Premiums

[balz]

This morning, I did exactly what I said I would do: bought more silver on margin.

Bought at 36.50$ CDN. At the time, I thought I did a good job. However, when I came back at home, I saw silver dropped close to 30$ US (31 CDN), and I looked again on the site and the buying price is still about 36.50 oz.

Usually, they charge 2-2.75 premiums... Now it's close to 5$.

I don't understand.

Feel like I got screwed!

[oober]

Some dealers will not drop the price too fast, they know this price move is just an anomally. I wouldn;t even deal with sellers like that.

[balz]

It's Kitco. Hard to avoid as I think it's the only major seller in Canada.

I was very happy with my purchase until I came back home.

[highroller4321]

It's Kitco. Hard to avoid as I think it's the only major seller in Canada.

I was very happy with my purchase until I came back home.

You should be buying from nickelmeister.....

[balz]

He's in Winnipeg... I'm like 1500 km. away, maybe more...

[natsb88]

Usually, they charge 2-2.75 premiums... Now it's close to 5$.

I don't understand.

Feel like I got screwed!

Some dealers will not drop the price too fast, they know this price move is just an anomally. I wouldn;t even deal with sellers like that.

Again with the "premiums." Why on earth would a dealer sell silver he bought for $42 yesterday for $32 today? I sure won't. There is no law, trade organization, or "gentleman's agreement" that says I have to, and if there was, it would be in violation of every concept of a free market that we supposedly value so dearly on this board.

Paper is paper. Physical is physical. The prices are different. Get over it.

[Nickelmeister]

Usually, they charge 2-2.75 premiums... Now it's close to 5$.

I don't understand.

Feel like I got screwed!

Some dealers will not drop the price too fast, they know this price move is just an anomally. I wouldn;t even deal with sellers like that.

Again with the "premiums." Why on earth would a dealer sell silver he bought for $42 yesterday for $32 today? I sure won't. There is no law, trade organization, or "gentleman's agreement" that says I have to, and if there was, it would be in violation of every concept of a free market that we supposedly value so dearly on this board.

Paper is paper. Physical is physical. The prices are different. Get over it.

Great post! I am getting grief from some of my customers today because I won't sell them silver Maples for $35. The same Maples I bought off them a couple of days ago for $42. Gimme a break.

[balz]

At some point physical has to connect to paper. I understand that a dealer don't want to lose money on a sale, but this is what happens when someone is trading something which its value is decided at the Stock Exchange.

[Nickelmeister]

At some point physical has to connect to paper. I understand that a dealer don't want to lose money on a sale, but this is what happens when someone is trading something which its value is decided at the Stock Exchange.

Value is an agreed upon price between buyer and seller - always.

When people try to sell me their jewellery, I am not obligated to pay their "appraised" value.
When dealers try to sell me a used car, neither of us are obligated to agree on "book" value.

If a dealer chooses to not sell inventory at a certain price, that is his perogative. He may piss off a customer, but that may be the pruden business decision.

[natsb88]

At some point physical has to connect to paper. I understand that a dealer don't want to lose money on a sale, but this is what happens when someone is trading something which its value is decided at the Stock Exchange.

Sorry, but that is incorrect. The value of a COMEX PAPER CONTRACT is decided on the stock exchange. The value of a BULLION BAR in my possession is determined by myself and the buyer, no third party required. At some point physical MIGHT connect to paper, but there is nothing that says it "has to."

I'd like to propose an experiment for those that insist dealers "must" sell bullion at the paper price: Walk into a grocery store and tell the butcher the price of the pork chops in his case "has to" connect to the price of pork bellies on the stock exchange. Then stop at an auto parts store and tell the technician that the price of a quart of oil "has to" connect to the price of oil on the stock exchange. Then stop at Dunkin' Donuts and tell the cashier that the price for a 5-pound bag of coffee "has to" connect to the price of coffee beans on the stock exchange. Let us know how it works out.

There is a difference between wholesale and retail. There is a difference between raw materials and finished goods. There is a difference between a 1000 oz paper contract and a 1 oz tangible coin.

If you want to buy at the paper prices, you can buy paper. If you want to buy physical bullion, you have to pay the free market prices for physical bullion. Simple as that

[balz]

Please don't misunderstand me. I am not blaming anyone for trying to make a profit. I was only underlining the fact that premiums are very very high in comparison to a normal day. You are right that at some point the price is something that is between the buyer and the seller, but from what I usually see it is pretty close to the spot price with maybe a 2-3$ premium (closer to 2$ than 3$ in fact). I don't want to insult anyone making a living selling bullions; you have the right to charge whatever you want to. I was simply a bit worried that I may have not find the best way to make a profit out of this once-in-decade silver dip and that I was a bit shocked (and still am) to pay 36$ when spot price is 31$.

[Nickelmeister]

Please don't misunderstand me. I am not blaming anyone for trying to make a profit. I was only underlining the fact that premiums are very very high in comparison to a normal day. You are right that at some point the price is something that is between the buyer and the seller, but from what I usually see it is pretty close to the spot price with maybe a 2-3$ premium (closer to 2$ than 3$ in fact). I don't want to insult anyone making a living selling bullions; you have the right to charge whatever you want to. I was simply a bit worried that I may have not find the best way to make a profit out of this once-in-decade silver dip and that I was a bit shocked (and still am) to pay 36$ when spot price is 31$.

Here is a tactic you might want to use. Buy paper silver on this correction.
When the price comes back up, sell the contract and convert to physical when the premiums are more to your liking.

[franklin]

I don't have a problem with them asking whatever kind of premium they wish but one of the online companies around 1pm was about $2.50 higher on quoting the spot price than was posted on 4 other sites. Just pay attention.
I priced Apmex morgans and peace dollars and found about a $10 premium each over silver content.

[balz]

Please don't misunderstand me. I am not blaming anyone for trying to make a profit. I was only underlining the fact that premiums are very very high in comparison to a normal day. You are right that at some point the price is something that is between the buyer and the seller, but from what I usually see it is pretty close to the spot price with maybe a 2-3$ premium (closer to 2$ than 3$ in fact). I don't want to insult anyone making a living selling bullions; you have the right to charge whatever you want to. I was simply a bit worried that I may have not find the best way to make a profit out of this once-in-decade silver dip and that I was a bit shocked (and still am) to pay 36$ when spot price is 31$.

Here is a tactic you might want to use. Buy paper silver on this correction.
When the price comes back up, sell the contract and convert to physical when the premiums are more to your liking.

Thanks for the tips. I might do this next time (if there is a next time). Right now I am fully loaded anyway; can't make any move anymore!

[appjoe]

The dealer I deal with buys at approx. 15% below spot and sells at spot. I just called him 15 minutes ago to see if he had any silver. He told me people have been buying and selling all day more buying then selling. I asked him what he was charging and he said spot as always. I told him I thought maybe he was holding onto what he had so he wasn't selling at a loss. He said I buy minute by minute at a percentage below spot and sell minute by minute at spot. He said I may be loosing money when it drops like this, but I make more when it goes up. It all evens out and I have happy customers.
If he told me he wasn't selling at spot as always I would never buy from him again. I buy once a week from him no matter what spot is and if now when it's down over $10 from last week if he refused to sell I would never ever buy from him again.

[balz]

The dealer I deal with buys at approx. 15% below spot and sells at spot. I just called him 15 minutes ago to see if he had any silver. He told me people have been buying and selling all day more buying then selling. I asked him what he was charging and he said spot as always. I told him I thought maybe he was holding onto what he had so he wasn't selling at a loss. He said I buy minute by minute at a percentage below spot and sell minute by minute at spot. He said I may be loosing money when it drops like this, but I make more when it goes up. It all evens out and I have happy customers.
If he told me he wasn't selling at spot as always I would never buy from him again. I buy once a week from him no matter what spot is and if now when it's down over $10 from last week if he refused to sell I would never ever buy from him again.

Wow. You DO have to give us his address!

[Copper Catcher]

The dealer I deal with buys at approx. 15% below spot and sells at spot. I just called him 15 minutes ago to see if he had any silver. He told me people have been buying and selling all day more buying then selling. I asked him what he was charging and he said spot as always. I told him I thought maybe he was holding onto what he had so he wasn't selling at a loss. He said I buy minute by minute at a percentage below spot and sell minute by minute at spot. He said I may be loosing money when it drops like this, but I make more when it goes up. It all evens out and I have happy customers.
If he told me he wasn't selling at spot as always I would never buy from him again. I buy once a week from him no matter what spot is and if now when it's down over $10 from last week if he refused to sell I would never ever buy from him again.

If you don't mind sharing his information I would like to knowl. Does he sell just generic silver at spot or all types of bars and rounds. What is his shipping policy? Send me a pm...

[Copper Member]

At some point physical has to connect to paper. I understand that a dealer don't want to lose money on a sale, but this is what happens when someone is trading something which its value is decided at the Stock Exchange.

Sorry, but that is incorrect. The value of a COMEX PAPER CONTRACT is decided on the stock exchange. The value of a BULLION BAR in my possession is determined by myself and the buyer, no third party required. At some point physical MIGHT connect to paper, but there is nothing that says it "has to."

I'd like to propose an experiment for those that insist dealers "must" sell bullion at the paper price: Walk into a grocery store and tell the butcher the price of the pork chops in his case "has to" connect to the price of pork bellies on the stock exchange. Then stop at an auto parts store and tell the technician that the price of a quart of oil "has to" connect to the price of oil on the stock exchange. Then stop at Dunkin' Donuts and tell the cashier that the price for a 5-pound bag of coffee "has to" connect to the price of coffee beans on the stock exchange. Let us know how it works out.

There is a difference between wholesale and retail. There is a difference between raw materials and finished goods. There is a difference between a 1000 oz paper contract and a 1 oz tangible coin.

If you want to buy at the paper prices, you can buy paper. If you want to buy physical bullion, you have to pay the free market prices for physical bullion. Simple as that

You are right on Nate. I certainly cannot sell at these prices right now. I am in business to make a profit, not to do others a favor. When the price fluctuates just a few cents a day, it's like dollar cost averaging. You are able to sell at spot or slightly above. 2 days ago, I was buying at 24x1 and selling at 30 x1. I can't hardly sell what I bought 2 days ago at 24x1 now and make a profit. Last I looked, I was a for profit business. That being said, most of the people that have been in my shop the last 2 days have been selling. I wonder how many of the users here would sell at a loss if they owned their own shop. My guess is 0. I am sorry, I am in business to turn a buck, not to be a facilatator for a customer that wants to speculate on silver. If you want that, trade paper.

[Rodebaugh]

I am all sold out.............. ...................

Yeah right, I have been buying like a mad man at 20X and will not sell that stock until I can clear 20-35%.......period.

If I can't get that ever again.........fashion me a casket out of Walkers and Bens and dump the rest of it inside on top of me and cover the hole with pre 82's.

[tractorman]

Yeah right, I have been buying like a mad man at 20X and will not sell that stock until I can clear 20-35%.......period.

That's funny, I've got a guy locally who feels the same way. He's an older guy who owns a bicycle shop in a small town. The sign outside his shop is one of those with the individual letters you arrange yourself, on one side he advertises that he "buys gold and silver, 20x face". He's bought a bunch of junk 90%. I stopped in a week ago and he told me if I wanted "a bunch" he'd sell to me for 25x (25% profit). I spent the week compiling "a bunch" of FRNs, planning to buy in at his offer, but with the price drops the last 2 days I was interested to see what he'd say. He said he needed 24x today (20% profit). Remember the price of silver is down nearly $10 per ounce between the 2 quotes. He don't care. I like the guy, we got along well. We talked for a while and I told him I didn't blame him, and "I don't think the price will stay down either." He was happy to sell me a stack of Morgans for 25 per (25% profit), and I was happy with that.

With a few more FRNs to play with I bought some more ASEs. Gainesville was there for me when I wanted to buy. If they'll sell to me on the dips, you can be sure I'll be their customer on bullion during the good times too.

As for junk 90%, guess where I'm stopping as soon as 24x is a good price again!!

[appjoe]

At some point physical has to connect to paper. I understand that a dealer don't want to lose money on a sale, but this is what happens when someone is trading something which its value is decided at the Stock Exchange.

Sorry, but that is incorrect. The value of a COMEX PAPER CONTRACT is decided on the stock exchange. The value of a BULLION BAR in my possession is determined by myself and the buyer, no third party required. At some point physical MIGHT connect to paper, but there is nothing that says it "has to."

I'd like to propose an experiment for those that insist dealers "must" sell bullion at the paper price: Walk into a grocery store and tell the butcher the price of the pork chops in his case "has to" connect to the price of pork bellies on the stock exchange. Then stop at an auto parts store and tell the technician that the price of a quart of oil "has to" connect to the price of oil on the stock exchange. Then stop at Dunkin' Donuts and tell the cashier that the price for a 5-pound bag of coffee "has to" connect to the price of coffee beans on the stock exchange. Let us know how it works out.

There is a difference between wholesale and retail. There is a difference between raw materials and finished goods. There is a difference between a 1000 oz paper contract and a 1 oz tangible coin.

If you want to buy at the paper prices, you can buy paper. If you want to buy physical bullion, you have to pay the free market prices for physical bullion. Simple as that

You are right on Nate. I certainly cannot sell at these prices right now. I am in business to make a profit, not to do others a favor. When the price fluctuates just a few cents a day, it's like dollar cost averaging. You are able to sell at spot or slightly above. 2 days ago, I was buying at 24x1 and selling at 30 x1. I can't hardly sell what I bought 2 days ago at 24x1 now and make a profit. Last I looked, I was a for profit business. That being said, most of the people that have been in my shop the last 2 days have been selling. I wonder how many of the users here would sell at a loss if they owned their own shop. My guess is 0. I am sorry, I am in business to turn a buck, not to be a facilatator for a customer that wants to speculate on silver. If you want that, trade paper.

IMO if I was buying silver from you once a week for the past year and now that silver dropped you refused to sell to me you would never see me in your shop again. You said most of your customers the last 2 days were selling. Then at the buy sell ratio you mention you were buying around 17-18x1 so why couldn't you sell now at 22x1 You said your not a facilatator for a customer to speculate in silver. I bet all your customers buying silver are speculating, that's what most of us here are doing. If silver takes off on Monday look at the profit you'll make because you bought so low the last 2 days. It all evens out. This is just my opinion and you have your's. After all it's your business you run like you want.

[Copper Member]

Well appjoe, you wouldn't being business with me then.

[mr18]

I am a buyer no matter what the price is. The challenge is finding a good deal when Spot drops. Yes, paper and physical do not go hand in hand and dealers, shop owners and any one who sells has the right to refuse service to anyone, if buyers get pissed off and never wan't to go back to buy from a particular seller again, that is fine. My way of looking at this is very simple, I don't take it personal, but if you don't ask you'll never know, If you can't find a deal, you may not be looking hard enough or someone snagged the deal before you. I just bought halves at $11.00 (1 roll) on CL which I thought was a good deal, but ASE's are going for $42 at LCS. So there you have it, buy what ever you can for the lowest price possible and try not to get feelings involved when a deal doesn't go your way. Nothing personal, just business.

[Mossy]

appjoe, would you sell at this big a loss if you did not have to for some reason?

[natsb88]

This idea of abandoning a dealer because he is charging $5 over instead of the normal $2 over seems really silly to me. Let's turn it around for a second. Say I'm a dealer that always pays spot for silver. You bought 10 ounces from me on Wednesday for $42. Now that spot has dropped to $31, I give you a call and say "you have to sell me that 10 ounces of silver back now for $31, or I will never buy from you again." That's exactly what you're doing to the dealer.

It seems to me the sense of entitlement in our society has even leached into PM buyers. Some people feel they are "entitled" to buy silver at the paper price, regardless of physical market conditions, and throw a temper tantrum if they don't get their way. That's juvenile behavior, and honestly I'd be happy to wave that type of customer right onto the next dealer, so I could get back to helping customers with legitimate questions and rational thought processes

Grumble grumble...

If spot stays down, physical prices will come down, but not as quickly and not as far. Physical trading requires inventories, real transactions and fund exchanges, shipping and delivery, etc. Stock trades are executed automatically and instantaneously by trigger prices and computer programs. Naturally the physical market is going to lag on dips.