So I gotta ask this question...

[CtrlAltBernanke]

I try to use the search box to avoid double topics so I apologize if this topic has come up in the past. So silver was down today and lets say hypothetically Silver get to $20. I know it more than likely wont but let say it does, it's hard for me to see the spot prices decrease if companies like APMEX and LCD's bought 1 oz products for around $28. When silver started to fall from its high of $50, was there a lag time from the dealers on the Internets and LCD's to catch up? I've purchased silver a handful to times from big dealers online over the last three months and whenever it dropped below $27 I still never saw ASE's being sold for under $30.

I'm going to throw out this other question since it just came to mind. Does anybody have a good guestimation of how much junk silver is out there on the market on any given day? And what I mean by that is face value. I know that there is a lot out there being held but I recently scanned the inventory from a online dealer and I thought that there would be more. I went to my LCD yesterday because I've been needing to satisfy a Franklin Half dollar fix that I've been having for some time and I was surprised at how much junk silver he had. he had much less when silver was above $30. I've also noticed that there has been more junk silver for sale on my local craigslist recently. Just last week there was six roles of silver quarters for sale that somebody picked up in about a day.
~Thanks

[barrytrot]

Quick answer: no.

Longer answer: there are SLIGHTLY different PREMIUMS used as silver/gold fall/rise quickly.

But sites like APMEX, Tulving, other big ones use a straight "spot + X" so if spot was $1 they might just shut down for a while, but if they were open it would be "spot + X" that they were selling for.


Also big companies like the above don't "buy 1 oz products for around $28", they do a simultaneous "buy of physical" and some sort of "sell of paper" at the same time to prevent any type of fluctuation from hurting them significantly. So they, naturally like silver to go up, but they make money regardless due to their favorable (for themselves) buy/sell spread being used.

[RTPMarine]

Wow, what are the chances...I just asked this same question on another forum...

The consensus is that the dealers all hedge the price of their silver by going short on their stock. That way, they won't lose money if spot price goes down, or if it goes up. This allows them to make 100% profit on the premiums of the coin, and their buy/sell spreads.

It was also brought up that as spot price goes down, the premiums have historically gone up. This may not be the case in the future as their is much more bullion floating around than in 2008 or earlier.

Also, you can use this website to find the cheapest price on specific bullion, including ASEs:

http://comparesilverprices.com/

The list does not include the usual low-priced dealers such as goldmart and gainesville.

[OtusLotus]

Sometimes, when everything is going well... people tend to hold on as they believe that the price will continue to increase, however, when the price starts to fall, people tend to get discouraged. These latter people then make a decision to either buy more and average down, or sell and cut their losses.

We used to have a saying when I was a broker... bulls make money and bears make money, but pigs get slaughtered!

Apmex and the other dealers really don't have a say in what happens to the spot price of Ag, Au, etc... they are pretty much along for the ride... however, their mark-up gives them a cushion as well as their ability to buy, often below spot, and flip immediately for a profit.