US 90% Premiums Increasing???

[Know Common Cents]

Within the past 2 weeks, I've purchased US 90% silver 3X from my LCS. Pricing has been favorable at 10.3 to 10.7 times per $1 face. Nice thing was, though, it was my pick for whatever I wanted. So...I opted for quantities of Walkers and Mercury dimes. There were culls to XF specimens in the buckets. I most certainly picked the best dates, MMs and condition.

My LCS owner said, "This'll probably be the last time I can sell you US90% at under $11 per one dollar face. He added that the supply is becoming scarce (pick your own reason why...we all have our theories), but prices are headed higher despite silver bouncing in the low $14 toz range.

Hope this helps a little for those on the fence trying to decide to buy or not.

[Recyclersteve]

Don’t know how long you’ve been at this, but saying this is the last time under 11x face is a very bold (and questionable) statement IMHO.

Nobody knows what will happen to silver prices. Money talks. If your dealer was a billionaire and was buying several hundred million of silver (in physical not paper form) with their own money (not like the Hunt Bros., who eventually used margin because they were greedy), then I’d pay more attention. And the really rich people often act in concert with their rich friends. But if he really knew something, he likely wouldn’t just tell anyone. He may HOPE we are near the bottom (plenty do), but talk is cheap.

I have a decent amount of silver, but I won’t believe we’re gonna have a big move til I see something much more extreme than what is happening now.

What is extreme?

1) Lines out the door at every coin shop in town.
2) Armed guards at the doors.
3) Every night they give the price of silver on the national news.
4) Dealers have so much silver in their shops that they don’t have room in the vaults to store it. So they have to do something like have an armored vehicle pick up daily.

All of this happened in 1979-80. Some on this site remember it.

Now, consider this- We have far more people in this fine country that we did in 1979-80- an estimated 325 million vs. 226 million in the 1980 census. We almost certainly have fewer coin dealers. There is absolutely a lot less 90% (“junk”) silver around now than there was then. (Yes, offsetting that somewhat are the silver American Eagles, which didn't exist in 1980) My point is that it wouldn’t take too much from truly wealthy people to cause silver to explode in price. But yet it still has been a down market for 7+ years and counting. You think that is a long time? The silver market had a whopping 22-year downtrend from 1980-2002, before rallying nicely. Still we never come even close to eclipsing the 1980 high on an inflation adjusted basis.

Stock traders (I’ve been one since the 90’s) have a saying: “The trend is your friend.” Anyone who can read a chart will tell you that silver is in a downtrend on a short-term, intermediate-term and long-term basis. Someone who is truly impartial and looking for the highest probability of profiting would be betting on silver going down at this point. That is from a trading standpoint only. For those who want to hold many years and will use further weakness as a sign to add more on the cheap, that is up to them. I think is would be silly to buy all at one time without being able to add more down the road.

Too many people get hurt by misplaced hype. Many of us have seen all kinds of people supposedly “in the know” saying that silver is about to break loose for this reason or that. The articles are often well written and compelling. I’d rather deal with high probability situations. I’m not saying silver couldn’t have a big rally starting soon. That’s why I have my stack. But the odds are very much against a big rally right now.

What does everyone else have to say on this matter?

[Cu Penny Hoarder]

In my experience LCS premiums lag behind online bullion dealers. Also, you can usually negotiate the price lower, especially when buying in size.

A couple weeks ago I urged people to buy 90% when the premiums were rock bottom. I have a feeling premiums will not be that low again for many years.

[Cu Penny Hoarder]

I have a decent amount of silver, but I won’t believe we’re gonna have a big move til I see something much more extreme than what is happening now.

What is extreme?

1) Lines out the door at every coin shop in town.
2) Armed guards at the doors.
3) Every night they give the price of silver on the national news.
4) Dealers have so much silver in their shops that they don’t have room in the vaults to store it. So they have to do something like have an armored vehicle pick up daily.

All of this happened in 1979-80. Some on this site remember it.

When this happens, it's time to start selling it.

[Recyclersteve]

I have a decent amount of silver, but I won’t believe we’re gonna have a big move til I see something much more extreme than what is happening now.

What is extreme?

1) Lines out the door at every coin shop in town.
2) Armed guards at the doors.
3) Every night they give the price of silver on the national news.
4) Dealers have so much silver in their shops that they don’t have room in the vaults to store it. So they have to do something like have an armored vehicle pick up daily.

All of this happened in 1979-80. Some on this site remember it.

When this happens, it's time to start selling it.

If this happens when silver is under $10/oz. I would be buying. If this happens when silver is $60-75 an ounce, I would likely be selling.

[pmbug]

When silver was ramping up towards $50/oz several years ago (circa 2010-2011) and people were buying physical silver in droves, premiums skyrocketed and supplies of 90%/junk silver disappeared. It was damn hard to find any.

All signs right now indicate that demand for physical silver is ramping up. Rumors of tightening supply abound. Premiums appear to be rising. Sales of silver eagles are definitely up.

90% silver is the canary in the coal mine with respect to the physical market IMO. They don't make it any more and what little supply exists that actually gets traded around disappears when the public gets serious about buying silver.

I don't find KCC's LCS's comment to be bold or questionable with respect to the near term. We saw this dynamic play out just a few years ago. I understand RS's quibble about the permanency of the statement, but I'm willing to give someone the benefit of the doubt that the comment was made in the context of forward guidance on the market for physical 90% and not a Nostradamus like prognostication of the future for all eternity.

[Recyclersteve]

One thing about some people is that they like buying things at high prices. Not everyone, of course, but there are enough of them out there to make a difference. Stock market technicians (who read stock charts) like to buy breakouts to new 52-week or all-time highs. And the volume often times goes way up right after the breakout occurs. Whether the breakout has any follow through to even higher highs remains to be seen. And then there becomes a point when the rapid move upward becomes so silly to many people that a collapse is about to occur. Or perhaps a rumor gets started and it sounds credible so it scares people into selling and then the downward momentum has begun.

[Cu Penny Hoarder]

One thing about some people is that they like buying things at high prices. Not everyone, of course, but there are enough of them out there to make a difference. Stock market technicians (who read stock charts) like to buy breakouts to new 52-week or all-time highs. And the volume often times goes way up right after the breakout occurs. Whether the breakout has any follow through to even higher highs remains to be seen. And then there becomes a point when the rapid move upward becomes so silly to many people that a collapse is about to occur. Or perhaps a rumor gets started and it sounds credible so it scares people into selling and then the downward momentum has begun.

The average Joe Shmoe out there doesn't know anything about buying silver on a "breakout", they simply buy it because of their greed and FOMO. No other reason. The same goes for every parabolic, maniacal mania in history.

[Recyclersteve]

The average Joe Shmoe out there doesn't know anything about buying silver on a "breakout", they simply buy it because of their greed and FOMO. No other reason. The same goes for every parabolic, maniacal mania in history.

I agree with this, but do feel that the average person tends to get swept up with what the crowds (especially the so-called experts among their inner circle) are doing. This can cause stampedes in and out of stocks, precious metals and other items as well.

I've talked to lots of people who say "If I only bought Apple way back when..." Yet, how about these (split adjusted) stock quotes for Apple:

5/30/83: $1.10
1/22/84: The famous Macintosh Super Bowl commercial (if you've never seen this, watch it on Youtube- it is VERY FAMOUS)
4/28/03: $1.03

So the stock was close to unchanged over roughly a 20-year period. Anyone who bought the stock based on the Super Bowl commercial was likely very disappointed over the following 19+ years.

[Cu Penny Hoarder]

The average Joe Shmoe out there doesn't know anything about buying silver on a "breakout", they simply buy it because of their greed and FOMO. No other reason. The same goes for every parabolic, maniacal mania in history.

I agree with this, but do feel that the average person tends to get swept up with what the crowds (especially the so-called experts among their inner circle) are doing. This can cause stampedes in and out of stocks, precious metals and other items as well.

I've talked to lots of people who say "If I only bought Apple way back when..." Yet, how about these (split adjusted) stock quotes for Apple:

5/30/83: $1.10
1/22/84: The famous Macintosh Super Bowl commercial (if you've never seen this, watch it on Youtube- it is VERY FAMOUS)
4/28/03: $1.03

So the stock was close to unchanged over roughly a 20-year period. Anyone who bought the stock based on the Super Bowl commercial was likely very disappointed over the following 19+ years.

Ah yes... the famous coulda, woulda, shoulda. Hindsight is 20:20 vision. If only time travel was possible.

The coulda, woulda, shoulda for PMs (especially silver) is right NOW. Will it stay $13-16 for another 20 years? It's possible, but not probable.

[Recyclersteve]

I agree that it is unlikely for silver to stay in the doldrums for another 20 years. I'm going to predict (wild prediction- no guarantees of course) that it will be over $20/oz. by the end of 2020. Hey, that should be easy to remember- $20 by 2020.

[pmbug]

Last time I checked Apmex, premiums on 90% were $1.99 over spot (I don't remember specifically which offerings I checked). Looked this morning and I'm seeing a mix (depending upon specific coin/bag) ranging from $1.49 to $1.99 over spot. Seems like at worst, premiums have held steady over the last week or so. At best, the premiums might have dropped slightly.

[Cu Penny Hoarder]

Last time I checked Apmex, premiums on 90% were $1.99 over spot (I don't remember specifically which offerings I checked). Looked this morning and I'm seeing a mix (depending upon specific coin/bag) ranging from $1.49 to $1.99 over spot. Seems like at worst, premiums have held steady over the last week or so. At best, the premiums might have dropped slightly.

They are currently offering $0.89 over spot on generic 90% (their choice). If you specify quarters, dimes or halves, it costs more. Premiums will continue to rise with demand. That $0.29 over spot they were offering a few weeks ago was the cheapest I've seen in many years. I urged people here to buy it then, I don't think anyone here did.

[Recyclersteve]

I would love to see a chart showing premiums relative to melt vs. the actual price of silver. It would probably be VERY DIFFICULT to put such a chart together over any real length of time, say, 5 years or more.

Also, you'd want to have consistent pricing from either someone big like APMEX or perhaps multiple sources averaged together.

Even with that, though, certain things can happen like a single well-to-do person temporarily scooping up all your inventory. I remember hearing about a coin dealer in Hawaii who said that someone offered to buy all his silver for the next year out (that was probably sometime between 2005 and 2011). Never did hear from the dealer after that, and frankly I forgot his name years ago.

[Cu Penny Hoarder]

I would love to see a chart showing premiums relative to melt vs. the actual price of silver. It would probably be VERY DIFFICULT to put such a chart together over any real length of time, say, 5 years or more.

Also, you'd want to have consistent pricing from either someone big like APMEX or perhaps multiple sources averaged together.

Even with that, though, certain things can happen like a single well-to-do person temporarily scooping up all your inventory. I remember hearing about a coin dealer in Hawaii who said that someone offered to buy all his silver for the next year out (that was probably sometime between 2005 and 2011). Never did hear from the dealer after that, and frankly I forgot his name years ago.

Here is a premium relative to spot chart from 2009 to 2015.



https://i1.wp.com/smaulgld.com/wp-content/uploads/2015/09/junk-silver-premiums-2009-2015.png?ssl=1

[Cu Penny Hoarder]

Before silver bottomed in price at the end of 2015, inventories of 90% silver bags were very low, and premiums skyrocketed. When silver dipped into the $14-15 range around that time, premiums averaged $5 to $6/oz over spot… that equated to nearly $20/oz !

This is why I keep mentioning here just how cheap 90% is right now... even at $0.89 over spot.

[Recyclersteve]

Here is a premium relative to spot chart from 2009 to 2015.



https://i1.wp.com/smaulgld.com/wp-content/uploads/2015/09/junk-silver-premiums-2009-2015.png?ssl=1

Wow, I never knew there was such a thing! Thanks for sharing that. Anyone have any idea where the data comes from- APMEX, Provident, several dealers combined? Also, how often is it updated and what time of day do they use? I'm really interested in the methodology used to come up with the data behind this chart- if it is available somewhere.

I was trying to look for any trends on this chart, but didn't seem to find any. Note that from August, 2010 to April, 2011 when silver was really booming the premiums over spot were very low to non-existent. To me that is counterintuitive, since I'd think that people would be offering premiums to dealers to scoop up everything they can when prices are going up in such a fashion. Oh well...

[Cu Penny Hoarder]

Wow, I never knew there was such a thing! Thanks for sharing that. Anyone have any idea where the data comes from- APMEX, Provident, several dealers combined? Also, how often is it updated and what time of day do they use? I'm really interested in the methodology used to come up with the data behind this chart- if it is available somewhere.

I was trying to look for any trends on this chart, but didn't seem to find any. Note that from August, 2010 to April, 2011 when silver was really booming the premiums over spot were very low to non-existent. To me that is counterintuitive, since I'd think that people would be offering premiums to dealers to scoop up everything they can when prices are going up in such a fashion. Oh well...

During 2008/09, Ag premiums went sky high. Demand went way up because the spot price had dumped from $21 to $8 very quickly. ASE's and 90% was not available. Dealers were also taking advantage of the "run to safety" caused by the financial/housing crisis. Banks were blowing up, people were dumping stocks and wanted something tangible (gold and silver). Another one of these economic/financial downturns is right around the corner. I predict that 2019 is going to be a year to remember.

During 2011, Ag premiums were low, but I remember Apmex was offering $1-2 OVER spot price to buy silver. The dumb money was jumping on the parabola train and buying at all time highs - ouch. The smart money is buying/accumulating NOW.

I keep referencing Apmex because they are the PM big boy on the block.

[Recyclersteve]

I keep referencing Apmex because they are the PM big boy on the block.

Good to know. I usually only deal with others on a cash and carry basis. The out of staters I deal with are usually at coin shows. There are some exceptions. For instance, I trusted Adam Youngs enough to get a 1 oz. palladium coin for him recently.

I remember seeing a video of the silver and gold held by Hannes Tulving's business before they went out of business. It sure did make me drool. Fortunately, I didn't lose any money when that happened.

[Cu Penny Hoarder]

I keep referencing Apmex because they are the PM big boy on the block.

Good to know. I usually only deal with others on a cash and carry basis. The out of staters I deal with are usually at coin shows. There are some exceptions. For instance, I trusted Adam Youngs enough to get a 1 oz. palladium coin for him recently.

I remember seeing a video of the silver and gold held by Hannes Tulving's business before they went out of business. It sure did make me drool. Fortunately, I didn't lose any money when that happened.

Tulving had issues long before he went out of business. He has several lawsuit against him. He relied on volume business for the most part, this is why his premiums were so low compared to other dealers, but he did not hedge properly. I know a few people who got burned badly when he went under.

[Recyclersteve]

I've never been comfortable with the idea of sending thousands of dollars to a total stranger hoping to get something in return. Some who are comfortable reply with something like "But he's got great prices!" Yes, but think of what that means. His business was in California on some of the more expensive real estate in the country. To operate on such razor thin margins means that even a tiny misstep and you could declare bankruptcy. I am just not comfortable with a situation like that.

[68Camaro]

This is headed off-topic, but maybe worthy of note since there are some newbies reading this.

That Tulving debate went on (softly) here, with some expressing concern and refusing to do business because he had gone bankrupt before, and because his practices didn't seem to make sense. Meanwhile others defended him saying that they had used Tulving with no problems and his prices were great so there was no reason to stop using him. Hopefully none of the RCers got caught out, but obviously many others did. That's why I no longer do significant business with anyone that I have even a shade of concern with, unless it's on favorable terms (they ship/pay first). I've been burned a couple of times here on smallish deals when I used to give virtually everyone the benefit of the doubt on small deals. That stopped after the second rip-off. There is only one company (which I won't name here because this isn't an advertisement) that I refer newbies to as trustworthy and semi-bulletproof. I even had a bad experience with APMEX and will no longer do business with them no matter how low their prices, even though they are the alleged industry leader. My practice is to focus on the most trusted, and follow one and done - if I have any bad experience that was preventable, occurs without an apology, and with no remedy made - and that's the last deal I make with them.

[Recyclersteve]

68camaro:

Are you at liberty to say (in polite or general terms, perhaps) what went wrong with APMEX?

[Cu Penny Hoarder]

68camaro:

Are you at liberty to say (in polite or general terms, perhaps) what went wrong with APMEX?

I'm interested in knowing what went wrong too. I've dealt with Apmex many times and I've never had any major issues. One time I bought a $500 FV bag of 90% JFK's from them and there were six 40%'s in the bag. I called them and they immediately shipped me the six 90%'s to replace them. They told me I could keep the 40%'s free of charge.

[68Camaro]

I posted on the issue at the time but it was through apmex/eBay. They shipped to a hand written incorrectly written address so it bounced around the country for two weeks becore returning to apmex then getting resent and when it arrived it was the wrong 1 oz gold coin so I returned it (I should have just kept it) and the whole debacle started over again. Through it all communication was nearly nonexistent and eBay was of course no help. In the end I got what I ordered but two months late with no apology or consideration for their incompetence. Never again.