said he thought the premiums were ridiculous and thought they wouldn't stay this high for long.

Anyone else?

[90Percent]

Depends on where you buy. Thursday I picked up some for melt at my LCS. Much farther away he says going rate is +$4.00 but i get it for less The main thing is yes it seems to being going up and alot.

[beauanderos]

The impact upon dealer mark-ups will be regional (or local) in effect based upon their ability to readily source a
continuous supply of more junk silver. Should they have ample supply, they will flip it at lower prices so that holding
their inventory doesn't cost them as much. Hence, those dealers with ready supply will not reflect as high of premiums
as will that of others, where demand outstrips supply. If you must bring in a certain amount each month to deal with
overhead... and you have fewer units to sell, and uncertainty regarding replenishing your stock... you must increase
your prices (or go out of business).

LCS dealers make money by buying low and selling higher, repeatedly, preferably as quickly as they can... so that
they aren't harmed by price plunges. I seriously doubt your small LCS is hedging to protect themselves from volatility.

[silverstacker]

Recently called a few LCS's north of me on Thursday and one was at 16.9x and the other was at 15x and they were in the same small town.

[beauanderos]

Recently called a few LCS's north of me on Thursday and one was at 16.9x and the other was at 15x and they were in the same small town.

Still dependent upon the variables I mentioned. Shows it's good to always shop around, however

[Cu Penny Hoarder]

Go to LCS with plenty of green stuff with Ben Franklin on them and make a fair offer. 50% of the time, they will capitulate.

[silverstacker]

Go to LCS with plenty of green stuff with Ben Franklin on them and make a fair offer. 50% of the time, they will capitulate.

In your mind what is a "fair" offer? I know we discussed this earlier but what's reasonable right now?

[wheeler_dealer]

In another post I shared my experience this past week. My personal finding was available 90% is tight if available at all. Spot plus $4.00 seems the going rate.
To determine a good price to buy at I reference e bay completed sales.

[highroller4321]

Rumor has it that a dealer or 1 person bought 100 bags of 90% so it made the availability of 90% go down a lot. That combined with the very low silver prices as seen 90% premiums go crazy! The dealers seem to be paying $3.50ish over spot and selling around $4.50ish or a bit higher.


I believe that once silver jumps up again this premiums will drop dramatically.

[Cu Penny Hoarder]

Go to LCS with plenty of green stuff with Ben Franklin on them and make a fair offer. 50% of the time, they will capitulate.

In your mind what is a "fair" offer? I know we discussed this earlier but what's reasonable right now?

If the LCS is asking 15x spot on 90%, offer him 13x. It probably won't work unless you have lots of cash to wave in front of his face.

How much is a lot of cash? - 1-3 thousand dollars or so. In this economy I would guess that most do not have that kind of dry powder available.

Money talks, BS walks.

[beauanderos]

Rumor has it that a dealer or 1 person bought 100 bags of 90% so it made the availability of 90% go down a lot. That combined with the very low silver prices as seen 90% premiums go crazy! The dealers seem to be paying $3.50ish over spot and selling around $4.50ish or a bit higher.


I believe that once silver jumps up again this premiums will drop dramatically.

If an individual bought 100 bags (I'm skeptical they could be $1000 face) and it impacted the scarcity of junk silver on a nationwide basis to the extent that it has ... that just highlights how depleted the ready supply has become.

If silver is "allowed" to rise in price again, junk will resurface, but dependent upon it's perceived scarcity at such time, may well continue to carry significant premiums. If you think junk is coming back with lower premiums... don't buy it. Good luck with that.

[Cu Penny Hoarder]

Rumor has it that a dealer or 1 person bought 100 bags of 90% so it made the availability of 90% go down a lot. That combined with the very low silver prices as seen 90% premiums go crazy! The dealers seem to be paying $3.50ish over spot and selling around $4.50ish or a bit higher.

Maybe, but I would also throw in market/dealer collusion too.

[highroller4321]

Rumor has it that a dealer or 1 person bought 100 bags of 90% so it made the availability of 90% go down a lot. That combined with the very low silver prices as seen 90% premiums go crazy! The dealers seem to be paying $3.50ish over spot and selling around $4.50ish or a bit higher.


I believe that once silver jumps up again this premiums will drop dramatically.

If an individual bought 100 bags (I'm skeptical they could be $1000 face) and it impacted the scarcity of junk silver on a nationwide basis to the extent that it has ... that just highlights how depleted the ready supply has become.

If silver is "allowed" to rise in price again, junk will resurface, but dependent upon it's perceived scarcity at such time, may well continue to carry significant premiums. If you think junk is coming back with lower premiums... don't buy it. Good luck with that.

On the wholesale level I can still buy 1oz rounds for $0.85-$1 over and 10oz bars for $1.25 over. When silver hit these levels last year you couldn't do that....

How many bags do you believe are floating around? Apmex is the #1 online dealer and rarely has more then 15 bags available....even when silver is much higher. I am not saying its 100% caused by 1 person buying a lot of bags, but its a big part of it.

Apmex currently has $200 FV of generic for sale.
JMbullion currently has $4450 FV of generic for sale.
Provident and gainsville don't allow you to see how many they have, but I doubt it is very many.


At $20 silver my guess is the premium on 90% would go down to $2 over or less again.

[Cu Penny Hoarder]

If there is truly a 90% shortage, then why aren't bullion dealers offering to pay more than spot price for it?

Does anyone remember what Apmex was paying for 90% during the 2008 slam down? How about at the 2011 peak?

[beauanderos]

If there is truly a 90% shortage, then why aren't bullion dealers offering to pay more than spot price for it?

Does anyone remember what Apmex was paying for 90% during the 2008 slam down? How about at the 2011 peak?

I remember APMEX used to send me emails offering $2.50 above melt. I might have sent them some slicks, can't remember

The reason they aren't offering more is the reverse of what we're feeling. Their normalcy bias is that they are accustomed to building
inventory without having to offer fair premiums. If true scarcity is really developing it will occur covertly, demonstrated by items perpetually
out of stock, and will take a while for the mindsets of the dealers to become accustomed to the necessity of raising their buy price... if they
want to have ANY junk silver to sell.

If, as you allude, collusion exists... if the price is allowed to rise, say back to $18 an ounce, junk may become plentiful (relatively speaking)
again. That said... I don't see TPTB allowing silver (or gold) to rise. It costs them nothing (just press a button to create money from ether) to
suppress the markets, so premiums will continue to rise as scant supply dwindles to extinction.

Now is the time to source what you can, and buy what's affordable for your budget.

If junk premiums stick in your craw... buy .999 Of course, you might face several week delays going that course ... and remember,
if you don't hold it you don't own it.

[Verbane]

If there is truly a 90% shortage, then why aren't bullion dealers offering to pay more than spot price for it?

Where are you getting your information?
Apmex is paying $1.63 over and Provident is paying $2.41 over right now.

[beauanderos]

If there is truly a 90% shortage, then why aren't bullion dealers offering to pay more than spot price for it?

Where are you getting your information?
Apmex is paying $1.63 over and Provident is paying $2.41 over right now.

I see Provident at $3.16 over for all their half dollars, buying at $12.96X face on the other stuff (+$2.43).

[fansubs_ca]

If there is truly a 90% shortage, then why aren't bullion dealers offering to pay more than spot price for it?

I would presume it's because they can hedge the silver price but can't hedge the premium
so anything they pay in premium they are risking. They'ld rather turn over a smaller
quantity with a bigger mark up than a larger quantity (with attendant larger amount
of money tied up in premium) at a smaller mark up. (Which is their normal operating
practice when they are able to usefully hedge.)

Now if this goes on long enough that people start bypassing the dealers and doing
individual to individual deals a lot more often this may put pressure on the dealers
to shrink their spread but in the short term the spread is going to be wide.

I imagine some coin dealers that are bit more inovative might make a better offer
to sellers willing to sell on consignment (where the dealer has no inventory risk)
but if they are tying up their own capital they'll want a bigger spread until things
"normalize".

[90Percent]

Three weeks ago while shaking the trees for 90% I heard a similar rumor here on the East Coast that someone in CA was buying 50 Bags of 90%. He is a wholesaler and offered my +$3.25 for what I had. He also said the market is very thin and that much would move the market significantly. Very little is falling out of trees right now for me.

[beauanderos]

Three weeks ago while shaking the trees for 90% I heard a similar rumor here on the East Coast that someone in CA was buying 50 Bags of 90%. He is a wholesaler and offered my +$3.25 for what I had. He also said the market is very thin and that much would move the market significantly. Very little is falling out of trees right now for me.

That's just a little over half a million. Imagine if big money tried to get in?

[highroller4321]

Three weeks ago while shaking the trees for 90% I heard a similar rumor here on the East Coast that someone in CA was buying 50 Bags of 90%. He is a wholesaler and offered my +$3.25 for what I had. He also said the market is very thin and that much would move the market significantly. Very little is falling out of trees right now for me.

That's just a little over half a million. Imagine if big money tried to get in?

Thats when the SEC comes in and throws the hammer down....like they did to Warren Buffet many years ago.