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Why is there such a Premium on 2020 Roll of 20 American Silver Eagles ?
JazzmanJAB
Posts: 1,026 ✭✭✭✭
I try to buy a roll each year, but have noticed recently, the increase in retail price, although, the silver melt price is so much lower than the January 2020 prices.
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At the Atlanta ANA I saw 2020s going for $22 for singles pretty much at all tables that had them. Spot was ~17/18 or so I think.
To add - rolls were $400+ across the board there.
supply and demand on an actual product and not on a promise into the future.
Suddenly promises are worth less and the real thing is worth more.
Give Me Liberty or Give Me Debt
Just wait a bit and the spread will settle back down and take your blues away
Is the current spot price a promised price in the future ?
yes, it is determined on the futures exchange. It is the price for future delivery (contracts) that most likely will never occur. Because these futures contracts are not backed by physical metal, their supply is unlimited. This destroys true price discovery involving actual supply. The difference between spot price and physical price (the premium) is largely due to the differences between the two in supply.
Give Me Liberty or Give Me Debt
How far in the future ?
Up to a year. It varies. Existing contracts, originally purhased earlier,are also bought and sold.
Research futures exchange or futures market.
There has normally always been some premium on silver products due to fabrication costs, shipping, etc. A growing premium, such as recently, is because of stronger demand in the face of weakening supply of physical products. The fact that spot price will decline in such a scenario indicates the supply of the paper promises has not weakened.
Give Me Liberty or Give Me Debt
Thank you for helping me understand better.
The US Mint has specific contracts in place with their authorized miners, they are priced in independent of spot price. Any business that requires silver also has long term contracts in place. The contracts take into account the actual costs for the miners to provide the material and guarantee supply. They also protect both parties, as if the miners can not afford to provide the material they will just close shop (as long as necessary).
This has nothing to do with the costs to then mint and or produce the products.
Think of silver bullion like buying a steak from the supermarket. It does not matter what the rancher is paid, it matters that the supermarket has to charge us. Very few people can afford to purchase a whole cow and process it for their personal use.
Start your own mine, set up a smelter, and assay your own product. Then decide what it is worth to you if you sell it. Not what it is worth to keep it, but to sell it.
If you want a more reasonable price, I think that you are going to have to wait it out. If the market doesn't correct, you may not get your 2020 coins. If that never happens, just be assured that the rest of your stack will have increased quite dramatically in the meantime.
I knew it would happen.
Supply/demand, only the US Mint makes them and they aren't selling any currently. Whats out there is it right now and lots of demand. Even generic stuff drying up. Who knows where spot will be when the Mint resumes sales or even when; other mints being affected as well.
For extra fun, premiums on 2020 pandas have had a bigger rollercoaster.
The wait may bring more reasonable premiums but it does not guarantee lower prices. I suspect premiums will come down only after spot price climbs.
Give Me Liberty or Give Me Debt
As we saw in 2008 with the planchet shortages, Mint contracts are meaningless if their supplier does not have the product, or chooses to sell what it does have to higher bidders.
Give Me Liberty or Give Me Debt
Hopefully things will get back to normal before too much longer.
Knowledge is the enemy of fear
I knew a snake oil salesman.
As I am sure has been said multiple times, supply and demand.
You are trying to buy your roll at a bad time, the worst time in almost a decade anyway. Wait a few months and those crazy premiums will be long gone.
The whole worlds off its rocker, buy Gold™.
I worked hard on that joke , at least 2 of you should have gotten it