Silver Premiums

[Devilpig]

I dont sell much silver, but the pricing of silver bullion always challenges me.

Spot today 59p so £18.35 oz 

lots of bullion coins list at £28+ +50%

una bars £38 + 100%

I get the challenge with vat, but is there a driver around brands / mints or is it just profiteering. gold in general spot+ few percent.

[GoldStandardPartyUK]

Spot is calculated based on enormous 400oz bricks with no numismatic value. Stackers are in competition for the bullion you're probably referring to.... shiny 999 1oz coins. If you buy other kinds of silver the reddit apes don't know about yet you'll find it near spot even on eBay. Spoons, plate, pre47 50% coins etc. 

[Bimetallic]

Silver spot isn't based on 400 oz bars – gold comes in 400 oz bars, not silver. COMEX silver futures contracts are based on 5,000 troy ounces. It's nominally five 1,000 oz bars, for the rare traders who want to take physical delivery. (Silver's terminal bar size is 1,000 oz, and gold's is 400 oz.)

Retail silver premiums are higher than normal, and have been since the pandemic got into full swing. Demand exploded. I'm not sure where demand is now, though Biden's fiscal policies should scare people. Premiums have come down a bit since the peak, at least in the US. Right now, we can get new Britannias for $29.90, which is a 20.5% premium over spot. This is a good baseline for new coins from a major world mint, from the lowest-priced dealer in North America, which is Silver.com. Link. Britannias tend to be among the cheapest of the major government-minted coins in the US market. Eagles are much more expensive, and Maples are usually in between. It's a good reference price for a VAT-free context. Some states will charge sales tax of 7-9% on bullion, but many won't and the listed price is before any sales tax is applied. So our premiums are much lower than in the UK probably. That's impressive since those Britannias had to be shipped across the pond.

[GoldStandardPartyUK]

I stand corrected on the size of the comex bars. Let me check my understanding.... the reason there is any premium at all is because the buyers' focus on 1oz 999 shiny. For different types of silver, you find yourself in different markets and currently everyone wants 999 1oz shiny, which pushed up the % cost over spot. 

The other kinds of silver have no %cost over spot. If you think you have found a gap in the coin market then buy britannias but if you believe in the case for *silver* itself the  surely you should want to obtain ugly silver at no premium 

Long live the dented spoons! 

[CollectorNo1]

Premiums are just greed..and the scale differs day by day..coin by coin...simples..🥳

[Tn21]

Right now on the forum it is cheaper to get the 1oz coins then the bigger weight bars or coins. 

Good buying opportunity in my opinion to get silver at £25ish an oz

Edited July 30, 2021 by Tn21

[Bimetallic]

7 hours ago, GoldStandardPartyUK said:

I stand corrected on the size of the comex bars. Let me check my understanding.... the reason there is any premium at all is because the buyers' focus on 1oz 999 shiny. For different types of silver, you find yourself in different markets and currently everyone wants 999 1oz shiny, which pushed up the % cost over spot. 

The other kinds of silver have no %cost over spot. If you think you have found a gap in the coin market then buy britannias but if you believe in the case for *silver* itself the  surely you should want to obtain ugly silver at no premium 

Long live the dented spoons! 

It's not about people wanting 999 silver – the commodities exchanges like COMEX are also basing everything on 999 silver. That's in their standard 5,000 oz. contract.

The retail silver market is small. Premiums are a given compared to spot price. Spot price is a futures price, I think maybe a month out. Volume is huge and transaction costs are tiny. It's all electronic (not "paper" like a lot of people grumble about).

Spot is the minimal baseline. Any kind of retail product is going to be higher, always. Retail silver introduces massive costs. Tiny volumes like an ounce or two or ten. Fancy manufacturing and finishes. Government mints, with all the standard incentive problems, excessive job security, apathy, and entitlement issues that make government organizations consistently inefficient. Shipping heavy physical products hither and yon. Losses from theft, fraud, and insurance against theft and fraud. Etc, etc, etc. A commodities market has none of those costs, and its purpose is primarily price discovery.

I don't know about the "greed" idea someone posted. Market prices are driven by market conditions. Some level of greed is almost always present in individual actors at some level of analysis, but greed doesn't matter independent of market conditions. Sellers don't get to arbitrarily dictate high prices because they feel like it, because they're feeling greedy or whatever. If the demand wasn't there, all the greed in the world would be irrelevant. I'm surprised that so many humans still lack a basic grasp of markets and economics in the 21st century. Believing that simple "greed" can explain a sudden increase in the prices of a good, as though it could happen at any time just because greedy sellers feel like it, is basically believing in magic or superstition. And it's logically incoherent, since prices would just rise to some crazy, infinite level, for everything, and they clearly don't.