In the live market quotes in Kitco today, the spread between buy and sell for platinum at 11:15 AM is $3 per oz. But the spread has usually been $10. What is the significance of that reduction to a narrow margin, if anyone can please explain it?link
Supply and demand. At these levels more people are selling than buying. If Plat was to slide a few hundred dollars then you would see no one wanting to sell and spreads will be what ever it takes to restock coins. Look at ASE's when silver dropped suddenly below $9 the speads went out the window and they we're selling for $5 per coin over melt.
Keep in mind COMEX prices are for paper PM's and it's starting to show. You can never really get a physical product for those quotes anymore until the up/down swing end and we have a stable market.
Many thanks for the reply, much appreciated, but can you please elaborate further? I don't understand how the number of buyers and sellers has that effect on the spread. If there are additional sellers, then why don't the bidders lower their bids to keep pace? Now at 2:30 PM the spread on the Kitco charts is $3 for platinum, but it was $10 all summer and even earlier this year when platinum was over 1700 the bid-ask spread was ten bucks.
At these levels more people are selling than buying.
My bad. I should have read ttown's post a little closer. If the price is going up, which it is, then there are more buyers than sellers. That's for starters.
As the price is going up, the buyers don't want to wait too long for their orders to be fulfilled, so they are setting their buy orders closer to spot.
The larger spreads are likely when the price is declining but nobody really wants to sell, like ttown said in his silver example. That is not the case right now.
In this case, somebody (probably an end user) needs the stuff and they are going to buy it regardless, but they aren't stupid either because they aren't buying at spot unless they have to.
What we are seeing is either a market that might be in short supply or one that is rising in sympathy with gold - or both.
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It really depends on what market your talking about if a dealer really could sell you a 1 oz plat coin for 3 or 4 dollars over spot there's a ton of sellers and he's needing to hedge his bets by selling because he's overstocked. When gold rose to $850 shortly in 79/80 many a dealer was caught holding the bag so they use margins to control their inventories. Many of dealers will low ball you when prices are these high because they can't afford for the bottom to drop out and they've lost money. I was refering to real bussiness with real product here.
Now to your link. Kitco isn't saying you can buy anything for that price as a small investor. Now future contacts selling 50oz comex bars, yes you can get a deal but don't think that's your total develivey cost and most people just buy and sell contracts for profits, a wall street game or a bussiness needing future supplies at a cost they can count on.
The cheapest I can find on Kitco is the pool account buy $1630/sell $1638 so if they're honest and don't go out of bussiness you might get your product.
That's a far cry from paper, pool, or futures contacts
My local dealer get 3% above melt and buys 3% under melt for a 6% profit. If the public sells enough these prices are good. If he has to go dealer to dealer and has to pay melt then he still marks them up at his 6% profit margin.
My revised comments were in reference to the link that was provided by the OP, which is NY Spot (Comex?), and doesn't take into account any dealer considerations, only the exchange price.
I also see that the spread is now back at $10.00. Maybe the exchange was just playin' around.
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Thanks to you both for helpful comments and insights. However, as I'm writing this now at 5:20 PM, the platinum spread is $6. I'm still unclear if that's meaningful or not, and if it is, what the implications are. By comparison, the spread for gold was $1 today, and for silver 2 cents.
Been watching today and the bid-ask spread for Platinum has varied from $10 this morning to $3 right now. I certainly appreciate the previous responses from two gents, who both provided thoughtful info, but not yet a complete explanation for this phenomenon.
Comments
Keep in mind COMEX prices are for paper PM's and it's starting to show. You can never really get a physical product for those quotes anymore until the up/down swing end and we have a stable market.
JMO from a decade of buying and watching.
I knew it would happen.
My bad. I should have read ttown's post a little closer. If the price is going up, which it is, then there are more buyers than sellers. That's for starters.
As the price is going up, the buyers don't want to wait too long for their orders to be fulfilled, so they are setting their buy orders closer to spot.
The larger spreads are likely when the price is declining but nobody really wants to sell, like ttown said in his silver example. That is not the case right now.
In this case, somebody (probably an end user) needs the stuff and they are going to buy it regardless, but they aren't stupid either because they aren't buying at spot unless they have to.
What we are seeing is either a market that might be in short supply or one that is rising in sympathy with gold - or both.
I knew it would happen.
Now to your link. Kitco isn't saying you can buy anything for that price as a small investor. Now future contacts selling 50oz comex bars, yes you can get a deal but don't think that's your total develivey cost and most people just buy and sell contracts for profits, a wall street game or a bussiness needing future supplies at a cost they can count on.
The cheapest I can find on Kitco is the pool account buy $1630/sell $1638 so if they're honest and don't go out of bussiness you might get your product.
bar $1702
Maple Leaf/Eagle 1 oz $1832.32
Here's the link for us mortals
.Prices
That's a far cry from paper, pool, or futures contacts
My local dealer get 3% above melt and buys 3% under melt for a 6% profit. If the public sells enough these prices are good. If he has to go dealer to dealer and has to pay melt then he still marks them up at his 6% profit margin.
I also see that the spread is now back at $10.00. Maybe the exchange was just playin' around.
I knew it would happen.