Market Newcommers Driving Physical Gold & Silver Premiums?

[BullionStar]

I am a newbie to this forum so please be gentle with me!

Having been collecting Silver & Gold since about 2004. I have been a keen watcher of Gold and Silver premiums. I started buying the odd Gold Sovereign and Silver Ounce bullion coin from eBay, when premiums at the time were pretty reasonable. Now however, premiums certainly on fixed price stuff on ebay are so much higher. Premiums on completed auctions are also higher, though not as high as fixed price stuff.

Reading discussion boards, here and elsewhere, and talking to professional dealers here in London, premiums seem to be rising everywhere as physical bullion shortages are becoming ever more common. As I have seen premiums rise, I have suspected that this is largley driven by new entrants to the market, rather than existing gold and silver paying whatever it costs to obtain precious metal.

So many factors effect premiums, what coin, brand of bar, weight, market etc, so I decided to do an experiment to try and get an idea of the current base premium for silver.

I had 200 one ounce 999 Silver bars minted up to promote our precious metal related business. This brand has never been on the market before as Silver bars, so the bars should not carry a undue premium like ASEs or JM bars, and I am currently feeding them into the UK eBay market to see what premiums we achieve as a totaly new brand to the market. US eBay will follow.

The results are not in yet but so far we are achieving around a 35% premium over the Silver price for an unknown brand, which is suprising. This is far higher than even a JM or Englhard 1 ounce silver bar was achieving even 12 months ago. It seems there is no shortage of buyers at these elevated levels whatever the brand is.

[theo]

Good first post.

A 35% premium at the current spot price would mean these bars are selling for almost $47 (US). The premiums here seem to be increasing, but I don't think we've reached those levels yet. Rumors of COMEX problems and assertions of low silver supplies in general my be reaching the mainstream. If these stories persist current prices might seem cheap, but on the other hand we could be setting ourselves up for a big correction.

[blackrabbit]

Lots of crazy collectors are willing to pay more for anything new that they haven't seen yet. Put up a picture so we can see your handiwork!

[BullionStar]

Interesting Theo. Thanks

We have gone for a nice clean bar design and had professional photography on the item photos (below)

which does look good and no doubt helps, but I find it suprising that 35% is being reached for a hither to unknown brand.

Time will tell I Guess.

[blackrabbit]

Yea wow, I would have thought you needed a picture of an animal or something on them to command that high premiums. Good job on the smart business decision! People must be freaking out right now about the global political/economic shakeup. It certainly does not look for peace, stability, and prosperity throughout most of the world.

[Copper Catcher]

BullionStar welcome!

This might help answer the question of why people are willing to pay what they are for silver:

"...the collective short position of all the banks is around 7 billion oz. This is made up of 4 billion oz in forwards which is the actual borrowing of metal and selling it forward, and 3 billion oz of naked calls against non existent silver."

Source: http://harveyorgan.blogspot.com/

Also, it doesn't hurt when you have a person testify openly that for every one ounce in the vaults of the LBMA there are one hundred paper contracts sold....oh sure they can settle with cash...but they do not have the physical so paper is backing paper so why is this not consider a fraud? You tell me?

http://www.youtube.com/watch?v=JXQ6Yqyj ... re=related

[NickelExpress]

Those bullionsupermarket bars I believe are now my favorite looking bar.

[999Ni]

Currently there is a frenzy over bullion bars & rounds. When spot price was $32.50 US, I couldn't find any bars or rounds on ebay for less than $39 shipped. 20% premium. Crazy.

Good luck selling your bars, they're purtyyyy...

[Know Common Cents]

All it really takes is a fast look at www.apmex.com to immediately see that most of their silver in any non-collector form from the US, Canada and Mexico is wiped out. Oh, sure, you can be notified when more of a specific item is restocked, but who knows what the price might be at that time. Purely a crapshoot, but the general trend is pointing toward higher prices.

Know what you're buying and what you should be holding to maximize your funds. Always think resale desirability even if you have no intent of selling them in the forseeable future. I'm a veteran of the late 70s and early 80s silver boom and then bust. Never thought I'd find my way back to that path, but this could be better than a flashback.

As more people become aware of the need for hard assets and feel their wealth needs to be preserved, the premiums will vault higher. Shop smart for silver. Expect to pay premiums, but think cash instead of credit cards. Establish a positive relationship with a local or regional dealer who may be able to cut you a better deal on rounds, bars or good ol' US 90% junk silver. The herd mentality is just winding up for a stampede.

[BullionStar]

Thanks for those that commented on my first thread here on Realcent.org

You might be interested to know the first few bars have been sold into the UK market now.

We achieved a 35.8% premium over the London Silver fix.

I intend to run some paralel sales into US and UK together next week and compare the premiums between the two. I suspect it might not be quite so good in the US, but we will see.

[TXBullion]

Thanks for those that commented on my first thread here on Realcent.org

You might be interested to know the first few bars have been sold into the UK market now.

We achieved a 35.8% premium over the London Silver fix.

I intend to run some paralel sales into US and UK together next week and compare the premiums between the two. I suspect it might not be quite so good in the US, but we will see.

Please let us know the details about how to get these bars and prices when you sell, I would be interested in 1, hopefully the premium and shipping arent too bad

[beauanderos]

Interesting Theo. Thanks

We have gone for a nice clean bar design and had professional photography on the item photos (below)

which does look good and no doubt helps, but I find it suprising that 35% is being reached for a hither to unknown brand.

Time will tell I Guess.

Ooh, ooh, ooh. Nice! Anyone for a game of silver dominoes?

[BullionStar]

Dominoes!

Theres an idea! It would be expensive to tool up for, making a tool for each of the different spots combinations but then you'd have a game and an investment!

Probably get an even better premium too!

[hejira11]

Those bullionsupermarket bars I believe are now my favorite looking bar.

Agreed. I'll take simple over ornate any day.

[BullionStar]

Thanks guys, this really is getting crazy now!

We have been acheiving upto 50% premium on our bars.

However I noticed that some Johnson Matthey bars, a pretty attractive design to my eye at least, have been completed at auction for over 90%!

Whos buying this stuff?