term paper silver? when market tanks
jdimmick
Posts: 9,676 ✭✭✭✭✭
He is a question I keep asking, every one keeps talking about paper silver price vs physical. Yes, I somewhat understand the difference, just because the spot price is down, doesn't mean you can go right out and find it at spot. There is usually a run on what is available and the premiums rise substantially, until enough gets placed back into the market at current price. Some finally give in an sell and The larger firms usually adjust fairly rapidly due to the volume they do.
This is why I am asking: Lets say you have 2000 oz of silver , the price has been running around 30-32 , then a sizeable drop like we had to 23 You decide to take the loss and sell, other individuals will be looking to add some silver at a bargain, but who normally is going to take all 2000 oz at once, or even divided by a couple of people, most likely to sell it all you will have to use a firm like Apmex, silver towne, or several others. They may be paying a slight premium, but it will be in relation to the current spot price, not yesterdays spot. In fact after the drop, I notice the buying prices at one of these firms actually close in tighter in relation to spot rather than increase premiums.
I know on a local level , when Mondays drop came, every one called to buy it, but nobody wanted to pay a premium to buy it, they wanted it in relation to current spot price.
This is why I am asking: Lets say you have 2000 oz of silver , the price has been running around 30-32 , then a sizeable drop like we had to 23 You decide to take the loss and sell, other individuals will be looking to add some silver at a bargain, but who normally is going to take all 2000 oz at once, or even divided by a couple of people, most likely to sell it all you will have to use a firm like Apmex, silver towne, or several others. They may be paying a slight premium, but it will be in relation to the current spot price, not yesterdays spot. In fact after the drop, I notice the buying prices at one of these firms actually close in tighter in relation to spot rather than increase premiums.
I know on a local level , when Mondays drop came, every one called to buy it, but nobody wanted to pay a premium to buy it, they wanted it in relation to current spot price.
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Comments
An increase in premiums in the midst of declining prices is a good sign. It means both buyers and sellers believe spot is lower than the fundamentals, the technicals, or their voodoo charts say it should be.
When premiums get smaller in a declining market it tells us that buyers are more desperate to sell and that buyers are fewer - not a healthy sign for the near term future of the particular market. If the metals market were in fact crumbling, I believe we would actually see physical prices at spot or even at a negative premium as everyone rushed to get out. Competition among sellers is a big determiner of premium and ultimately price.
For your question, it is not abnormal to have trouble finding a non-dealer buyer for large quantities of PMs. The fact that you can still sell them to individuals in smaller lots tells you that your buyers think it is a bargain.
"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
I knew it would happen.
<< <i>Well, it really does come down to a negotiated price. This is true whether the price is stable or jumping all over the place. Naturally, when there is a big price move, sellers are more reluctant and buyers are more motivated. >>
Strength of both seller reluctance and buyer demand is directly proportionate to their expectation of higher, future prices. Perception is a major force in markets, even manipulated ones. Manipulating perception can also obtain desired results.
"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