Thursday, May 25th, 2017 MST

Premiums surge on physical metals

Recent collapsing stock prices did not result in significantly higher metals prices, primarily because investors fled stocks not just in the US but around the world. Following conventional thinking, investors plowed into dollars via short-term US treasuries, which made the dollar stronger versus other currencies.

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In the US, gold and silver trade against the dollar, and, therefore, the monies flowing into dollars offset the huge buying of physical gold and silver, keeping the metals prices from exploding as one would expect when stock prices decline more than 10 percent in six days.

Many buyers are surprised by the increased premiums on the physical metals. For example, 2015-dated American Silver Eagles are carrying premiums in excess of 23 percent, whereas only three months ago SE premiums were 16 percent over spot.

Premiums on ALL basic silver bullion products, 100-oz. silver bars, 10-oz. and 1-oz. silver rounds, have climbed as well, as demand has outstripped the industry’s production capacity. Circulated pre-1965 US 90% silver coins (junk silver coins) are carrying premiums of $6.00/oz. over spot. Worse yet, junk silver coins are next to impossible to find.

Twenty years ago, I could have purchased 100 bags ($1,000 face) of junk silver coins from any one of five wholesalers. Today, I would be hard-pressed to obtain ten bags from five wholesalers total. Whereas .999 fine bullion products are being produced almost daily, junk 90% silver coins have not been minted since 1964, more than a half-century ago.

Nowadays, the only sources of 90% coins are private investors, and few of them are selling at these levels. We do not expect the premium on 90% coins to come down until silver recovers to the $25-$30 level. Even then, 90% coins may still carry $3/oz. premiums. However, if the metals’ prices stay in this range, premiums will ease on all products, but probably not significantly.

5 Responses to “Premiums surge on physical metals”

  1. Bruce Tolagian

    HELLO, ALL YOU HEAR ABOUT IS THE SHORTAGE OF SILER VERSES WORLD WIDE DEMAND. AFTER 7 YEARS I HOPE I WITNESS A PRICE OF OVER $100.00. People are starting to hoard it again. Any commets welcome.pGb

    Reply
  2. Fred Carz, L.r.c.

    DEAR BRUCE TOLAGIAN,

    I offer a few replies to your Comments & Question.

    Before I start to write, keep in mind I am doing you a Favor, as Your comment is THE ONLY ONE here.
    So, I have no incentive TO PROVE TO YOU what I am going to write.

    I am a LIFE Relations Counselor & Consultant and a Part-Time “American Bar Certified” Independent Paralegal, and have Freely & Gladly {for over 20 years} consistently
    given 25% of my of my Clients my Counseling Services pro bono publico, & Taught the uneducated, ripped-off Lower & Middle Class Masses “Basic Law” & “How To Read Contracts” at No Charge.
    So, I am one of “The Good Guys”!

    I Practice Free Market Economics, and therefore I don’t do anything FOR FREE unless there is some Urgent Need in Society for me to do so.

    You wrote: “ALL YOU HEAR ABOUT IS THE SHORTAGE OF SILER VERSES WORLD WIDE DEMAND.”
    Reality: NO ONE, except a few of your Local ‘Concrete & Wood’ Retail Gold & Silver Coins Store Owners AND
    a few Very Well Known Hard-Money Experts {I guarantee You don’t know the Names of any of THE ONES WHO TELL THE TRUTH & Can PROVE what they say nor the URLs of their Websites} have Ever told You and/or anyone else who REALLY wants to KNOW & SEE the Proof, that Silver {In ANY & ALL of Its sellable Forms} has EVER, I repeat, EVER been in a “Shortage” situation!!

    I’ve been into Hard Money Investing since I was 16, so I’ve “been around the Corner, many times.”
    I Lost Money only One Time in my Buying & Selling of Gold/Silver Coins.
    And that One occasion occurred as a result of my First {AND LAST} UNEDUCATED Purchase of, OF COURSE, Numismatic Coins!

    The First Rule of Buying Gold and/or Silver Coins: Unless You are an Educated Collector who can afford to Lose EVERY Cent of Your Purchase, NEVER, EVER Buy Numismatic Coins; Even from your Local Retail Coins Dealer’s Store!!

    Second Rule: ALL, ALL Phone-Sellers of Gold & Silver Coins ARE LYING SALESMEN, CRIMINALS! Most of them, Personally, know NOTHING about Economics, Gold and/or Silver!!
    NEVER Buy ANY Gold and/or Silver Coin(s) Over The Phone!
    That’s because You CAN ALWAYS buy the Same, Exact Coin(s) from your Local Retail Store-Front Gold & Silver Coins dealer at Much Lower Prices!
    I have NEVER Bought any of my Gold & Silver Coins from a Phone Company! I HAVE bought ALL of them from Local. Retail Gold & Silver Stores!

    Again, THERE IS NO SILVER SHORTAGE AND THERE HAS NEVER BEEN A SILVER SHORTAGE in the U.S.A. and/or THE WORLD during the 20th. Century!!!

    AND, if you Knew THE TRUTH about ALL the EXISTING, KNOWN Above Ground & Below Ground Silver,
    You’d probably Go into “Shock”!
    There will NEVER be a Silver Shortage in You Lifetime!

    I could furnish you the Links to Articles & INDUSTRY-Articles that tell THE THUTH about The FOREVER, CONSTANT “Silver Shortages” — but Few would read them and even Fewer would Believe what they read.

    As for me, I do own a lot of pre-1965 U.S.A. Silver Quarters, bought when Spot Silver was under $4.00, at Times when all the Fools and the Uneducated were Panic Selling! I always bought All of my Tenth Gold Eagle Coins when the same Panic Gold Selling was taking place! During the year 2000 “Y2K” Panic Selling, I bought Half of the Tenth Gold Eagles that I own.

    Once again: There has NEVER BEEN and WILL NEVER BE ANY Shortages of Silver!

    Reply
    • Tom Boroghs

      Dear Fred Carz,

      Today (Monday Nov, 30) I happened to find your comment on silver “shortages” attached to a CMI newsletter that I receive. First of all thank you for your information.

      Now for my comment and question. Several years ago I bought a lot of silver in bar form for over $30 an ounce. I lost a large of money. I still have the silver in my possession. Earlier today I was contemplating selling some or all of it and putting it into a different investment. Which leads to my question should I sell what I have for what I can get or hold it awhile longer in hopes that the price may rise again?

      I am not in any immediate need of the money but it does upset me to see the amount that I have tied up in a losing investment.

      I would appreciate any input you might give to me as I am totally on the fence right now.

      Thank you in advance,
      Tom Boroughs

      Reply
      • Robert Staley

        Tom,

        You may want to ask yourself why you invest in PM. You have not “lost” anything currently. I look at it as a long view insurance policy so that WHEN, not IF, the credit bubble pops my kids will still get a warm meal.

        In the event of my untimely demise, the transition of wealth will be unquestioned and without difficulty. To this day I can’t tell you how great it feels to “go shopping,” satisfy my American need to consume, and haven’t lost anything in the process.

        http://www.usdebtclock.org/gold-precious-metals.html still shows the numbers decreasing and someday energy may make mining anything cost prohibitive. Ok,so it will take a while to whittle away 528759t of reserves, yet we show no sign of slowing population growth either.

        If I don’t need to sell, I don’t

        My $0.02

        Bob

        Reply
  3. Duane Meulners

    Controversy over the metals rages, and of course much of that is from the industry touts. I’ve been into the metals for many years, like try 30 now and always I have bought but never sold anything. What is not talked about much in this crowd is the possibility of government action in these times to attach your bank accounts and so forth. Currency controls looks like it may be on the near horizon, but then, even the best educated in economics can only guess at what governments will do. I will not wax on about this in terms of my knowledge of world events, however such measures are now being exploited in Europe and could well, be the next turn of the cards for the Fed. There has been much discourse on metals confiscation over the past few years but I like others tend to think that there is not much to get monetarily now for the governments financial malaise to warrant confiscation as the total gain is not worth the hassle.

    Where we stand right now is at impasse. I think we are now at the bottom rung and slowly people are moving into physical but it is definitely not a land slide. Thus, I am confident that holdings are safe as long as you have those holdings in hand. There is much ado right now in the blogosphere on overall international monitary instability. Defaults are in the wind from Greece to Puerto Rico and then we have to look at states and municipality finance to see the huge numbers in red. So far we’ve seen some market turmoil, this will definitely increase as the world debt based economics boils to higher level of debt with each passing day, in short I believe firmly that we are now on the up leg of the economic hockey stick of debt. The need for new and higher debt is now baked into the cake, the only question at hand is how long will this fuse burn before the bomb goes off. My view is not long.

    If financial hell shows its ugly face as it surely has to we should see the metals surge. So what I am saying is the hot money has not jumped in yet on the metals to any palpable effect. Soon, I think, and a number of billionairs think so also that the compressed gas in the bottle will very soon blow off the cork. More turmoil soon in Chinese markets and in the domestic markets with in lock step, further entanglements, perhaps militarily in the middle east and certainly in Ukraine. Things could turn hot militarily very fast.

    I do not believe that our future in the metals is a function of premiums; I believe we are about to witness a turmoil economically causing the Fed to make a very big misstep leading directly to a runaway inflation with gold leading the charge.

    Thanks for the opportunity to throw in my two cents, and yes I am in big time as a metals investor.

    Reply

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