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What drives the disconnect betweenthe "Spot" price on Futures vs. Selling price of Physical Metal?

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  • BLUEJAYWAYBLUEJAYWAY Posts: 7,941 ✭✭✭✭✭

    @bronco2078 said:

    @cohodk said:

    @bronco2078 said:

    @cohodk said:

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    Buehler? Anyone?

    what do you mean? Just to screw with the owner?

    I want to know how much i can sell my silver for today....because its an emergency and i need cash now.

    I wish to cash in my insurance policy....how much will i get?

    CALL JG WENTWORTH 877-CASH-NOW !!!!

    JG W. was all I could think of the other day. When at the news conference by gov't officials they stated Americans "need cash now" in regard to the stimulus checks being considered for all Americans.

    Successful transactions:Tookybandit. "Everyone is equal, some are more equal than others".
  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭
    edited March 21, 2020 7:51PM

    @Baley said:

    @cohodk said:

    @bronco2078 said:

    @cohodk said:

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    Buehler? Anyone?

    what do you mean? Just to screw with the owner?

    I want to know how much i can sell my silver for today....because its an emergency and i need cash now.

    I wish to cash in my insurance policy....how much will i get?

    Put up a picture right here and the cash offers will just roll right in!

    I need cash now. Not paypal, not Zelle....not a check is in the mail.

    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • BaleyBaley Posts: 22,658 ✭✭✭✭✭

    @cohodk said:

    @Baley said:

    @cohodk said:

    @bronco2078 said:

    @cohodk said:

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    Buehler? Anyone?

    what do you mean? Just to screw with the owner?

    I want to know how much i can sell my silver for today....because its an emergency and i need cash now.

    I wish to cash in my insurance policy....how much will i get?

    Put up a picture right here and the cash offers will just roll right in!

    I need cash now. Not paypal, not Zelle....not a check is in the mail.

    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    Yes, if it's junky and you're desperate for a local offer right now, value =melt= spot , +/-

    If it's less junky, like Engelbert 3.14 oz. Bars ir draped bust half dimes, then collectors and dealers might offer more than your bent forks and dented candlesticks 😉

    Liberty: Parent of Science & Industry

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭
    edited March 22, 2020 8:01AM

    @Baley said:

    @cohodk said:

    @Baley said:

    @cohodk said:

    @bronco2078 said:

    @cohodk said:

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    Buehler? Anyone?

    what do you mean? Just to screw with the owner?

    I want to know how much i can sell my silver for today....because its an emergency and i need cash now.

    I wish to cash in my insurance policy....how much will i get?

    Put up a picture right here and the cash offers will just roll right in!

    I need cash now. Not paypal, not Zelle....not a check is in the mail.

    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    Yes, if it's junky and you're desperate for a local offer right now, value =melt= spot , +/-

    If it's less junky, like Engelbert 3.14 oz. Bars ir draped bust half dimes, then collectors and dealers might offer more than your bent forks and dented candlesticks 😉

    Wondering how many collectors there would be in a SHTF scenario?

    Or if i couldn't find a collector, or even a coin/pawn shop and really needed food or other necessity, how much could i get for my PMs? Would i get a get roll of TP for an ASE? Maybe a can of spam?

    For those that have stockpiled MREs, how many oz of silver would i need to get one from you?

    How many oz of would it take to get a box of 12 ga #6?

    Edited to add....those 3.14 Engebert bars were especially pricey in 2015. Gonna take another 95 years to get that premium back. I cant believe i missed that on first read. Dang you Baley. 😉

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • bronco2078bronco2078 Posts: 9,964 ✭✭✭✭✭
    edited March 22, 2020 5:43AM

    @cohodk said:

    @Baley said:

    @cohodk said:

    @Baley said:

    @cohodk said:

    @bronco2078 said:

    @cohodk said:

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    Buehler? Anyone?

    what do you mean? Just to screw with the owner?

    I want to know how much i can sell my silver for today....because its an emergency and i need cash now.

    I wish to cash in my insurance policy....how much will i get?

    Put up a picture right here and the cash offers will just roll right in!

    I need cash now. Not paypal, not Zelle....not a check is in the mail.

    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    Yes, if it's junky and you're desperate for a local offer right now, value =melt= spot , +/-

    If it's less junky, like Engelbert 3.14 oz. Bars ir draped bust half dimes, then collectors and dealers might offer more than your bent forks and dented candlesticks 😉

    Wondering how many collectors there would be in a SHTF scenario?

    Or if i couldn't find a collector, or even a coin/pawn shop and really needed food or other necessity, how much could i get for my PMs? Would i get a get roll of TP for an ASE? Maybe a can of spam?

    For those that have stockpiled MREs, how many oz of silver would i need to get one from you?

    How many oz of would it take to get a box of 12 ga #6?

    menu A or menu B ? self heating or non? :#

    I find it amusing to sell the ones I dont like

    to be serious for a moment , unless you are cooking for just one person , dollar stores will feed you cheaper than MRE's

    but you needed to go last week or the week before :D

    The people that are all of a sudden deciding they need to fill 5 carriages at costco will be the first to die or go mad.

    You dont need to be a TV news freak or psychic to have known about this possibility weeks ago.

  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    Looks like physical metal is not only insurance for fiat dollars. All of a sudden it has become insurance for fiat futures.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    I dont see any disconnect. If i walk into a coin shop with a 10oz bar or $10 in 90%, im going to get dollars in exchange about equal to paper price.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    edited March 22, 2020 2:30PM

    @cohodk said:
    I dont see any disconnect. If i walk into a coin shop with a 10oz bar or $10 in 90%, im going to get dollars in exchange about equal to paper price.

    and when Baley walks in behind you to buy it what do you think happens to the price? Thread is about the sell price disconnecting from spot - what retailers are getting, not what they are paying.

    Retailer buy price will climb when they can't get the inventory their customers are willing to pay a higher premium for. Once they realize they are missing out on the new spread they will pay more to get the inventory.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    Sounds like price gouging to me derryb. Where is the CFPB?

    I see nothing different than scalpers outside a sporting event.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    edited March 22, 2020 3:30PM

    @cohodk said:
    Sounds like price gouging to me derryb. Where is the CFPB?

    I see nothing different than scalpers outside a sporting event.

    Or people trying to sell tickets when the game gets cancelled (equities). Probably been quite a while since you've seen a free market at work. Get used to it, at least for the short term.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    I see emotions. Emotions always make bad decisions.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    Yep, "rescue" plan will confirm that any minute now.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭

    I see nothing different than scalpers outside a sporting event.

    What the Fed does makes scalpers outside a sporting event look like microbes on a gnat's ass.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • dcarrdcarr Posts: 7,936 ✭✭✭✭✭

    @cohodk said:
    I need cash now. Not paypal, not Zelle....not a check is in the mail.
    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    If you are a "weak hand" holder of silver and didn't manage your finances to the point where you MUST sell under the stipulations outlined above, then naturally you are going to get reamed.

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    @dcarr said:

    @cohodk said:
    I need cash now. Not paypal, not Zelle....not a check is in the mail.
    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    If you are a "weak hand" holder of silver and didn't manage your finances to the point where you MUST sell under the stipulations outlined above, then naturally you are going to get reamed.

    Really? Look at the participants in this forum. While some may have 1000s and 1000s of ounces of silver, most have 10s or maybe a few hundred. Scanning these forum topics will confirm that and are probably a representative example of society. The dealers on this thread have always spoken of people buying a few ounces here and there.

    These folk put silver away for a rainy day, in case of crisis, or job loss or emergency. Now they have the emergency and you say "naturally they get reamed"?

    Wow. Nice stripes.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • TwoSides2aCoinTwoSides2aCoin Posts: 43,796 ✭✭✭✭✭

    What's a rainy day to the populace is a larger payday for the marketeers, investors, and sometimes speculators.
    This disconnect is the higher premium paid for the shortage of product during the storm.

  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    @cohodk said:

    These folk put silver away for a rainy day, in case of crisis, or job loss or emergency. Now they have the emergency and you say "naturally they get reamed"?

    I'd say they failed to buy silver for the right reason - dollar insurance, protection needed now more than ever.

    For a rainy day you buy an umbrella.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭

    Now they have the emergency and you say "naturally they get reamed"?

    The reason they're getting reamed isn't because they managed to buy a few ounces of silver.

    It's because they didn't manage their finances to the point where they aren't forced to sell under the stipulations outlined above. The same issue applies especially to the stock market, or any other asset.

    People make life choices that don't always result in optimal outcomes, and then they tend to blame anyone but themselves. That's how socialism brushfires start.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • TwoSides2aCoinTwoSides2aCoin Posts: 43,796 ✭✭✭✭✭

    I buy and sell. My margins are thin despite the disconnect or the daily futures price. And those of us who work in the field don't get to choose the price, we simply sense the disconnect and paranoia (fear). I have a lot more young fellows buying silver than old fellows selling it. Now , I see the connection

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    @jmski52 said:
    Now they have the emergency and you say "naturally they get reamed"?

    The reason they're getting reamed isn't because they managed to buy a few ounces of silver.

    It's because they didn't manage their finances to the point where they aren't forced to sell under the stipulations outlined above. The same issue applies especially to the stock market, or any other asset.

    People make life choices that don't always result in optimal outcomes, and then they tend to blame anyone but themselves. That's how socialism brushfires start.

    Then I think you are saying they never should have bought it in the first place and that it might not offer insurance as promised. What advice do you offer to those people today, or to those who wish to get in? For the 2nd time in as many crises, silver has lost 1/3 its value.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    @derryb said:

    @cohodk said:

    These folk put silver away for a rainy day, in case of crisis, or job loss or emergency. Now they have the emergency and you say "naturally they get reamed"?

    I'd say they failed to buy silver for the right reason - dollar insurance, protection needed now more than ever.

    For a rainy day you buy an umbrella.

    Better warn them not to open the umbrella during a thunderstorm as they may not like the outcome.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • HigashiyamaHigashiyama Posts: 2,139 ✭✭✭✭✭

    Let me bring this back to the original premise. Is it correct to describe the currently large difference between spot and small quantities of physical metal as a disconnect?

    I might not quibble with the words, except that some or perhaps many participants in this discussion seem to think that there is some fantasy “paper” market that is disconnected from a “physical” market.

    I can in fact by 5000 + ounces of physical metal for close to spot. I cannot buy 5-10 ounces at anything near spot at the moment. It is perhaps remarkable that at times in the past, you could actually buy small quantities of silver for only a dollar or so above spot. A relatively high premium for fabrication and distribution of small quantities seems reasonable. In any case, the disconnect is not between spot and physical or between “paper” and physical, it is a matter of volumes transacted.

    Higashiyama
  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    The futures paper market will let you convert your promise for the spot price to a min. 5K oz. if you jump through all of their hoops and foot the bill for delivery. If you want a cash and carry price, you pay the disconnect.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭

    Then I think you are saying they never should have bought it in the first place and that it might not offer insurance as promised.

    You might agree, that if you don't have $400 available for emergencies, you don't take out a loan to buy a gold eagle for $1,700. Common sense dictates what you should and shouldn't do.

    What advice do you offer to those people today, or to those who wish to get in?

    It would be imprudent for me (or anyone) to start handing out financial planning advice without knowing the big picture about that person's situation & finances.

    Those who wish to get in should have some idea about whether or not they can afford to weather a downturn, no different than they should if they were considering stocks. Or bonds. Or real estate. Or paintings.

    For the 2nd time in as many crises, silver has lost 1/3 its value.

    I refer you to the time period 2008 to 2011. The metals recovered much more quickly than stocks, and then they vaulted higher. There are no guarantees in life, but the history is similar. Perhaps more uncertain now, but still similar.

    A relatively high premium for fabrication and distribution of small quantities seems reasonable. In any case, the disconnect is not between spot and physical or between “paper” and physical, it is a matter of volumes transacted.

    I'm not entirely convinced of that. Consider that large scale production of 1 oz coins or rounds drives down the unit cost. Quantities matter, but in a competitive market even quantities don't tip the scale by 60% or more in premiums, as is happening now.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • MilesWaitsMilesWaits Posts: 5,301 ✭✭✭✭✭
    edited March 23, 2020 10:25AM

    On Bullion Direct for 2001 SE Silver Roll Spot Price:
    Spot $13.23 $0.75
    Volume Pricing
    Qty
    1 + $562.40 $568.08 $585.83

    Now riding the swell in PM's and surf.
  • isaiah58isaiah58 Posts: 385 ✭✭✭

    @jmski52 said:
    Now they have the emergency and you say "naturally they get reamed"?

    The reason they're getting reamed isn't because they managed to buy a few ounces of silver.

    It's because they didn't manage their finances to the point where they aren't forced to sell under the stipulations outlined above. The same issue applies especially to the stock market, or any other asset.

    People make life choices that don't always result in optimal outcomes, and then they tend to blame anyone but themselves. That's how socialism brushfires start.

    The disconnect here is as you are saying, proper financial planning.

    Basic financial planning starts with a base emergency fund. From there, 3 months of all expenses. Many would argue 6 months before any investments, or a split towards 6 months plus investing at this point. PMs should not be a primary investment, though many have been fortunate to make it as such.

    I see two distinct groups here upset with the current disconnect. The first group purchased silver with funds they should have put away for emergencies. The second group has money to burn, they could care less about why silver is down at spot, they just feel they deserve to be able to purchase it at spot regardless of if that would put bullion dealers out of business.

  • HJPHJP Posts: 423 ✭✭✭

    Or, perhaps a third group who are to understand the market dynamics of precious metal pricing in the current time frame.

  • isaiah58isaiah58 Posts: 385 ✭✭✭

    @HJP said:
    Or, perhaps a third group who are to understand the market dynamics of precious metal pricing in the current time frame.

    The groups that understand the dynamics are not upset. I was referring to those upset over their perception of a disconnection. I always considered paper and physical two independent markets.

  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    edited March 23, 2020 4:13PM

    @isaiah58 said:
    I always considered paper and physical two independent markets.

    Unfortunately most don't. Normally, physical price movement follows paper price movement. While the paper price serves as a "base" for the physical price it really shouldn't. Hopefully the day will come when it no longer does.

    The creation of PM ETFs in recent years, where ETF price tends to follow futures exchange spot price, have only made the dependency worse.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • bronco2078bronco2078 Posts: 9,964 ✭✭✭✭✭

    I've recently updated my emergency plan to include a mountain of toilet paper

  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    @bronco2078 said:
    I've recently updated my emergency plan to include a mountain of toilet paper

    The decline from democracy to tyranny is both a natural and inevitable one.

  • blitzdudeblitzdude Posts: 5,367 ✭✭✭✭✭

    @derryb said:

    @bronco2078 said:
    I've recently updated my emergency plan to include a mountain of toilet paper

    lol they should add US Mint Silver Eagles to that list.

    The whole worlds off its rocker, buy Gold™.

  • RonBRonB Posts: 635 ✭✭✭✭✭
    edited March 23, 2020 11:09PM

    Interesting article on Kitco News
    regarding silver $ disconnect..
    3/23/2020 :

    The global pandemic has shut down several mining jurisdictions around the world, taking off a large chunk of silver production, this according to Keith Neumeyer, CEO of First Majestic Silver.

    “In 2018, we produced, as a global industry, 855 million ounces of silver. So far, we’ve had Peru come offline, with 145 million ounces, we’ve had Chile come offline with 42 million ounces, we’ve had Argentina come offline with 26.5 million ounces. That’s a total of 213.5 million ounces that has now been shut down,” Neumeyer told Kitco News.

    Neumeyer noted that there exists a fundamental disconnect between the physical market and the paper market for silver.

    “For us [miners] to see the metal, silver prices, to go down to 10-year lows in a pretty tight market, it just goes to show you that the paper markets are just complete fallacy,” he said. “It’s got nothing to do with reality.”

    He added that the recent decline in silver prices was purely financial and had nothing to do with changing supply and demand fundamentals.

    “That was just purely financial; people having to sell paper, people having to short the metal because markets are dropping, it had nothing to do with the physical market at all,” he said. “It’s a very tight market, and now you can’t buy any metal at all.”

    Spot silver last traded $0.65 an ounce higher on Monday to $13.24 an ounce.

    Edited to add: (March 20) :

    Rhona O’Connell, INTL FCStone’s head of market analysis for EMEA and Asia regions, has also noted that silver demand has increased significantly in India. “Silver has continued to slither lower, hit by the dual adverse effects of lower gold and a debilitating economic outlook. The dramatic fall in silver to eleven-year lows has launched a rush to buy silver in India, the world’s largest silver consumer,” O’Connell commented.

    Regardless of the growing demand, on Wednesday, silver prices continued to slide lower, hitting $11.84 per ounce. Moreover, the same day, the gold/silver ratio peaked at its highest level ever, soaring to 126. For reference, at the end of the last trading week, it averaged at 101.74, and during 2019 – at 86.04.

    On Thursday, the commodity’s value started to wobble back and forth, with its rapid fluctuations indicating that we might finally see some stabilisation in this shiny metal. Right now, the $12 level looks to be rather supportive. For that, as long as silver can stay above this mark, there is a solid chance of some type of base forming.

    At the time of writing, March 20, silver traded at $12.66 per ounce.

    Analysts suggest: what is the outlook for silver prices?
    Edmund Moy, a former director of the US Mint, believes that the metal’s prices have experienced such a dramatic plunge as “institutions have dumped silver for cash to pay for margin calls and other obligations, as well as hoarding cash.” He added that such a significant increase in silver bullion demand is “just the beginning,” and is “primarily driven by individual investors who see silver as an affordable safe haven and because of the lower prices, a buying opportunity.”

    Moy also prognosed that “eventually, low silver prices will catch up to limited physical supply and increased physical demand. And once the global economy begins to recover from this pandemic, silver demand from industry will recover too.”

    Peter Spina, a president and CEO of GoldSeek.com and SilverSeek.com, suggests that silver futures are likely “ready to at least bounce in a significant way.” On the other hand, he is yet uncertain of what the future holds: “if there is another global market selloff, silver futures could get one more historic dump to the $10 area.”

    Collector of Classic US Coins
  • dcarrdcarr Posts: 7,936 ✭✭✭✭✭

    @dcarr said:

    @cohodk said:
    I need cash now. Not paypal, not Zelle....not a check is in the mail.
    So i think what im hearing is that my silver is worth about 12-13/oz which seems to be the paper spot price.

    If you are a "weak hand" holder of silver and didn't manage your finances to the point where you MUST sell under the stipulations outlined above, then naturally you are going to get reamed.

    Elaboration:
    If someone's need is so great that they can't even wait for a check in the mail, then they have failed to plan for even a week's worth of emergency cash. And there is a strong possibility that they will get a greatly reduced "fire sale" price on their silver when they are forced to sell.

  • blitzdudeblitzdude Posts: 5,367 ✭✭✭✭✭
    edited March 24, 2020 3:55AM

    That gold is going to Pluto baby, that's what she was supposed to do.....

    Edit 5 minutes, the BIGS are piling on lol

    The whole worlds off its rocker, buy Gold™.

  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭
    edited March 24, 2020 4:04AM

    The groups that understand the dynamics are not upset. I was referring to those upset over their perception of a disconnection. I always considered paper and physical two independent markets.

    What we're talking about is really just the buy/sell spread under extremely volatile market conditions. Lots of head fakes and smoke. It doesn't matter whether you think it's paper vs. physical, or a buy/sell spread, or a huge discrepancy in the prices shown between Kitco, Comex, goldprice.com, or Apmex. It's people's natural reaction to a volatile market in an attempt to protect their positions. Carry on.

    Look at the swing in gold within just 6 minutes in the Kitco charts that blitzdude just posted. Lots of thrashing around.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭

    Interesting article on Kitco News
    regarding silver $ disconnect..
    3/23/2020 :
    The global pandemic has shut down several mining jurisdictions around the world, taking off a large chunk of silver production, this according to Keith Neumeyer, CEO of First Majestic Silver.

    +1

    The interview with Keith Neumeyer on Kitco is worth a listen......

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • ShadyDaveShadyDave Posts: 2,186 ✭✭✭✭✭

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    I was at my LCS on saturday morning. Owner told me he was waiting on a walk-in that called before. Guy walked in (two trips from the car) with 1000 oz...and got paid spot. Combo of ASE's and Maples. 10 minutes later they were selling for $17/oz....

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    @ShadyDave said:

    @cohodk said:
    Has anyone walked into a pawn or coin shop with a bag of 90% or box of 1oz rounds to sell?

    What price were you offered?

    I was at my LCS on saturday morning. Owner told me he was waiting on a walk-in that called before. Guy walked in (two trips from the car) with 1000 oz...and got paid spot. Combo of ASE's and Maples. 10 minutes later they were selling for $17/oz....

    Thanks for the anecdotal evidence.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • HigashiyamaHigashiyama Posts: 2,139 ✭✭✭✭✭

    There still seems to be a major misconception among many message board participants.

    Based on this and other threads, many people seem to believe that there is a "spot" market, which is some sort of paper fantasy market, substantially disconnected from a "physical" market. This is simply not the case.

    In particular, most physical silver that changes hands is bought/sold at near spot.

    Who are the big buyers of silver? Electronics firms; makers of photo-voltaic cells, some pharmaceuticals, makers of jewelry, coins, etc. Two examples are the Samsung Group and the US Mint.

    Here is a quiz question (T or F): When Samsung or the US Mint buy silver, they buy it at near spot. (or in the futures market, which is linked to spot)

    Higashiyama
  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    Large consumers such as Samsung and the US mint do not buy their silver on the futures exchange. They buy from producers of silver at close to spot. They are buying extremely heavy volume.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭

    Based on this and other threads, many people seem to believe that there is a "spot" market, which is some sort of paper fantasy market, substantially disconnected from a "physical" market. This is simply not the case.

    There is a spot market that is real, and there is also a physical market that is real. What's also real is that there IS a disconnect in pricing between the two markets, when there previously was no disconnect at all.

    I've been around long enough to have seen spot and the retail market very closely correlated with only a small carrying cost for physical bullion compared to the spot price - for many years running.

    Something significant has changed.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    @jmski52 said:
    Based on this and other threads, many people seem to believe that there is a "spot" market, which is some sort of paper fantasy market, substantially disconnected from a "physical" market. This is simply not the case.

    There is a spot market that is real, and there is also a physical market that is real. What's also real is that there IS a disconnect in pricing between the two markets, when there previously was no disconnect at all.

    Perhaps one is based on reason and logic while the other on fear and ignorance? You have your opinion on which is which, while others may differ. Thats what make the world go round. We all just need to be responsible for our own actions and decisions.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • WingsruleWingsrule Posts: 2,977 ✭✭✭✭
    edited March 25, 2020 4:49AM

    @cohodk said:

    You have your opinion on which is which, while others may differ. Thats what make the world go round. We all just need to be responsible for our own actions and decisions.
    >

    This. Pretty much applicable to any discussion topic.

  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    @jmski52 said:

    Something significant has changed.

    Not the deniers.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • HigashiyamaHigashiyama Posts: 2,139 ✭✭✭✭✭

    @derryb said "Large consumers such as Samsung and the US mint do not buy their silver on the futures exchange. They buy from producers of silver at close to spot. They are buying extremely heavy volume."

    Agreed!

    Then I think we both agree that the issue is not one of "spot" versus "physical", but one of volume.

    Higashiyama
  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    @Higashiyama said:
    @derryb said "Large consumers such as Samsung and the US mint do not buy their silver on the futures exchange. They buy from producers of silver at close to spot. They are buying extremely heavy volume."

    Agreed!

    Then I think we both agree that the issue is not one of "spot" versus "physical", but one of volume.

    Disagree, pricing is an issue of spot versus physical as they are two different prices. Price paid falls somewhere in the spectrum based on many things, but the most important thing is "am I getting physical metal for immediate delivery at today's prices." Placing an order for large quantity, such as does the mint and Samsung, allows them to demand a price closer to spot than you and I would pay for a tube of silver eagles, just as APMEX offers us a price closer to spot if we buy five tubes of silver eagles.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭
    edited March 25, 2020 8:57AM

    There is a spot market that is real, and there is also a physical market that is real. What's also real is that there IS a disconnect in pricing between the two markets, when there previously was no disconnect at all.

    Perhaps one is based on reason and logic while the other on fear and ignorance? You have your opinion on which is which, while others may differ.

    I didn't offer an opinion on why the two markets differ so please don't say that I did. I don't think that it has anything to do with fear and ignorance as you suggest.

    The only thing I pointed out is that there is now a divergence, where previously there was very little divergence.

    Please stay with the train of thought instead of twisting it.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • HigashiyamaHigashiyama Posts: 2,139 ✭✭✭✭✭

    @jmski52 said "There is a spot market that is real, and there is also a physical market that is real. What's also real is that there IS a disconnect in pricing between the two markets, when there previously was no disconnect at all."

    But the key point is that in any large transaction, physical silver changes hands at near spot. Therefore, if there is a disconnect, it is not between spot and physical, it is between large and small transactions.

    (And, I think @topstuf did a good job in his earlier posts explaining why the divergence in price for large and small transactions may be particularly large at the moment. Also, as I believe @bronco2078 has indicated, this divergence is likely to diminish over time)

    Higashiyama
  • derrybderryb Posts: 36,118 ✭✭✭✭✭

    CME Urged To Change Physical Gold Delivery Rules Amid Market "Breakdown"

    "No matter whether they approve it or not, there are serious cracks starting to appear in the paper gold markets as the world reaches for 'money' as The Fed explicitly admits to infinite dollar debasement capabilities."

    The decline from democracy to tyranny is both a natural and inevitable one.

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