| Author |
 Topic  |
|
|
Country
1000+ Penny Miser Member
USA
3121 Posts |
 Posted - 05/18/2009 : 19:09:34
|
A few months ago many folks thought that spot meant nothing. The true value of PMs was what you had to pay to put PMs in your stack. You paid a very stiff premium to get PMs into your possession too. Now that premiums have virtually disappeared, what is the near term future for them? I suppose you could make the case that large investors had acquired PMs during height of fear; when PMs disappeared from the large dealers. Now that the world stock markets seem to be recovering, oil prices indicating a semblance of future economic rebound, and the fear of a depression has been washed away with torrent of paper money, PMs seem to be available everywhere, in some cases less than spot.
The following questions appear to me:
(1) Has the big money walked away from PMs now that the fear factor is lessened?
(2) Now that premiums have dropped, will the spot price of PMs drop precipitiously next, due to increasing supply and dwindling demand?
(3) While most of us view PMs as a true store of value, could we be wrong?
(4) If the visible economic collapse last fall could not propel PMs higher, what other event could?
|
---> Come to the new and improved realcent: http://realcent.org
The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.
Theodore Roosevelt
|
|
|
Neckro
1000+ Penny Miser Member
Saudi Arabia
2080 Posts |
Posted - 05/18/2009 : 19:15:45
|
| lol, good, premium need to go away. No skin off my back. |
Trolling is an art. |
 |
|
|
Kurr
1000+ Penny Miser Member
2906 Posts |
Posted - 05/18/2009 : 19:22:56
|
I think your questions to be based on the assumption that the markets operate "freely". I think this is a false rally. Reports are coming in that the bilderbergers are discussing long reseccion or crash it all.
But first for the last big "rake" they need to have an illusion of recovery. The "markets" are manipulated therefore any readings they give are false. IMHO.
*EDIT: As for the question of are we wrong... 4000 years of history says we are right! |
The silver [is] mine, and the gold [is] mine, saith the LORD of hosts. Hag 2:8 [/b]
He created it. He controls it. He gave it to us for His use. Why did we turn from sound scriptural currency that PROTECTS us?
KJV Bible w/ Strong's Concordance: http://www.blueletterbible.org/
The book of The Hundreds: http://www.land.netonecom.net/tlp/ref/boh/bookOfTheHundreds_v4.1.pdf
The Two Republics: http://www.whitehorsemedia.com/docs/THE_TWO_REPUBLICS.pdf
Good reading: http://ecclesia.org/truth/government.html
A number of people are educated beyond, sometimes way beyond, their intelligence. - Tenbears
|
Edited by - Kurr on 05/18/2009 19:24:08 |
|
|
|
jadedragon
Administrator
Canada
3788 Posts |
Posted - 05/18/2009 : 19:28:14
|
Premiums on Silver are going away because of increased physical supply in the the investor physical market.
Four Reasons:
1. A whole bunch of Mints cranked out a whole bunch of product in response to massive demand
2. Demand slackened when prices came up again
3. Investors who are less committed to PM are selling
4. Investors who really need the $$ are selling to pay daily bills
Spot is driven by a number of factors, including paper traders and industrial use, not so much by the individual physical silver guys.
Inflation - coming soon - will drive prices on commodities higher. The government can't control inflation forever. |
The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
|
|
|
oober
1000+ Penny Miser Member
USA
1304 Posts |
Posted - 05/18/2009 : 19:28:31
|
IMO, PM's are a long term investment. Considering one of the largest hedge funds sunk a bunch of money into PM's I think that bodes well for the PM market as a whole.
Hold tight Country. I think we will see some nice returns within 24mo...
If you don't listen already, these guys seem to have some good explanations why things are the way they are now and what we could expect to see in the future....
You must be logged in to see this link.
|
|
|
|
wagsthadog
Penny Hoarding Member
USA
565 Posts |
Posted - 05/18/2009 : 19:41:00
|
Hi all-
I think the premiums are and have been the most outrageous only on the most well-known coins: pre-33 gold, GAE's, SAE's, and graded coins. Other world coins were always high, but US bullion was the worst offender. Philharmonics have always been close to spot (about $30 over, not bad considering)
Anyway, the premiums are kind of a good thing because they're bringing out a lot of gold coins from countries you've never even seen on the market.
Brazil 20000 reis? Uruguay 5 pesos? Mexican dos pesos gold coins? Russian roubles?
If you really serch, you can STILL find deals. Someone on this forum posted a great idea to type in misspelled or unclear descriptions of coins you're looking for on ebay. Worked for me! I scored a 1986 STAUTUE of Liberty $5 gold coin for bone spot and free shipping last week. Woot!
If Pre-33 premiums drop to within $50 over spot, I'm diving in.
wags |
Only when they CAN'T have it, ......THEN they'll want it.
I love Cents. If you get an UNC box, you win. If you get a regular circ. box, you win. If you get a zinc box, you don't lose....so you still win. |
|
|
|
Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
 Posted - 05/18/2009 : 21:56:23
|
wag- where do you track the pre-33 prices?
i'm less familiar with gold but I heartily agree that the close to numismatic stuff most deserves a premium. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
|
|
|
|
theo
Penny Hoarding Member
USA
588 Posts |
Posted - 05/18/2009 : 23:56:41
|
quote:
Originally posted by Country
A few months ago many folks thought that spot meant nothing. The true value of PMs was what you had to pay to put PMs in your stack. You paid a very stiff premium to get PMs into your possession too. Now that premiums have virtually disappeared, what is the near term future for them? I suppose you could make the case that large investors had acquired PMs during height of fear; when PMs disappeared from the large dealers. Now that the world stock markets seem to be recovering, oil prices indicating a semblance of future economic rebound, and the fear of a depression has been washed away with torrent of paper money, PMs seem to be available everywhere, in some cases less than spot.
The following questions appear to me:
(1) Has the big money walked away from PMs now that the fear factor is lessened?
(2) Now that premiums have dropped, will the spot price of PMs drop precipitiously next, due to increasing supply and dwindling demand?
(3) While most of us view PMs as a true store of value, could we be wrong?
(4) If the visible economic collapse last fall could not propel PMs higher, what other event could?
(1) Has the big money walked away from PMs now that the fear factor is lessened?
I don't know if they "walked away", but since the stock market seems to have stabilized, the demand for PMs might not have the same urgency that it did a few months ago. Understand that most of the economy's core indicators (unemployment, consumer spending, private investment spending) range from bad to very bad and don't justify the recent optimism.
(2) Now that premiums have dropped, will the spot price of PMs drop precipitiously next, due to increasing supply and dwindling demand?
Possibly in the short term. Silver could test the $12.00 level again and Gold could retreat back to 850, if we have an uneventful Summer. However I view this as a buying opportunity and you should too. But understand that international conflicts (Israel and Iran for example) might a cause renewed buying frenzy.
(3) While most of us view PMs as a true store of value, could we be wrong?
If we are, then hundreds of years of economic theory and thousands of years of history is wrong too. Society may change and technology may advance, but the fact that money must have intrinsic value to be a true store of value will always remain. A French 500 Franc bill from 15 years ago is worthless, yet a Roman gold coin from 2000 years ago still has value.
Never lose sight of the fact that the dollar is in trouble. If and when inflation sets in, the Government's best tool to fight it is to pull money out of the economy by raising interest rates, including interest on government debt. At this point the government's ability to borrow more money will be greatly reduced if not eliminated. The Treasury will have to monetize the additional debt to cover government obligations. Once this printing becomes apparent we will run a serious risk of a hyper-inflationary collapse.
(4) If the visible economic collapse last fall could not propel PMs higher, what other event could?
What happened last Fall was the bursting of the real estate bubble, which had a deflationary effect due the freezing of the credit markets. This caused virtually every asset class (including PMs) to decline in value. Also the Dollar strengthened because investors in the U.S. and around the world escaped to the perceived safety of U.S. Treasury bonds. The question you should be asking is not "Why did PMs fall?" but, "Why didn't they fall further?"
|
Edited by - theo on 05/19/2009 00:09:26 |
|
|
|
wagsthadog
Penny Hoarding Member
USA
565 Posts |
Posted - 05/19/2009 : 00:29:29
|
quote:
Originally posted by Lemon Thrower
wag- where do you track the pre-33 prices?
i'm less familiar with gold but I heartily agree that the close to numismatic stuff most deserves a premium.
Hi there-
For all it's faults, ebay is a good way to at least track average market prices on coins, and I use it a lot. Big time dealers like Apmex, Kitco(they're a rip-off most of the time JMO),and Tulving are a good reference for bullion market prices, but I stay away from numismatics. There WAS a time when common-date pre 33 gold was just that- common. These coins traded AT or slightly (like 2-4%) above spot. Now, EVERY coin on the face of ther planet minted before 2008 is now a "rare example" or "hard to find!"
As for Country's questions, I look at it like this-
what is the national debt?- will any rally or bounce go towards paying it down? No?? Buy PM's.
Remember Dollar Cost Average- I have some gold that I bought before the huge rally in Mar 2008, some silver that I bought at the height of it, and some more gold that I bought recently. I took some hits and I also made great steals. I figure it averages out to me paying about $800 oz for the gold and $12 oz for silver, So if I needed to sell it all today, I'd still make money. Just keep buying over time.
wags |
Only when they CAN'T have it, ......THEN they'll want it.
I love Cents. If you get an UNC box, you win. If you get a regular circ. box, you win. If you get a zinc box, you don't lose....so you still win. |
|
|
|
Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 05/19/2009 : 05:38:47
|
wags - so ebay would be the best place to buy?
big money - they were in 1000 ounce bars of silver, not 1 oz rounds. I think the refiners eventually got around to minting smaller quantities. rumor is a lot of 90% bags got dumped on the market recently. a lot. hedge fund maybe? |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
|
|
|
|
AGgressive Metal
Administrator
USA
1937 Posts |
Posted - 05/19/2009 : 11:10:36
|
| PMs didn't fall recently - the dollar strengthened temporarily. Don't think in nominal terms, think in global purchasing power. |
And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world.
-Caxton's edition of Aesop's Fables, 1484 |
|
|
|
buyingsilvers
Penny Collector Member
441 Posts |
|
|
n/a
deleted
15 Posts |
Posted - 05/31/2009 : 05:24:31
|
In my view, PM premiums on physical coins & bars tend to be driven by small investors.
I have never done any specific analysis, but is seems to me that the premiums on precious metals on eBay at least (an excelent proxy for 'public' demand) seem to correlate with the search volumes on precious metals that are shown in Google trends.
You can see the spikes in seach activity on the term "buy gold" at:
You must be logged in to see this link.
Unfortunately You must be logged in to see this link. whilst it does a great job of tracking current ebay premiums, does not yet do this historically for comparison, but over the six months I have been using it there is definitely a correlation
|
|
|
| |
Topic |
|
|
|
What does the drop in PM premiums presage?
Forum Locked
