Why is silver sold SO HIGH over spot in the UK?

[TeaTime]

11 hours ago, Shep said:

Haha I like your analogy and I see your point but the issue stands that in the U.K. if you need to sell your stack quickly for a milestone purchase, emergency, whatever, you’re going to need to sell to a dealer and you’re going to get absolutely smoked.

Yes I agree you can sell piecemeal to individuals and pass on the VAT premium. If you truly need to get out of your stack it’s going to be difficult to do that and not take a pounding at the same time.

Yep. And that is where the 'spot price' comes into play - dealers will sell at a premium and buy back at spot or under. They're in the market to make money after all. The manufacturing cost, general appeal, VAT, aesthetic qualities etc that justified the selling premium suddenly become irrelevant.....

'Spot price' in reality relates to the raw material not the finished product and is used by dealers (when buying back) as a means to ensure there is a profit to be made. Even PM dealers need to eat !

I do not generally invest in silver - i collect items made from silver.

(Around the turn of the century i was buying 1oz silver coins for £5-6 each - double the spot price.....)  

 

 

[SidS]

14 hours ago, GoldStandardPartyUK said:

Pre 1920 sterling coins are difficult to obtain and suffer from being collectable.

I don't see that being a problem though, I see that as being diverse. They have two types of buyers, so spot price fluctuations aren't really as terrible.

Three months ago, I bought two Victoria Young Head crowns for £25-£28 each. So yes above spot, but can I resell them for more than I purchased them for?

You bet I can.

[TeaTime]

1 hour ago, SidS said:

I don't see that being a problem though, I see that as being diverse. They have two types of buyers, so spot price fluctuations aren't really as terrible.

Three months ago, I bought two Victoria Young Head crowns for £25-£28 each. So yes above spot, but can I resell them for more than I purchased them for?

You bet I can.

There is always a market for numismatic silver but, by and large, the market is for small private sales. Trying to unload collectable coins in any quantity is almost always going to result in a loss.

If you sold them to a PM dealer you would be lucky to get £14 each.....

If you sold them to a numismatic dealer you may get half book price (£25 for Fine examples).....

It's mainly forums, FB groups, Ebay and, to a lesser extent, coin collecting socieities that enable most sellers to not make losses when trying to release funds tied up in PMs. Not really information that is likely to encourage people to dip their toes into the silver markets.

God, i've made myself feel depressed !!

[stefffana]

It is easy to find bullion 999 silver now on forum at decent prices to build a silver stack. A lot of stackers are changing now the direction into gold and are trying to sell some silver. If you are looking now, there are for sale a lot of bullion coins with prices between £26 and £28 each usual with free delivery in bulk, depending of condition. So, buying 10 x 1oz at £260-£270 delivered it is not too bad now. Last september, similar rounds were @£30/oz in bulk. Also, 1kg silver bars are very often for sale at @£750/kg, equivalent £23.35/oz. 

In my opinion, now it is a good moment to start stacking if you are young🙂.

The spot price is manipulated, this is clear for everybody. In time, month/years/decades, who knows, will come a moment when the spot price will make you happy. If your decision is to start putting your money in silver is firm, just do it and keep stacking, without looking at daily spot's fluctuations. On long term your investment will grow. 

But don't invest only in silver. There are a lot of options for gold and platinum. Nobody can predict which one will perform better in the future.

Happy stacking!🤗

Stefan.

[LawrenceChard]

23 hours ago, FutureStacker said:

Hello,

I have been looking at silver on and off for years, but never taken the plunge and bought any.

I've always noticed, and it seems to have got far worse now, how much over spot price physical silver is sold for.

Right now the price is hovering around roughly £19 an Oz - but from places such as The Royal Mint, the cheapest 1 oz bar is £28. From Bullionbypost, the cheapest 2 Oz silver round is £72 when you're buying a single one - which works out to twice the spot price.

How does anyone buy physical silver when you're getting such a bad deal? I'd understand £2-3 over spot, but 50% over spot? It's crazy! 

I'd love any input and advice.

Thank you!

This is a little historic, but back in early 2018, we bought one tonne of 2017 UK 1 oz Silver Lunar Year of the Rooster coins.

We were offering them at between £1.30 and £1.50 premium, (plus VAT and postage), depending on quantity. This was almost certainly more than the RM wholesale distributor price. Despite this it took us almost the whole year to shift them. Possibly it's not the greatest design, and we did have customers choose to pay extra for silver Britannias, but this was a bargain price for stackers and silver investors. At any time in the past 18 months, we could probably have sold the lot within a week.

Mints know they can get a higher premium for some coin designs and types than others, sometimes helped by lower issue limits, but design, fashion, market sentiment and other factors come into play. 

Because of Covid causing production delays and shipping difficulties, many dealers with stock understandably asked, and got, higher premiums from impatient buyers. Many mints, if not all, increased their premiums, also because they could get it.

So, for the higher premiums, do we blame the mints, distributors, dealers, shipping companies, or customers? The answer is probably a combination of all these factors. 🙂

 

 

 

[Shinus73]

1 hour ago, LawrenceChard said:

This is a little historic, but back in early 2018, we bought one tonne of 2017 UK 1 oz Silver Lunar Year of the Rooster coins.

We were offering them at between £1.30 and £1.50 premium, (plus VAT and postage), depending on quantity. This was almost certainly more than the RM wholesale distributor price. Despite this it took us almost the whole year to shift them. Possibly it's not the greatest design, and we did have customers choose to pay extra for silver Britannias, but this was a bargain price for stackers and silver investors. At any time in the past 18 months, we could probably have sold the lot within a week.

Mints know they can get a higher premium for some coin designs and types than others, sometimes helped by lower issue limits, but design, fashion, market sentiment and other factors come into play. 

Because of Covid causing production delays and shipping difficulties, many dealers with stock understandably asked, and got, higher premiums from impatient buyers. Many mints, if not all, increased their premiums, also because they could get it.

So, for the higher premiums, do we blame the mints, distributors, dealers, shipping companies, or customers? The answer is probably a combination of all these factors. 🙂

 

 

 

I remember this, but couldn’t bring myself to spend anything like a significant amount of money on the worst coin ever made.

[ChrisSilver]

On 14/07/2021 at 14:57, FutureStacker said:

Hello, thank you for your response,

You mention that the production cost is factored in - does this mean that if you buy a 1 oz silver coin for example £28, when the spot price is £19, imagine that you want to immediately sell it, does that mean you get back £19 (spot price) or when you come to sell, do you get back spot price plus the extra value of production?

VAT at 20% means that £5.60 of it is tax, meaning £3.40 is over spot. When you sell, is any of this recovered, or do you literally get the £19?

If you sell to a dealer you will likely get under spot value. If you sell on the forum you can likely get some of the premium back as you are selling direct to other investors/collectors without a middleman, so better prices for sellers and better prices for buyers  

If trading on the forum please do read the required 'QuickStart guide to trading' found in each applicable trading area. Many members choose to exclusively buy and sell on The Silver Forum, some members also like to purchase direct from dealers. The choice is yours  

[MonkeysUncle]

20 hours ago, Shep said:

Haha I like your analogy and I see your point but the issue stands that in the U.K. if you need to sell your stack quickly for a milestone purchase, emergency, whatever, you’re going to need to sell to a dealer and you’re going to get absolutely smoked.

Yes I agree you can sell piecemeal to individuals and pass on the VAT premium. If you truly need to get out of your stack it’s going to be difficult to do that and not take a pounding at the same time.

Which is why I always advise anyone to keep a quantity of cash (physical, savings account or better still both) to cope with emergencies. As a young man the amount I had stashed was small as I could only afford to save a small amount.

I would recommend keeping the equivalent of at least six months wages, better still a years wages, so you have a cushion to fall back on.

Only once you have a safety net think about buying shares, metal, crypto or whatever.

Just my two cents!

[silenceissilver]

22 hours ago, Pete said:

If the latter then my wisdom and age would advise you to stay well away and get yourself mortgage free, pension pot established and all your ducks in order so if you suddenly lost your income or interest rates rise you are not forced on to the street. The "youngsters" today are in a bubble and if it bursts .....

Most of our pension pots are mostly filled with toxic garbage though that will certainly not make it through to the pension of a now young man. There are not many things one can invest into in the time of the everything bubble and PMs belong to the few exceptions, so you might as well buy PMs for your pension. As most here, I agree, it makes most sense to start with (half or full) sovereigns for a newbie to PMs in the UK, not just because I started like this myself but because gold is considerably less volatile than silver and the difference between buying and selling is also much smaller (at at given spot price), easier to store, no issues with milk spots. I definitely do recommend silver, also now but for newbies - start with (half) sovereigns unless what you can afford per month is so little that even half a sovereign would take you half a year or so which of course is not at all uncommon, in your early twenties. 

[silenceissilver]

1 hour ago, MonkeysUncle said:

Which is why I always advise anyone to keep a quantity of cash (physical, savings account or better still both) to cope with emergencies. As a young man the amount I had stashed was small as I could only afford to save a small amount.

I would recommend keeping the equivalent of at least six months wages, better still a years wages, so you have a cushion to fall back on.

Only once you have a safety net think about buying shares, metal, crypto or whatever.

Just my two cents!

I think your advice is generally totally right thus at most given points in time but not right now, at a looming hyperinflation. Yes, even now you should start with a little bit of cash but not half a year of spending, if you are just about to start saving. We still don't know if the looming hyperinflation will indeed materialise in the next few months or even years and theoretically it might never do - even a severe a long lasting deflation is still possible at this point. But the risk of a hyperinflation is much higher now than at most points in time. If you buy half sovereigns now the worst thing that can happen (apart from theft or losing it) is that you might have to sell it at a small loss. Your cash however could evaporate over night. Nevertheless -  as said - start with a bit of cash but the emphasis should currently not be identical to what it was when you were 23 (assuming you are middle aged or old).

Edited July 15, 2021 by silenceissilver

[LawrenceChard]

2 hours ago, Shinus73 said:

I remember this, but couldn’t bring myself to spend anything like a significant amount of money on the worst coin ever made.

There are worse, for example:

https://www.chards.co.uk/2011-royal-wedding-william-and-kate-5-pounds-silver-proof/1890

Baring their teeth at each other.

[greendragon]

1 hour ago, LawrenceChard said:

There are worse, for example:

https://www.chards.co.uk/2011-royal-wedding-william-and-kate-5-pounds-silver-proof/1890

Baring their teeth at each other.

You are right. It is a MUCH worse coin than the Rooster

And it sells for how much...?

beauty is very much in the eye of the beholder 🤣 

[Chorlton]

2 hours ago, LawrenceChard said:

There are worse, for example:

https://www.chards.co.uk/2011-royal-wedding-william-and-kate-5-pounds-silver-proof/1890

Baring their teeth at each other.

It does not even look like them

Need to start a what is the worse looking coin thread !

[GoldenGriffin]

On 14/07/2021 at 14:28, FutureStacker said:

Hello,

I have been looking at silver on and off for years, but never taken the plunge and bought any.

I've always noticed, and it seems to have got far worse now, how much over spot price physical silver is sold for.

Right now the price is hovering around roughly £19 an Oz - but from places such as The Royal Mint, the cheapest 1 oz bar is £28. From Bullionbypost, the cheapest 2 Oz silver round is £72 when you're buying a single one - which works out to twice the spot price.

How does anyone buy physical silver when you're getting such a bad deal? I'd understand £2-3 over spot, but 50% over spot? It's crazy! 

I'd love any input and advice.

Thank you!

My theory is that gold could be subsidised by silver.

I've seen it happen in other aspects by the "great minds of manipulation" and I can see it happening here.

Crypto appeared, then rose significantly when the pandemic hit (a distraction away from gold).

Crypto was discussed in the 1990's but appeared now, in a financial crisis (repo market September 2019), followed by COVID-19.

Followed by signals of a silver shortage (another distraction away from gold).

Silver premiums rising and minds wondering if silver is worth a lot more and prices at RM and dealers indicating a true price for many silver bugs, may end up letting them down.

After all, silver is very much an industrial metal and therefore, the price will be kept low - my theory, silver premiums are subsidising gold.

Edited July 16, 2021 by GoldenGriffin
.

[LawrenceChard]

2 hours ago, greendragon said:

You are right. It is a MUCH worse coin than the Rooster

And it sells for how much...?

beauty is very much in the eye of the beholder 🤣 

The gold proof one is an even worse example, but I was being lazy, and just used the first one I found.

[SpotGoblin]

On 14/07/2021 at 20:23, GoldStandardPartyUK said:

Pre 1920 sterling coins are difficult to obtain and suffer from being collectable. 

But the best is 1920-1947. You can obtain this at spot. 

This is the way.

Especially if you're willing to trawl through places or online listings looking for half-crowns, sixpences or threepences. Crowns are usually inflated and are sought for numismatic value. 

The smaller the denomination more usually closer to spot it will be (for the older British coins.) You can even find the occasional pre-1920 at times.

In terms of other coins its sort of a pot luck, you have to be willing to look through odd stuff; for example some world commemorative silver coins can be found near spot.  

Its fun as a side/hobby thing to locate and find these but they aren't exactly plentiful options. If you want less aggravation and despise paying over the perceived odds then I heartily agree with the other comments buy gold sovereigns.