Dealers... how do you price bulk silver at regarding spot?
Geoman
Posts: 2,491 ✭✭✭
I sold some silver recently to buy a coin I really wanted. But still have some silver left. When I brought in the silver a few weeks ago, my local dealer took out his calculator, pushed in some numbers, and quoted me 6x face value. This was when silver was at $9/ounce. I asked him how high silver would have to go per ounce before he pays 7x face value. He said a formula too quickly for me to remember.
But it was something that takes the account of silver spot into account. And I know there has to be some profit margin. So dealers, what is the magic formula? Just curious...
But it was something that takes the account of silver spot into account. And I know there has to be some profit margin. So dealers, what is the magic formula? Just curious...
0
Comments
check the bid price on 1000 dollar bags and divide by 1000,that would come to about 7.20 per dollar times 90 % or 6.48 per dollar face
There are appx. avg 715 fine oz in a $1000 bag. So 715 x spot is the melt value.
However there is also a market spread that fluctuates by demand. At high silver prices most buyers are bidding below spot value and asking maybe spot value.
At low silver prices, the demand will put an actual PREMIUM to spot on both bid and ask.
At ULTRA high silver prices, the silver coins will be being bought for refining and a "time lag" ..negative... premium (or discount) will apply to reflect the time between shipping to smelter and receiving fine silver to sell on Comex.
but this time ...could.... be different. A lot of silver coin has been melted. A premium could be on coins just due to demand from survivalists and those worried about controls on silver sales.
Personally I prefer .999 silver, ......but things can change. And do.
<< <i>
At ULTRA high silver prices, the silver coins will be being bought for refining and a "time lag" ..negative... premium (or discount) will apply to reflect the time between shipping to smelter and receiving fine silver to sell on Comex.
>>
I agree with almost everything you said but this (the above)
Maybe I'm spoilt living in a big market area (LA), but if I deal with any of the houses downtown, they contract with refineries and consistantly pay spot (-1% to -3% depending on volume) - because they have the ability to "lock in" at spot. The silver (or gold) is being traded on paper before it physically leaves their facility. Day in, day out business... High metal prices or low... Very consistant.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
Of course at that time, one ounce rounds were a NEW thing and few were in the market.
Same with gold. At spike tops, gold is available closer to spot than at bottoms when everyone is clamoring for some.
The premium stemmed from the fact that rounds didnt need to be refined and scrap silver did.