How are premiums so low?

[Seth]

5 hours ago, Bimetallic said:

The US Mint could do lots of things. Just because the Canadians have done the major animals doesn't mean the US Mint couldn't design coins with similar animals. There are a million ways to draw a bear, cougar, hawk, etc. They could do striking, gorgeous work.

And US Mint bars would sell in huge numbers. You think because there are private mints in the US that the US Mint couldn't make a killing? Come on man. If that were true, the Eagle wouldn't be the best selling silver coin. They could design a gorgeous bar.

I never said that the U.S. mint couldn't, I said that I didn't see a point, if you would like me to give you further reasons for why I don't see the point of the U.S. mint releasing anything besides ASE's, I'll even give you another two:

 

1, The U.S. mint as you pointed out sells ASE's for US$2.00 over spot, Americans can buy a lot of different silver coins from not just privately owned American based mints, but also imported coins from other countries mints like the Royal Canadian Mint, and the Royal Mint for less than US$2.00 over spot, and that's just buying one coin at a time, if you're buying more the U.S. mint still charges you US$2.00 over spot, where as every privately owned as well as every other countries mint reduce the amount over spot they charge you with the more coins that you buy.  I can't see the U.S. mint brining out a new pricing policy/scale, or changing their existing one just because they release a bar minted by the U.S. mint.  Stackers tend to buy for value for money, the less over spot the better, so therefore I can't see it ever being more than a novelty item that silver stackers buy maybe one or two a year, meanwhile they continue to focus their stacking by bying the privately owned mints bars which are priced much closer to the silver spot price, and since there is no tax advantage to buying ASE's over any other countries mints or privately owned mints coins, why risk their place in the market, especially since the ASE is already one of the more expensive silver coins that you can buy in America - silver coins as in has a face value and is recognised as legal tender unlike a silver round.  Especially given that the ASE has a face falue of just US$1.00, where as the Canadian maple 1 ounce has the highest face value of CDN$5.00 - I know how Americans like to joke about canadian dollars not being real money but 5 Canadian dollars is worh more than 1 US dollar it works out to be roughly US$3.75 so should the bottom ever fall out of the silver market to the point where the spot price of one ounce of silver drops below US$1.00  you will always get a minimum of US3.00 and change for a 1 ounce maple, where as you will only be given US$1.00 for a ASE in that situation.

 

2, The ASE was inroduced back in 1986 by an act of congress - actually it took several acts from congress going as far back as 1970, to sell off silver from the Defence National Stockpile, due to the domestic production of silver far exceeding the strategic need for silver, then back around 2002 when it became obvious that the Defence National Stockpile of silver would become depeleted it took another act of congress - I think it was called something like the "Support of American Eagle Silver Bullion Program Act", to allow the U.S. Treasury to buy silver on the open market on bahalf/for the U.S. mint in order to continue minting ASE's, once the Defense National Stockpile of silver was depleted - which has now already happened.  As far as my understanding of how the U.S. Treasury and U.S. mint works, it would take an act of congress in order for the U.S. mint to start to mint anything other than ASE's - hence why America still has the US$0.01 coin because it has Abraham Lincoln on it and his home state won't allow it to be removed from circulation, and to be brutally honest I think that American taxpayers think that their government and congress have far bigger and more important things to do and worry about than to debate the merits of allowing the U.S. mint to start minting bars, different coins, what to show on these new coins and about a thousand other things that they would have to debate, come to an agreement on as not to offend, upset, leave anybody out.... before they could bring it before congress to be approved.  Hence why I suggested again in my opinion that I thought a better idea than the U.S mint bringing out U.S. mint bars was to offer the ASE in not just 1 ounce coins, but also in several other weights/sizes like a 5 ounce version, a 10 ounce version,  a 50 ounce version, and even a 100 ounce version of the ASE, from my understanding that would not require an act of congress, and if it did, it would be an act that required minimum work, as the design has already been approved and in use for over 3 decades now, it would just be an act of congress to give the U.S. mint permission to mint ASE's in more than one weight/size - which is currently 1 ounce.

 

Like you yourself pointed out both the Royal Canadian Mint and the Royal Mint don't just mint coins and currencies for their own countries like the U.S. mint does, the Royal Canadian Mint and the Royal Mint also mint the currencies for quite a lot of other countries, so have a lot more room for maneuvering, new designs and even new products - like jewellery, than the U.S. mint does.  I'm not bad mouthing nor talking down the U.S. mint, I actually like the fact that the design of the ASE has remained unchanged since it's introduction, it means to people like me who have not even the slightest interest in coins or their designs but who's only interest in them is the metals that they are made from, the metals purity, their weight, and things like tax advantages can instantly know what they have without having to do any if much research into coins, the differences between years, privy marks......

[Bimetallic]

On 05/03/2020 at 10:43, STONE said:

You are hyper focused on one product and one profit margin. A companys profit margins are based on all of their products and all of their sales and acquisition costs combined. Some products have a small profit margin, some products have a high profit margin. Buying product on the low dips helps to offset the lower profit items. They also have silver contracts that are long and short with puts attached to control and offset when they buy and sell. Also look at their buyback prices... 

These are currently being sold for 2.19 over spot: https://www.jmbullion.com/american-silver-eagle-varied-year/#

The mistake would be to assume they paid $2.00 over spot for these when in reality since they are not BU they may have purchased them at $16 or less. So the profit is more like $3.50 per coin. So Joe the buyer buys a tube at $394 and their initial profit is $74 on a tube they paid $320 for. When they have sales or so called sales, they are not reducing the price they are reducing their profit margin by a little bit to move product.

Dealers use whats called a buy sell spread, they dont want to catch a falling knife. Thats why its always best to sell your silver to a dealer when the price is rising. I think another hidden assumption people make is that most of us buyers buy on the dips. Its quite the opposite for the masses. Experienced stackers buy on the dips but in all reality we are the minority and not the majority. Dealers know this...

Good points!

What does BU mean anyway, as far as Eagles and similar coins? I know it stands for Brilliant Uncirculated, but why are the Eagles you linked not BU? Silver Eagles never circulate right?

[STONE]

Yes, its brilliant uncirculated. Now that silver is getting dragged down by the SM most dealers are raising their premiums so the lower it goes the more it will stay the same. A while back equilibrium was around $14.50 and now I am guessing its going to be around $15.50ish since the dealers latest purchases have been in the $17 range. A few more heavy down legs like what we saw today in the SM and I am guessing PM's will detach and begin to rise. Short window folks, get what you can while its still on sale...