Has the secondary silver market hit the market saturation point.

[Tn21]

£25.50 per Oz here on the forum I like the sound of that 

Edited April 3 by Tn21

[James32]

1 minute ago, Tn21 said:

£25.50 per her on the forum I like the sound of that 

Obviously @theman73 or @arphethean will set the tone, but I'd be astounded if their next batches of silver were cheaper than £25 per oz.

@theman73 thoughts please?

[HonestMoneyGoldSilver]

7 minutes ago, James32 said:

I've always worked of a £4 average premium, so imho silver should now be trading at £25.50 per oz for recognisable coins.

Regrettably as a buyer I think you're about right. Spot + 20% is £25.70 + £8 million RMSD. The man was saying £27 on his latest batch of ASEs

[arphethean]

There is still a lot of confusion around secondary market and the primary market. 

Secondary market concerns all of us, and even dealers, and vat is not a factor. 

The reason is the second hand vat scheme. You do not automatically lose vat when you buy from or sell to a dealer. You lose whatever the difference in dealers sell/ buy prices and secondary market prices. Ignore vat. Dealers can afford to buy silver at any price below the price they sell at. They do not add on 20% to the whole! They only pay vat on their profit. They could buy your ounce at £22 and sell at £22.25, paying only 5p vat. Don't assume any vat registered dealer can only pay spot. Most pay more. 

The secondary market has over the past two years been heavily eroded by a small number of people steadily or sometimes dramatically undercutting everyone else, which has led to premiums on 2nd hand silver being reduced approximately to parity with USA and other silver vat free countries, I.e less than spot plus vat. It only affects big dealers selling Virgin silver with 20% vat on the whole price in the sense that low secondary market prices will knock demand for dealers' higher priced silver.

The price of new silver from dealers will be determined by factors far bigger than the secondary market going rates. Cost of mining, refining, electricity, shipping, waste recovery etc etc etc. All of these factors are opaque and will have an influence on spot. The price of an ounce to a big dealer (who will have multi million £ annual contracts with mints and refiners) could be as little as spot plus 1% for all we know. Or why not even less? They add their margin and 20% on the whole. Their margin will be dictated by whatever their customers will pay but everything else is affected by macro factors. 

So £25.50 or any other price that we think is "right" will only happen if there are no people able or cunning enough to source silver cheaper and able to undercut everyone else. Just cause spot has gone up one can't assume the secondary market will automatically adjust. Though I bloody hope it will as I am still seeing ounces only selling if prices are less than £23. Fine for buyers I guess. But eventually I assume every buyer becomes a seller, right? 

Edited April 3 by arphethean

[PhilB]

Whilst I agree with your secondary market v primary silver price analysis, your comments re mining and refining costs affecting spot price are the opposite of reality in my view.

The paper silver or gold market is the tail wagging the bullion price dog.  Prices of both silver & gold are not currently rising because there are more coin and bar buyers than sellers. We are all exchanging bullion at higher prices now due to the change in spot price, which is pushed around by that paper pm traders/hedgers /speculators. 

The recent rapid price rise, in my opinion is primarily caused by the paper shorters reducing the number of short contracts by buying back the paper bullion. Hence buying. This will be followed by the long speculators and hedgers increasing their long positions, effectively buying more of the the precious metals. Then finally it will be Followed by metals investors buying the physical, which will potentially push up premiums rather than affecting the paper derived spot price. 

Commitment of traders report analysis and commentary by Adam Hamilton at zeal llc and others brought me to this view of price action. 

Edited April 6 by PhilB
Spelling

[PhilB]

On 03/04/2024 at 23:26, arphethean said:

 

The price of new silver from dealers will be determined by factors far bigger than the secondary market going rates. Cost of mining, refining, electricity, shipping, waste recovery etc etc etc. All of these factors are opaque and will have an influence on spot. The price of an ounce to a big dealer (who will have multi million £ annual contracts with mints and refiners) could be as little as spot plus 1% for all we know. Or why not even less? They add their margin and 20% on the whole. Their margin will be dictated by whatever their customers will pay but everything else is affected by macro factors. 

When price of spot is below cost of production then miners lose money and share prices leverage the change in gold.or silver bullion price declines. Similarly they have approx 2x leverage when prices are rising, or more accurately margins are expanding as costs also rise but hopefully slower than spot price received by the miners/refines. 

Edited April 6 by PhilB
Deleted some of quote

[arphethean]

On 06/04/2024 at 01:02, PhilB said:

Whilst I agree with your secondary market v primary silver price analysis, your comments re mining and refining costs affecting spot price are the opposite of reality in my view.

The paper silver or gold market is the tail wagging the bullion price dog.  Prices of both silver & gold are not currently rising because there are more coin and bar buyers than sellers. We are all exchanging bullion at higher prices now due to the change in spot price, which is pushed around by that paper pm traders/hedgers /speculators. 

The recent rapid price rise, in my opinion is primarily caused by the paper shorters reducing the number of short contracts by buying back the paper bullion. Hence buying. This will be followed by the long speculators and hedgers increasing their long positions, effectively buying more of the the precious metals. Then finally it will be Followed by metals investors buying the physical, which will potentially push up premiums rather than affecting the paper derived spot price. 

Commitment of traders report analysis and commentary by Adam Hamilton at zeal llc and others brought me to this view of price action. 

Thanks for your insight. Appreciate it

[Tn21]

Market collusion - price fixing 

I hereby declare the going rate for an oz of silver here on the the silver forum is £29 per Oz 🙌🙌🙌

[HonestMoneyGoldSilver]

Let's all take a moment to thank BBP and Royal Mint for making everybody else look like great value:

Tube Of 2023 1oz Silver Britannias - From £919.32 | BullionByPost

25 x 2024 1oz Silver Britannia Coin - From £827.76 | BullionByPost

Britannia 2024 1 oz Silver Bullion Twenty Five Coin Tube | The Royal Mint (£850 inc VAT)

£1000/tube for the cheapest brits (2024 KCIII) is on the cards this time next week. That would be nuts, almost as nuts as BBP asking £50 for a 2023 QEII or £65 for a 2011 brit

[James32]

Just now, HonestMoneyGoldSilver said:

Let's all take a moment to thank BBP and Royal Mint for making everybody else look like great value:

Tube Of 2023 1oz Silver Britannias - From £919.32 | BullionByPost

25 x 2024 1oz Silver Britannia Coin - From £827.76 | BullionByPost

Britannia 2024 1 oz Silver Bullion Twenty Five Coin Tube | The Royal Mint (£850 inc VAT)

£1000/tube for the cheapest brits (2024 KCIII) is on the cards this time next week. That would be nuts, almost as nuts as BBP asking £50 for a 2023 QEII or £65 for a 2011 brit

I can do a tube of 2024s for you at £800, because we have a special bond.

[JohnA1]

On 03/04/2024 at 23:26, arphethean said:

...Secondary market concerns all of us, and even dealers, and vat is not a factor. ..

^^^^^

This