For you lifetime stackers
ChewliesGum
Posts: 72 ✭✭
I’m fairly new to adding some gold and silver positions to my portfolio. Can anyone school me on a history lesson about these massive premiums right now. I realize every situation is different, but in the past when the premiums exploded this far over spot how long did it take to settle back to normal?
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Look at the numbers the mint has been cranking out. Almost 7M ASEs so far this year. Another made up shortage by the gutter peddlers. This has happened many times in the past. As far as when premiums return to normal nobody knows for sure but it usually doesn't last long. 1-3 months typically. Once the masses lose interest and decide to move on to the next shinny object premiums will drop like a rock. It is insane to be buying at current premiums IMO. Be patient and save yourself some $$$.
Disclaimer: being a lifetime stacker has been by far the poorest investment of my life. My advice, slow and steady. Spread the majority of your wealth elsewhere. Some physical is good for insurance but for god sakes stay out of the gutter and stick with gold. GooD LuCK!
stick with silver
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@ChewliesGum
Look at the first two responses and you will see opposing viewpoints. This is common here, but don’t get discouraged. Like many things in life, some people only look at or believe the things that help support their point of view.
Many make good points. Others, not. But do your homework and read whatever you can. An informed decision usually turns out to be a good decision.
I'm relatively new to this forum. But I did manage to find this photo of blitzdude and derryb together at a coin show though I'm not sure which is which...
the questions are not being answered.
there was a dislocation in april of 2020 that did not work itself out fully before the run up a couple of weekends ago.
every situation is different. I'm not sure how long it will take for spreads to reduce. it could be months and then they stay what we'd call wider than normal.
there were a few times on ebay where you could find a "deal" for a little over $2.50 over spot for ASE. those days are gone. I'm not sure when they are coming back.
from another thread, the amount of silver sold in 2020 was up significantly from the year before. in other threads on this forum we have the sellers and the mint saying they are having trouble meeting demand. we are going to see high markups with this situation.
I think all response so far have some merit at least. I’m working towards a total portfolio weight of 6% in metals. Would like that to be split pretty evenly between gold and silver (dollar value not weight). It just seems like I’ve been kicked into a holding pattern for the past few months and wanted to get some viewpoints on when it will cam down.
I seem to recall premiums falling quickly when the price falls.
These premiums seem very high to me. But this is a strange place.
I'm not sure I really understand premiums at $3 or $4 per ounce (or more) when the price of silver seems 30% higher than it feels like it should be.
Long and short: I'm not buying, except very esoteric pieces because they're collectible.
Dollar cost averaging is probably your friend right now. I certainly wouldn't be plunking huge money down at these prices. Small strategic purchases or even wait a few weeks. Put a gun to my head and ask if the price is going to go up from here or down, I'd say 75% chance it'll drop to $20 or below within the next 6 months. 15% chance it will go higher. 10% chance it will be where it is now.
--Severian the Lame
Don't know the answer to your question, but I will add that I look at the spread between physical buy and sell rather than the spread between physical buy and paper. Spread is very large right now which tells me to not buy. Tells me that dealers can get what they need but are taking advantage of the buyers because of current events/uncertainties/reddit crowd/etc. Prices are slow to change sometimes even after the crisis has passed so who knows when things will "normalize." If ASE's are $12 over paper but I can sell at $8 to $10 over paper then I would think pricing is fine and would be buying. Local coin shows are the best places to buy IMO,
One of the problems with not buying? You end up without any PM's.
Platinum is down
[runs away]
My Saint Set
Palladium has been on a consistent run up. Impressive and beautiful in an Eagle!
High premiums are partly because of market volatility & uncertainty and partly because market participants aren't willing to give their stuff away if the market should suddenly take a turn for the better and then spike.
With some major banks and the Federal Reserve now warning of a significant stock market decline, and with the more frequent rumblings of a financial "reset", I don't see the premiums going away in the near term (3 months).
Generally, it takes an extended period, sometimes years - of boring market activity before premiums for retail silver to drop to levels near melt.
If I were building a position in pms at this time, I would agree with Weiss to the extent that dollar cost averaging is a prudent move. However, I disagree with Weiss about not plunking down huge money at these premiums. That depends on your financial position, your current cash flow, and your assessment of the near-term prospects for metals. Sometimes, you simply have to call it like you see it.
Again, I think that it's more a question of personal money management and personal finances than it is a question of market timing or premiums. There's a bigger picture out there than making the right move in a perfect storm (although that scenario can be quite a rush.)
I knew it would happen.
Only God knows when but some day silver will explode higher and by the time the premiums come down the metal will be at multiples of previous prices.
Don't get caught up in buying panics though. Buy before and if you miss then wait it out.
Shortage of supply has created much premium.
The premium could be signaling a rise to come in the
exchange traded commodity.
I have stacked over many, many years.... Been sitting on pure profit for a long time. Happy that I am not just starting out in PM's...
Cheers, RickO
In the long term time will be on the side of the stacker regardless of when he began to stack. This is because in the same long term time is working against the value of the fiat currency the metal is priced in. If this were to appear in a chart I suspect you would see a logarithmic climb in PM value (and the same for currency decline) in lieu of a linear movement simply because of the non linear growth of our money supply in the last decade.
My point is that a stacker just starting out will see stronger price growth in the next ten years than you and I saw in the last ten years. Unfortunately, this is because at the same time span he is going to see a quicker/greater loss of dollar value than you and I witnessed over the last ten years.
Since 1950:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Simply put:
Silver supply is not meeting demand and even dealers are paying higher premiums and passing them on to buyers.
I recommend JM Bullion’s “On Sale” stuff. They have some Australian Silver Kangaroos 1oz and 1/10 oz British Gold Britannias at lower prices than most other places.
@derryb... Thanks, excellent chart information. A good perspective on new stackers as well. Cheers, RickO
I definitely am not a life time stacker.
$5 over on those kangaroos from JMB, sigh. I was excited for a half a second before getting the email and seeing the over$.
I am a lifetime slacker.
Dave
That’s exactly what this playground is for Dave. Slackers and stackers welcome.