Daylight robbery

[Melon]

23 hours ago, HawkHybrid said:

that is not what is proven to be happening.

if the spot price did not drop. the premiums would still

rise due to the lack of liquidity. the rise in premium is

regardless of the movement in spot.

ie the spot price has nothing to do with this rise in the

premiums.

 

HH

On 31/03/2020 at 16:56, Platinum said:

But for the love of...

Sherlock, if the price goes down they raise the premiums because of the high demand and low supply. 

21 hours ago, Blehhhh said:

Wouldn't low spot prices bring more interest from more people looking to buy, hence effecting supply.

I think you're all basically saying the same thing in different ways. The rise in price and the rise in premium are not quite the same thing, as we all know. 

The rise in premium (%) can at least partly be attributed to the fall in spot - i.e. if we charge the same for a coin today as we did before the drop, obviously the percentage premium is higher. Dealers may be protecting margins on older stock. So this may explain the price (£) staying the same despite a fall in spot on older stock therefore increasing premium (%), but it does not explain the price (£) actually rising.  

The rise in price £ can not be attributed to the fall in spot. That would be backwards. The rise in price (£) is due to a rapidly changing supply-to-demand ratio despite the fall in spot. We can't sensibly claim the reason for more people buying silver at higher prices is because the spot dropped - the actual prices have risen, so spot reduction creates no incentive. Higher price does not lead to higher demand, that's demand curves 101. 

We can make an educated hypotheses on why the supply-to-demand ratio has changed. It's likely to be a mix of reduced supply (production constrained, distribution constrained etc) and increased demand (seeking investment metal during unstable markets, excess funds pulled out of stock markets etc). 

Of course the other elephant in the room is that spot falling may not be particularly relevant to physical silver at all given what's happening in the paper markets, but that's a whole different rabbit hole.. 

I don't think any of you actually disagree with what I've written above, but I'm sure you'll tell me if you do! I think you're just expressing it in different ways. 

 

On 31/03/2020 at 16:44, Platinum said:

Now can you please stop writing with double space and stop the blasted signature at the end?

Edit: It is so annoying.

PP

21 hours ago, Blehhhh said:

Seriously, cant you stop writing like that please?. Its irritating to read.

No need for that gents, Hawk is free to write however he pleases. 

[Blehhhh]

4 minutes ago, Melon said:

 

No need for that gents, Hawk is free to write however he pleases. 

Itsjustthatitsalittlehardtoreadwhensomeonedoesntwriteliketherestoftheworld.

Wouldyounotagree?.

Requestisintheinterestofconversation.

[Melon]

On 01/04/2020 at 15:41, Bimetallic said:

HH is right about a surge in demand causing the spike in premiums, though I'm not sure what liquidity he's referring to.

It's also true that a drop in spot price can lead to higher relative premiums – percentage over spot. This is because sellers need to protect their margins, starting with mints and refineries. Some mints charge a flat amount over spot, not a percentage. For example, the US Mint charges $2.00 over spot per Silver Eagle coin. This sets the floor on premiums – in normal times, the best American dealers charge a little over $3.00 over spot for a single ASE (volumes less than a tube of 20).

If spot falls from $16.00 to $12.00, the $2.00 flat upcharge grows from a 12.5% premium to 16.7%. And a $3.25 retail premium grows from 20% to 27% just from that drop in spot.

For low priced bullion like silver, sellers are more protective of their margins. They might decide that they need to make something like $2.00 per ounce. So when spot falls, sometimes the premiums don't change much, which makes them larger as a percentage. This's different from gold, which tends to maintain relative premiums better since there's a lot more to work with. The US Mint doesn't charge a flat fee over spot for Gold Eagles, for example – they charge 3%, so you're more likely to see premiums shrink in dollar terms when gold spot falls.

Premiums don't generally increase in dollar terms when spot falls. But this fall was very sudden and happened along with a huge surge in demand for retail physical silver. I think all the major American dealers broke sales records.

I largely agree, although I think I recall seeing a post from @LawrenceChard not long ago that where supply is available, generally speaking the dealer will seek a set margin over spot and be happy to sell even at a loss on original purchase price providing new stock can be brought back in to replace old. 

Here's an example - for the sake of simplicity I'll just assume dealers buy exactly at spot and ignore VAT. If only real life was so simple! 😄 

1. Let's say I'm a dealer who bought 1 Britannia at £15 spot. My standard margin on a Britannia is 10%, so I'm looking for £16.50 for the coin. 
2. Tomorrow spot price drops to £10. There is plentiful supply from the mint. 
3. I have a choice, I can either sell my Britannia today at my standard 10% margin on the new spot price for £11.00, making a loss of £4.00, or I can keep my price at £16.50 and wait for the spot price to rise again. 
4. If I choose to hold my stock and avoid realising the loss on that coin, tomorrow I have: 1 Britannia
5. If I choose to make the sale at £11.00 and reorder the coin from my supplier, tomorrow I have: 1 Britannia and £1.00 cash 

Obviously a grossly oversimplified example, but the point being that when supply is available there's little point in dealers trying to protect margins on the original cost price when spot falls. So the real driver of prices today is the lack of supply.  

[Melon]

14 minutes ago, Blehhhh said:

Itsjustthatitsalittlehardtoreadwhensomeonedoesntwriteliketherestoftheworld.

Wouldyounotagree?.

Requestisintheinterestofconversation.

He can write however he wants, you are of course free to decide if you'd like to read it.

There's no need to resort to trivial insults. Personally I don't find it difficult to read Hawks posts. 

[Platinum]

It is a tad annoying to read but mainly to quote. Also it feels somewhat pointless to sign off with initials minding the forum name is shown. Alas he is free to write as he pleases but for the conversation’s sake it is preferred not to write like that.

As you pointed out though both HH and I are saying the same thing depending on which angle you look at this from. Hence the expression chasing the tail.

 

[LawrenceChard]

13 minutes ago, Melon said:

I largely agree, although I think I recall seeing a post from @LawrenceChard not long ago that where supply is available, generally speaking the dealer will seek a set margin over spot and be happy to sell even at a loss on original purchase price providing new stock can be brought back in to replace old. 

Here's an example - for the sake of simplicity I'll just assume dealers buy exactly at spot and ignore VAT. If only real life was so simple! 😄 

1. Let's say I'm a dealer who bought 1 Britannia at £15 spot. My standard margin on a Britannia is 10%, so I'm looking for £16.50 for the coin. 
2. Tomorrow spot price drops to £10. There is plentiful supply from the mint. 
3. I have a choice, I can either sell my Britannia today at my standard 10% margin on the new spot price for £11.50, making a loss of £3.50, or I can keep my price at £16.50 and wait for the spot price to rise again. 
4. If I choose to hold my stock and avoid realising the loss on that coin, tomorrow I have: 1 Britannia
5. If I choose to make the sale at £11.50 and reorder the coin from my supplier, tomorrow I have: 1 Britannia and £1.50 cash 

Obviously a grossly oversimplified example, but the point being that when supply is available there's little point in dealers trying to protect margins on the original cost price when spot falls. So the real driver of prices today is the lack of supply.  

That may be simplified, but not over-simplified. It is a good, clear exposition and example.

I think I detected one slight error, though, 10% margin on the new £10 spot is £1, not £1.50, so you end up with 1 Britannia and £1.00 cash.

 

[5huggy]

3 minutes ago, cinereus said:

Nonsense.

Taken

to

its

logical

conclusion

it

makes

the

board

unreadable

for

everyone

(as already was demonstrated in this thread.

I picture him tapping with one finger loupe in eye. And the HH signature is just obnoxious.

 

vbw,

cinereus

I can read that fine! 👍

I

dont

get

why

you

are

being

pedantic 

over

semantics

 

[Shinus73]

Several relatively new members being a bit rude about a long standing member for no obvious reason - all recently banned from Twitter by any chance?

[Melon]

24 minutes ago, LawrenceChard said:

That may be simplified, but not over-simplified. It is a good, clear exposition and example.

I think I detected one slight error, though, 10% margin on the new £10 spot is £1, not £1.50, so you end up with 1 Britannia and £1.00 cash.

 

Ah yes, you're absolutely right 👍

[Melon]

17 minutes ago, cinereus said:

He doesn't even have the common decency to explain himself.

I picture him tapping with one finger loupe in eye. And the HH signature is just obnoxious.

I wouldn't explain myself to people making rude, pedantic comments either. 

It's a complete non-issue. 

[ChrisSilver]

Members are reminded to please be polite to all members. 

[Martlet]

Forget 10oz, i see the dealers are doing similar practice with the 2oz QB, premiums of 60% or more when previously about 25%.  I understand short stock but there's also a bit of fairness and i'm disappointed bullion is been overpriced. 

[Melon]

2 hours ago, cinereus said:

Apparently several of us think otherwise so it's factually incorrect to say it's a "non-issue". Perhaps he's not very experienced or aware of social norms online but it's actually incredibly rude and obnoxious (as has been well-established in most internet forums over the years).

Yes it's a bit awkward when people aren't aware of social norms isn't it? 🙄 

[Nick1368]

Read all the comments and can't believe how rude some new members are towards a member @HawkHybrid who has been sharing his knowledge with the whole forum for a long time and I personally have learnt a lot  from him since I've been a member here.

 I have been reading @HawkHybrid posts on this forum for a long time and never had a problem with his typing.

Fair play to him for not responding to such childish behaviour from some members trying to make fun of his typing.

[Seth]

How about everyone stops all the fighting and starts asking the question thats on everybodies mind:

 

Is the original poster now walking like John Wayne or not?

I have a fiver saying he is, what about the rest of you?

[Bimetallic]

6 hours ago, Melon said:

I largely agree, although I think I recall seeing a post from @LawrenceChard not long ago that where supply is available, generally speaking the dealer will seek a set margin over spot and be happy to sell even at a loss on original purchase price providing new stock can be brought back in to replace old. 

Here's an example - for the sake of simplicity I'll just assume dealers buy exactly at spot and ignore VAT. If only real life was so simple! 😄 

1. Let's say I'm a dealer who bought 1 Britannia at £15 spot. My standard margin on a Britannia is 10%, so I'm looking for £16.50 for the coin. 
2. Tomorrow spot price drops to £10. There is plentiful supply from the mint. 
3. I have a choice, I can either sell my Britannia today at my standard 10% margin on the new spot price for £11.50, making a loss of £3.50, or I can keep my price at £16.50 and wait for the spot price to rise again. 
4. If I choose to hold my stock and avoid realising the loss on that coin, tomorrow I have: 1 Britannia
5. If I choose to make the sale at £11.50 and reorder the coin from my supplier, tomorrow I have: 1 Britannia and £1.50 cash 

Obviously a grossly oversimplified example, but the point being that when supply is available there's little point in dealers trying to protect margins on the original cost price when spot falls. So the real driver of prices today is the lack of supply.  

Major dealers are fully hedged. They don't need to be mindful of their original cost so much.

[Melon]

1 hour ago, Bimetallic said:

Major dealers are fully hedged. They don't need to be mindful of their original cost so much.

The example stands though. Regardless of hedging, if supply is plentiful the cost price becomes somewhat irrelevant. 

[ravenshunter]

Wow......am I seeing things?

10oz silver Yale now at €293 on gs.be

I'm in shock.how high could it go?with a bit of luck the European mint gets some in at a reasonable price.