Buying Silver on a Weekly Basis

[margomaps]

Some of you have probably noticed that small-volume silver orders have become somewhat harder to find over the past couple months.  I've had good success with APMEX most of the time -- if I regularly check the site and buy when something comes in stock.  With spot prices low and demand for physical silver high, sometimes days go by when there's nothing but expensive specialty/numismatic silver available.

Today I noticed that APMEX once again has 2008 silver eagles available...for a stunning $7/ounce over spot.  If you buy between 20-499 ounces that premium falls to "only" $6.50/ounce over spot.  You need to buy 500+ to get the bigtime discount price of...hold onto your hats!...$6/ounce over spot.  With the spot price around $10.50 today, that's an absurd 67% markup over spot for smaller orders.  That really speaks to the apparent distortion in the spot price in light of the obvious lack of supply relative to demand.  I would assume that whatever is causing the distortion cannot, and will not last indefinitely.  Barring a total financial/economic collapse, I expect the spot price of silver to at least double over the next year, much like it shot up last year to ~ $20/ounce.  That's my bold prediction. 

For those of you buying silver elsewhere, are you also seeing these huge markups over spot price?  Is $6-$7/ounce over spot typical even in B&M coin shops these days?

I was thinking of giving www.midasresources.com a call after hearing the company owner/president/representative/whatever on FTL the other day.  It looks like they have substantially longer lead-times for shipping than APMEX, but I'm not in a hurry.  I might also try NWT mint, which I understand some of you are happy with while others had bad experiences.

[Fluff and Stuff]

Yeah, Silver Eagles go for way over spot.  I have a 2-3 left but I gave away most of mine.  You should look into the cheaper rounds, they are a much better deal, for what I'm looking for (nice, shiny, silver rounds).

[margomaps]

Yeah, Silver Eagles go for way over spot.  I have a 2-3 left but I gave away most of mine.  You should look into the cheaper rounds, they are a much better deal, for what I'm looking for (nice, shiny, silver rounds).

Agreed.  And now APMEX has more generic rounds in stock -- something that has not routinely been the case lately.  I've had somewhere between decent and good luck with APMEX's secondary/used generic rounds.  Most have been in really nice shape.  A few have been well tarnished or otherwise aesthetically undesirable.

I have to admit I'm a sucker for new/shiny rounds, and I'm willing to pay a little extra for those.  But I guess it's also nice to have some that are useful and not quite as pretty.  Similar concept to getting that first dent in your new car, or first scuff on a pair of new white shoes; you just don't care as much after that. 

[PowerPenguin]

I just found out that Pacific Bullion has a new "Silver Savings Program" that seems like a good way to buy silver on a regular basis, and they don't have minimum or maximum orders. See http://www.pacificbullion.com/silver.html. I'm getting a paycheck soon, so I'm back in the silver market. If anyone here in NH has to pay some bills and is looking to sell, let me know. Otherwise, I think I'm going to try this system out for a while.

[margomaps]

I just found out that Pacific Bullion has a new "Silver Savings Program" that seems like a good way to buy silver on a regular basis, and they don't have minimum or maximum orders. See http://www.pacificbullion.com/silver.html. I'm getting a paycheck soon, so I'm back in the silver market. If anyone here in NH has to pay some bills and is looking to sell, let me know. Otherwise, I think I'm going to try this system out for a while.

Here's what Pacific Bullion is offering:

- $50 "account setup fee"
- $5 per-payment fee
- $15 shipping fee
- You get whatever price appears on their site the day your payment arrives
- What happens to any "extra" money in your account when you decide to close it?

Best case scenario is that you send them enough for 20 ounces all at once.  Then your costs are $5 (payment fee) + $15 (shipping) + $50/X (where X is the number of times that you will end up taking delivery from this company).  So the bottom line is that you're paying a $20+ premium on your order, and you lose the opportunity to buy during a dip in the spot price.  If it takes you two payments to reach the 20-oz number, then your premiums is $25+.

Here's my offer:

- $0 "account setup fee"
- $0 per-payment fee
- $5 order fee (to be charged when your contributions equal the cost of 1 oz of silver, no more frequently than monthly; or when your contributions equal the cost of X ounces of silver, where you pick the value of X)
- You can pick up your silver at my house (Seacoast) monthly (or every other month, etc.) for free.  If you want me to ship it to you, I will charge the actual USPS rate, plus $3 for my time to run to the post office.
- Your spot price will be whatever the price is the day I place my order; I typically place my orders sometime in a 1-week window, and I'm pretty good at catching the lowest spot price that week -- since it's in my own best interest to do so.
- Any money in your "account" will be immediately returned to you if you request it.  You can pick it up at my house with no charge, or I'll mail it to you at no charge.

What do you say?   

[K. Darien Freeheart]

I'm kind of amazed that Pacific Bullion is offering that "Silver Savings" thing. Honestly, it sounds a lot like the "pools" or warehousing certificates that every other metals dealer (and metals buyers) I've dealt with say "Stay the hell away from!".

I'm not putting any FRNs down without physical delivery, preferably as fast as possible. There may be some exception to the 'fast as possible rule' if I know that the physical metals are in the possession of a trusted agent.

[William]

Some of you have probably noticed that small-volume silver orders have become somewhat harder to find over the past couple months.  I've had good success with APMEX most of the time -- if I regularly check the site and buy when something comes in stock.  With spot prices low and demand for physical silver high, sometimes days go by when there's nothing but expensive specialty/numismatic silver available.

Today I noticed that APMEX once again has 2008 silver eagles available...for a stunning $7/ounce over spot.  If you buy between 20-499 ounces that premium falls to "only" $6.50/ounce over spot.  You need to buy 500+ to get the bigtime discount price of...hold onto your hats!...$6/ounce over spot.  With the spot price around $10.50 today, that's an absurd 67% markup over spot for smaller orders.  That really speaks to the apparent distortion in the spot price in light of the obvious lack of supply relative to demand.  I would assume that whatever is causing the distortion cannot, and will not last indefinitely.  Barring a total financial/economic collapse, I expect the spot price of silver to at least double over the next year, much like it shot up last year to ~ $20/ounce.  That's my bold prediction. 

For those of you buying silver elsewhere, are you also seeing these huge markups over spot price?  Is $6-$7/ounce over spot typical even in B&M coin shops these days?

A walking liberty silver half dollar has .36 ounces of silver in it. At today's price of 9.60 an ounce, that's about 3.50 per coin. Coinflation says

"Physical silver shortages are being reported across the country. In the past, most "junk silver" coins on Ebay often sell between a +/- 5% spread of the melt value. For example, if you have a silver coin that has a $1.00 melt value, you should be able to find someone who's willing to buy/sell it between $0.95 - $1.05. However, I think we've reached a point where you should buy what you can, wherever you can.

If you're planning to buy/sell 1 Walking Liberty half dollar(s) when silver is priced at $9.59 / oz, expect the final total to fall between $3.3 - $3.64."

The truth is you can't buy one of these for less than 5.50 ea, that's about 15.25 an ounce so yes, 6 bucks over spot is about right.

[mackler]

That really speaks to the apparent distortion in the spot price in light of the obvious lack of supply relative to demand. 

No kidding.  I would love to see someone try to buy some silver on the spot market to see if the reported spot price is actually the spot price.

[Pat McCotter]

On NHTeaParty Gu3st posted a link to a good story about how silver has gained a "street price" that does not reflect the spot price changes.
http://markonmarkets.com/2008/10/silver-crunch/

So what happened? The price of silver (and houses, stocks, oil, and probably yachts and beanie babies too) has been falling - and fast. Some people decided that they would start buying silver as the price fell (and, maybe just in case it was the end of civilization). So many people were buying silver in fact, that there wasn't really any left of the most popular forms (silver can come in many shapes and sizes). Then, small coin shops around the country started running out of silver occasionally. Next, online retailers started delaying shipments, and before you knew it there was almost none available at all.

Eventually, someone got the bright idea that the little silver they had left could be sold at a higher markup than normal to the "official" price of silver, and quickly they were buying silver above the official price as well. This may not sound terribly significant, but it is. Silver has astonishingly developed a "street price", and currently, it's about 40% above the price at which it is traded in Chicago. Forms of silver that are unpopular with investors don't have as high of a markup, but the most popular forms really aren't available at all - unless you are willing to pay very high prices indeed.

[margomaps]

On NHTeaParty Gu3st posted a link to a good story about how silver has gained a "street price" that does not reflect the spot price changes.
http://markonmarkets.com/2008/10/silver-crunch/

Interesting link -- thanks for posting it.  That makes a lot of sense.  Here's another over at kitco.com that deals with the supply/demand/price disconnect and explains it in terms of COMEX paper.  It's similar in some ways to the link you posted, but it's more gold-centric and adds a few wrinkles. I think the same principles apply to silver:

Why Gold Is Dropping When It Shouldn't

[William]

So it looks like the main reason gold and silver are "dropping" is because people are attempting to take physical delivery and they're discovering that there is none available so they sell the paper which leads to a run on the market. Paper down and coins up. Just the way it should be.

This represents a complete breakdown of confidence in the markets like we've never seen. This however doesn't explain the price of gas coming down. I wonder if it's even possible to take physical delivery of a barrel of oil at anywhere close to $69?

[John Edward Mercier]

Must be able to.
There must be some real exchanges occuring that would base themselves on the market price.
Else OPEC wouldn't care what it was.

[Lloyd Danforth]

Oil is down due to recession worries spreading across the world. They see demand for oil  decreasing in the future.

[PowerPenguin]

Here's my offer:

- $0 "account setup fee"
- $0 per-payment fee
- $5 order fee (to be charged when your contributions equal the cost of 1 oz of silver, no more frequently than monthly; or when your contributions equal the cost of X ounces of silver, where you pick the value of X)
- You can pick up your silver at my house (Seacoast) monthly (or every other month, etc.) for free.  If you want me to ship it to you, I will charge the actual USPS rate, plus $3 for my time to run to the post office.
- Your spot price will be whatever the price is the day I place my order; I typically place my orders sometime in a 1-week window, and I'm pretty good at catching the lowest spot price that week -- since it's in my own best interest to do so.
- Any money in your "account" will be immediately returned to you if you request it.  You can pick it up at my house with no charge, or I'll mail it to you at no charge.

What do you say?   

Can I get $200 FRN worth sometime in the next few days?

[margomaps]

Here's my offer:

<blah blah blah>

Can I get $200 FRN worth sometime in the next few days?

I'll place an order in the next few days and include you on it if you'd like.  Obviously you won't be able to take possession of the rounds until they arrive from the dealer.  But your $200 combined with my order will be enough to get us a really nice price on generic rounds: about $1.50 over spot.  At today's prices you could get 18 brand new 1 oz rounds for about $200.

Forget my "offer" that I mentioned earlier.  Just join me on a bulk purchase and we'll both reap the savings.  Anyone who wants to jump in, just let me know.  I'll probably be going with NWT Mint this time, so there will be no shipping/handling charges.  FYI: from what I've seen of other dealers lately, it will probably be a few weeks from when the order is placed until the shipment arrives.