Despite Being A 'Pet Rock', The Premium For Physical Bullion Is Exploding

Tyler Durden's picture

While status quo-huggers are all too happy to point out gold and silver's lack of utter exuberance amid this week's carnage, perhaps they need to re-comprehend the difference between a heavily manipulated 'paper' market and the surging demand for physical precious metals that is evident in the 20-plus percent premium - and rising - being paid for silver bullion currently...

 

 

Chart: GoldChartsRUs.com

"One important aspect of the physical market that is often overlooked is the premium it commands over spot price. Right before the Global Financial Crisis in 2008, the spot Silver price fell as low as USD 9 per oz., whereas the price of a 1 oz. Silver Eagle was around USD 17 on the wholesale market and even higher on the retail market! That’s a price premium of 188%!

 

That means that if you had held 100 oz. of paper Silver, you might have had to liquidate that for USD 900 (assuming the market was not halted for trading then), whereas if you had held 100 pieces of 1 oz. Silver Eagle coins, you would have gotten at least USD 1700 for them if not more."

 

BullionStar, The Difference in Paper and Physical Gold and Silver in times of Crisis

h/t Jesse's Americain Cafe

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localsavage's picture

paper metal = fools gold

White Mountains's picture

Fools gold, Iron Sulphide, is at least worth something.

Pladizow's picture

The gold bugs have said this for 4 years - and what has happened to price?

Premiums could have gone up by 225% since 4 years ago and you would have still been better off waiting!

JPM Hater001's picture

I just just got back from adding to my stack.  American Rare Coin in Bloomington, MN the premium over spot on 90% junk is 6.35…supply running exceptionally tight. .999 is only $2.30 over.

Apparently last week southern California ran out of the 90%.  2 prices coming bitchez...

greenskeeper carl's picture

thats pretty good. My LCS is about 20% like the article said. His price hasn't come down much since the spot price was sitting near 17.

Payne's picture

4-6 weeks delay today on all silver coinage.  Will this improve over time, expand or contract.  My bet is delays will expand. 

JoeSexPack's picture

Premiums for 90% silver coins are over 50%, if you can find them.

 

http://www.apmex.com/category/25835/90-silver-rolls-bags-dimes/all

 

Mostly sold out.

Big Corked Boots's picture

Can't' touch a walking liberty half for less than 8 frn on the bay now. Premium is so high I switched to bullion bars.

realmoney2015's picture

Just shows you that the paper gold/silver prices mean almost nothing. Its imporant to try not to equate your stack in terms of the dollar. You should value your stack in terms of what it can buy.

That being said, its obvious that the day that the paper and physical markets completely break from each is coming soon.

BaBaBouy's picture

This Whole PM's Market Spectrum Is A Joke...
Check Out The Paper Futures Bullshit In The Last Week,

Major Commi Shorting On GOLD Just As
I Whould Expect In A Strong GOLD Rally:
http://www.cftc.gov/dea/futures/deacmxsf.htm

Now Check Out The Last quarter results for PAAS A big SILVER Producer.
They Are basically producing SILVER at +/- spot, increasing production of it(WTF...why?), and losing millions while doing it.

Pan American loses $7.29-million (U.S.) in Q2 2015
Second quarter 2015 highlights:

Silver production of 6.65 million ounces, 1 per cent higher than a year ago and 9 per cent higher than in the first quarter of 2015;
Gold production of 44,400 ounces, 18 per cent higher than both a year ago and the first quarter of 2015;
Consolidated all-in sustaining costs per silver ounce sold, net of byproduct credits (AISCSOS), of $14.46, 20 per cent lower than a year ago;
Consolidated cash costs of $9.44 per silver ounce net of byproduct credits, 25 per cent lower than a year ago;
Revenue of $174.2-million;
Cash flow generated by operating activities of $20.6-million, or 14 cents per share;
Net loss of $7.3-million, or five cents per share.

Indeed A PM's BIZZARO World.................

Supernova Born's picture

America the Beautiful 5 ounce silver from the US Mint have never gone below $149.95 regardless of spot, that's $29.99 per ounce.

More than 104% premium.

$73.35 worth of silver and $76.60 worth of "other".

It seems they are actively trying to suppress sales.

TheRedScourge's picture

My dealer's got no shortage of .999 Canadian Maple Leaf 2015s, very reasonable premium as well. I suspect the shortage is limited to US + online retailers.

DirkDiggler11's picture

There is no major shortage in the U.S. At the present. When I want silver, Gainesville Coins always has silver.

I will say their overall inventory is down quite a bit from previous levels. Almost no inventory on Morgan or Peace silver dollars, and very little 90% bags in inventory. ASE inventory is mainly just 2015 coinage.

indygo55's picture

My LCS charges 3.95 on Eagles. Not too bad but supply is limited to like 300 pieces total in stock. He had 14 10 oz bars and I took all of them for 1,79 over spot. Wiped them out. 9 weeks for delivery on more if they can get them. 

Squid-puppets a-go-go's picture

And andrew Maguire comes out claiming that the miners are starting to refuse selling to LBMA / comex

thats one cat that knows the entrails of the market

Motasaurus's picture

I won't believe that the price is "exploding" until I see gold at $10k/ounce and silver at $500/ounce - where they belong.

Pinto Currency's picture

 

 

Summer: https://comparesilverprices.com/

 

100 oz bar premia gone to 10% from 4.5% at Apmex: http://www.apmex.com/category/25670/100-oz-silver-bars

60% of those 100 oz bars out of stock.

SilverRhino's picture

Picked up a 100ozt bar for 2.3% Friday morning.  

TongueStun's picture

Where? That's what I thought.....

johngaltfla's picture

Good luck getting those "pet rocks" in about 45-60 days.

The squeeze is on and when this short squeeze hits, all bets are off.

SolarSystem1932's picture

Details Man! Details.  Why 45-60 days ?

I agree, but would like to hear your interpretation of events.

RaceToTheBottom's picture

Bullion VS coins?  Is there a difference based on that?

johngaltfla's picture

If you have to ask, you're already in trouble.

RaceToTheBottom's picture

Point was the article didn't mention squat.

Thanks for your reply, though.

RockyRacoon's picture

I hate to add to the confusion, but johngaltfla was correct.  If this is not a discernible difference for you then some due diligence (and a bit of research) is in order.  Buy what you like, but BUY!  Don't be too concerned about the premium being higher for U. S. coins since the premium stays with the coin when you sell.

jeff montanye's picture

with many things, premiums have been known to fluctuate, even disappear.  imo better to get a low price on widely available silver, bars or rounds with no "collectible" cachet.  for instance, the america the beautiful 5 oz. coins mentioned earlier as not being below $150 are shown as available for $120 but only for the most recent issue (blue ridge). others are shown at higher prices, some over $200 and others unavailable.  but this is collectible rarity, not silver rarity (which is getting to be pretty rare itself, especially compared to the futures markets/paper silver).

https://bullion.nwtmint.com/silver_americathebeautiful_5oz_bullion.php

RockyRacoon's picture

I don't think anyone was talking about the ATB 5 oz rounds.  Those are an anomaly.

RaceToTheBottom's picture

I have always treated my PMs as something very different that coins or stamps.

Volkodav's picture

where is price for junk you claim?

KansasCrude's picture

Oh BULLSHIT Summer of 71.   Junk prices are $1551.10 BEST PRICE OF ALL the surveyed suppliers.....that $21.69 an OZ... for $100  face 71.5 oz of silver.

Here is the MATH

$21.69-14.57=7.12 WHICH IS 48.9% PREMIUM OVER SPOT!   Under 10% LMAO

 

 

Big Corked Boots's picture

Dbl post.    Stupid smart fone

fattail's picture

I had to pay $20 a piece for 12 peace dollars from my relative who said he could have sold them for $25.  I bought every every thing he had.  

AetosAeros's picture

Delays on everything, and it's only advancing. Bought 10 ounces of silver a month ago, took 2 weeks for them to finally get it here, and at the 'over spot' price per ounce, I feel no sympathy with a miner who is running 'tight' against operations costs.  

Bought a 10 ounce stacker 12 days ago direct from mint- still. hasn't. shipped. Getting a bit pissed at this point at the excuses from them about how their 'stated shipping times was wrong on this particular item and has now been updated, oh and your peice was put on the shipping line today', that was Thursday. UPS shows that only a shipping tag was made yesterday afternoon, but no drop off to them/pickup. 

Note to stackers, just like everything else in the world, only support those who deliver what they promise, in the manner in which is in good business. Me, I'm looking for a new mint, because SilverTown will never get another dime from me again.

JPM Hater001's picture

I'm just over the border in WI and could have had it shipped and avoided tax...Risk premium of non-delivery too high for me.  Take delivery...now.

Calmyourself's picture

Good ole sconny, wait till they shut the bridges down and your stuck in W. Wisconsin.  No food coming from Mn...

klockwerks's picture

Texas Precious Metals in Shiner Tx. No monster boxes but they don't sell unless they have it in stock. I can drive down and pick it up. They are out of 1/2 oz gold eagles but have 1/10, 1/4 and full oz. Premium is really stiff on silver. Great company

AetosAeros's picture

Thanks for the info. I checked out their site. Much better prices than I've had in a while, and their stock comes from my home state, so I feel like I'm at least keeping some northern locals employed. Too bad their stocks are out right now though, but at least they state honesty on their site. Oh, they did have a few Monster's up for sale when I checked. I guess if you can, get 'em. Me, I'm a deteriorating middle class guy who went from being able to get at least 10 ozt a week to only 10 a month at best....

phoggy's picture

I said this before, but I have been using a coming called SilverSaver.com for years.  Never have any inventory issues.  They only list what they have in inventory.  If you see in onthe "deliverable" page", then they have it in stock.

 

Ralph Spoilsport's picture

I like the way Texas Precious Metals does business. I haven't had a single problem or shipping delay dealing with them. 

They have an update page explaining their inventory problem in terms even an economist could understand:

https://www.texmetals.com/news/an-important-update-on-inventory-levels/

Urban Redneck's picture

I picked up a few dozen assayed silver kilo bars a few weeks ago and it cost less than 11% over spot, and they're still selling at the same spread to spot.  So unless they want to cough up methodology and source data... it's just meaningless chart porn to me.

However, I have a more serious problem with this piece of untermenshcen insinuation-

"One important aspect of the physical market that is often overlooked is the premium it commands over spot price. Right before the Global Financial Crisis in 2008, the spot Silver price fell as low as USD 9 per oz., whereas the price of a 1 oz. Silver Eagle was around USD 17 on the wholesale market and even higher on the retail market! That’s a price premium of 188%!

 That means that if you had held 100 oz. of paper Silver, you might have had to liquidate that for USD 900 (assuming the market was not halted for trading then), whereas if you had held 100 pieces of 1 oz. Silver Eagle coins, you would have gotten at least USD 1700 for them if not more."

While you may stand to receive a higher premium when selling physical silver (or any other PM) than paper, but YOU PAID A HIGHER PREMIUM IN THE FIRST PLACE for the physical metal.

N2OJoe's picture

This is true, but when the "market" breaks again, that premium ensures I'll get more than zero for it. Likely much more.

ShrNfr's picture

Yeah, American Eagles are a sucker way to buy stuff. At the moment provident is selling kilos from OPM for spot+$0.99 per toz, and they are not the cheapest folks around. The ask is $512.59 and the bid is $471.11 with them. Folks should remember that this stuff is done in toz and not oz. At 99 cents for $14.65 of metal, the markup is 6.7%.

RockyRacoon's picture

That depends upon why you are buying silver in the first place.  If I have a 100 oz bar I'm gonna have a helluva time with it at the local farmer's market.  Whereas, I plunk down a circulated Franklin half or a Silver Eagle -- no problemo.  The purpose of the stash determines its composition.... and a little mix of all is good.

Crisismode's picture

 

 

What Farmer's Markets are YOU going to???

At the Farmers' Market I sell my organic veggies at,

we take cash, and only cash.

There's no setup for gold, silver, or Rhodium.

WTF, get real and welcome to the world of people who ACTUALLY

work here with their hands and backs.