Silver premiums indicative of market direction/sentiment

[68Camaro]

I am one of the few on RC who will admit to actually buying silver at the previous highs. The most I paid for ASEs was $48 shipped in April 2011, and the most I paid for 90% was $47 shipped in the same month. And those prices were with moderate premiums - spot was actually at those prices. For those two lots, I literally bought at the high (at least those particular lots). I did this because I could see the possibility of a real "great reset", where the USD becomes worthless, and even though I had been at the time prepping for a couple of years, I was in the early stages of a multi-year effort and I felt relatively unprotected. While the price drops of the next few years stung, I continued to buy, and looked for opportunities. I have sold almost nothing, regardless of the price I paid.

I have since completed the necessary steps to protect my family, and I hope everyone on RC has done the same, or is at least in the process of it. (And despite some purchases at blip highs, I compensated by also purchasing at blip lows, and I am dollar cost averaged so that I am above water in all PM categories. Since I am well prepped (as much as I can be) I am currently buying very little PMs, as I have other uses for my fiat in the moment.

The concerns I had in 2011 that led to my 2011 purchases at the highs are of even greater concern in 2021. I believe some type of "great reset" will happen; we are clearly 10 years nearer to it now, and I believe the event(s) is/are actually already in the early stages of uncoiling. It may be several more years before it becomes obvious, but it is people who can see the early trends and act on their convictions (without listening to the noise of the naysayers) who come out on the other side with minimum damage.

With spot at $27, APMEX ASEs are now at $39-41. $1000 face "junk" 90% is selling for nearly $38/oz. Incredible premiums. While some think we will see a pull-back before it continues to rise into the coming years, I'm not so sure about that. Obviously the powers that be will do their damnedest to try every unusual effort to stop the hemorrhaging and reverse the prices and restore "trust" in the markets, there is a growing belief across the lower classes of the wealthy and the upper middle class that the stock market is "not right". People are moving to cash, and while for most that still means literal cash, there is a growing population that is adding either crypto (which I don't strongly support), or PMs, or both.

Be prepared.

[Changechecker]

Guilty. I rode the same roller coaster. My selling recently is limited to gaming the current spread. I agree with your thoughts that it won't pull back, at least not for physical. Word is London has no physical and all the vaulted silver is tightly held in this price range. (Can't imagine that will change). Im in the camp that we may see $30.00 this year once stimulus checks get issued and inflation picks up. I also think government will begin to regulate crypto soon as it competes with the U.S. dollar.
Regarding prepping, I also think now would be a good time to refocus on preps. If not for any reason other than the shortages and inflation
that could soon begin to manifest itself in the coming year. Rumor is that the ports in California are weeks behind in onloading shipping containers. This only adds to costs. Combined with increasing fuel and covid regulation costs and we could soon see stagflation. Just my own thoughts.

[Cu Penny Hoarder]

With spot at $27, APMEX ASEs are now at $39-41. $1000 face "junk" 90% is selling for nearly $38/oz. Incredible premiums. While some think we will see a pull-back before it continues to rise into the coming years, I'm not so sure about that.

In 2018/19 when silver was ranging between $14-16 I was urging ppl to buy 90%, the premium was only 0.29 cents then. Prices were low, things were quiet/calm, and that's the perfect time to accumulate.

Then in March 2020 the price dumped to $12 due to the scamdemic. I posted here for stackers to hurry up and buy (premium on 90% was only 0.49 cents). Only 4-6 hours after that slam down, the premiums skyrocketed. Those few hours was quite possibly the buying opportunity of a lifetime.

Stackers should be aware of the daily price movement and keep lots of dry power ready in order to take advantage of price smash downs (for whatever reason). If you are a long-term holder, I guess buying now would be okay, but I'd rather wait until things calm down and premiums drop a bit before buying more.

History shows that premiums have always come back down a few month after a market shock event. Most silver pundits out there who have proclaimed: "This is it!" have been wrong. Could this time be different?... possibly, but I believe the interest will eventually wane when these younger buyers see the PM prices stall or come down again. There is no instant gratification in PMs.

[Cu Penny Hoarder]

Regarding prepping, I also think now would be a good time to refocus on preps. If not for any reason other than the shortages and inflation that could soon begin to manifest itself in the coming year. Rumor is that the ports in California are weeks behind in onloading shipping containers. This only adds to costs. Combined with increasing fuel and covid regulation costs and we could soon see stagflation. Just my own thoughts.

People who do not have food and water storage and a weapon to protect themselves are going to be in serious trouble. Don't forget the ammo. The majority of the population is reactive, not proactive. You gotta buy/store these things when they are available. I've recently purchased another $2K of freeze-dried foods... it has recently become available again. Things are only going to get worse from here. Prepare accordingly.

[68Camaro]

With spot at $27, APMEX ASEs are now at $39-41. $1000 face "junk" 90% is selling for nearly $38/oz. Incredible premiums. While some think we will see a pull-back before it continues to rise into the coming years, I'm not so sure about that.

In 2018/19 when silver was ranging between $14-16 I was urging ppl to buy 90%, the premium was only 0.29 cents then. Prices were low, things were quiet/calm, and that's the perfect time to accumulate.

Then in March 2020 the price dumped to $12 due to the scamdemic. I posted here for stackers to hurry up and buy (premium on 90% was only 0.49 cents). Only 4-6 hours after that slam down, the premiums skyrocketed. Those few hours was quite possibly the buying opportunity of a lifetime.

Stackers should be aware of the daily price movement and keep lots of dry power ready in order to take advantage of price smash downs (for whatever reason). If you are a long-term holder, I guess buying now would be okay, but I'd rather wait until things calm down and premiums drop a bit before buying more.

History shows that premiums have always come back down a few month after a market shock event. Most silver pundits out there who have proclaimed: "This is it!" have been wrong. Could this time be different?... possibly, but I believe the interest will eventually wane when these younger buyers see the PM prices stall or come down again. There is no instant gratification in PMs.

Fair enough and mostly good points. I wasn't really urging people to buy, though it could have been interpreted as that. However, if you have no silver at all (if you are a newbie to RC - most veterans have as much as they can afford), I view the risk of buying "too high" too early as less than the risk of having no silver at all. But if they buy now at a high premium, people shouldn't commit everything they have - as you say, things may calm down within the next few months and the price may moderate. In which case, buy more then.

What is worse than being wrong about "this is it"? It is being wrong about "this isn't it".

[pennypicker]

Today's PM environment makes me think of the California gold rush days and back then the people panning the gold did all the hard work and accumulated little if any wealth while it was the merchants selling the food, clothes, pick & shovels that became rich. Similarly today I see us stackers using the fruits of our hard labor to buy silver and gold from the merchants who again do little work and are getting rich off the ridiculous premiums. I agree this is not the time to buy silver and it would be more prudent to save your money and wait for the virus (and premiums) to fade from the forefront.

However if you must buy silver they you may want to look at sterling silver on ebay. Last week I was high bidder on a 90 gram sterling spoon which contained $73.61 of actual silver if melted--I was the high bidder at $68 which included shipping!

[Changechecker]

What I am noticing with the shops I'm visiting is that there is a void of inventory. It appears that the squeeze has led to and continues to cause physical shortages at the retail level. The inventory that remains is overpriced and will sit there until there is a big upward correction and if sellers adjust accordingly it will remain that way. I was in a shop last week and watched while the owner paid over spot just to get inventory. He was selling at 23.8 for 90%. Considering his overhead rent, salary, etc. He is breaking even at best. Yes the premiums we pay may be hard to swallow but unless the physical price increases substantially I don't think that sellers are going to willing sell even at spot. (Maybe thiefs will but not true owners).
Big online dealers are an entirely different story. Just my thoughts

[thecrazyone]

I already shared my story from a coin dealer on another thread here at RC, but that one in particular made it seem like they were laughing all of the way to the bank right now.

[Changechecker]

Keep things in perspective. For every seller there needs to be a buyer. The equilibrium must be achieved for there to be an opportunity to close the deal. Where p.m.'s are concerned it's a fluid market. The price is not fixed and while not what you were expecting it was within the market parameters based on market conditions. Sorry you were disappointed and as you stated they won't get your business in the future which is the beauty of Capitalism. Be patient, be prepared for the next opportunity to present itself. It will.

[thecrazyone]

Keep things in perspective. For every seller there needs to be a buyer. The equilibrium must be achieved for there to be an opportunity to close the deal. Where p.m.'s are concerned it's a fluid market. The price is not fixed and while not what you were expecting it was within the market parameters based on market conditions. Sorry you were disappointed and as you stated they won't get your business in the future which is the beauty of Capitalism. Be patient, be prepared for the next opportunity to present itself. It will.

Thanks- I did not want to seem like I was grumbling about it. Today's a new day

[68Camaro]

Obviously, dealers only make money on premiums when they have bought the metal at a lower price.

If they choose to sell, they will make money on existing inventory, but unless they resupply at a much higher price than before, they will have no more stock to sell, and they lose regular customers. If they choose to sell out their stock, they themselves will have to pay more than spot to re-stock. In general, after a big market move, the buy/sell markets will settle down again eventually at normal premiums, but if the entire supply side is empty it could take months to regain equilibrium. Generally large bars (1000 oz LBMA compliant) might be available when small bars (10 oz), and 1 oz coin, rounds, and bar, are not available. But few regular people want bars that large. Even 100 oz bars aren't very fungible. Most retail demand is at the >=2 oz per unit level. When small unit supply sells out new stock has to be spun-up by the foundry and coining shops using the large bars as feedstock, and with COVID aggravating the labor force, with past big resets as examples, regaining equilibrium typically takes 2-4 months to resolve.

If a market force like reddit silvershorts really has legs and patience, and they keep pushing the market on top of other demand by buying up all the new stock as the market attempts to re-supply, the results could be interesting.

Also, keep in mind the big dealers only make money on premiums over spot, as for every sale they make they hedge by buying at the same price on the comex futures market, and for every purchase they make they sell for the same price on the futures market, leaving themselves essentially net zero as far as product cost. This prevents them from going bankrupt if the market changes magnitude or direction quickly.

[franklin]

Just saw some 100 oz bars available at various sites today but with silver a bit below 25, premiums on large bars are still 5-6 bucks per ounce! I can remember back in the late 90s when I paid about 40 cents above spot for them.

[shinnosuke]

No matter how much we paid for silver, this table puts some things in perspective, particularly if the total number of silver ounces is accurate.

Ag ownership level.png (872.08 KiB) Viewed 1566 times

[coincrazy]

No matter how much we paid for silver, this table puts some things in perspective, particularly if the total number of silver ounces is accurate.

This was interesting but it seems this is GOLD and not silver.

50 billion troy ounces of silver mined in history

based on this article which says 6 billion for gold.

https://sdbullion.com/blog/how-much-sil ... d-is-there

[shinnosuke]

No matter how much we paid for silver, this table puts some things in perspective, particularly if the total number of silver ounces is accurate.

This was interesting but it seems this is GOLD and not silver.

50 billion troy ounces of silver mined in history

based on this article which says 6 billion for gold.

https://sdbullion.com/blog/how-much-sil ... d-is-there

Hey, there. The next sentence in the article you linked says: "Again, most physical silver mined over time has been lost to industrial use and gone unrecycled." Perhaps then the numbers are not so far off. My first post on this matter speaks of Monster Boxes of something. I haven't heard of those coming in gold flavor.

Either way, I do not know exactly how many ounces have been mined (I wasn't there. LOL) or how many are still available (because most people won't tell me how much they have) so that's why I wrote: "particularly if the total number of silver ounces is accurate."

My advice is to just keep stacking. Silver is cheap compared to the price it will be when most people realize the currency in their wallets and in their bank accounts are debt instruments, mere Federal Reserve Hiney Wipes. Our ultimate place on the chart is less critical than our total preparations for that day. Let it be sooner than later.