Premium on Junk Silver Narrowing

[vinoveri]

I've noticed the premium over spot on bags of 90% Ag US coins narrow from +25% a few months ago to ~6% today (and remember there being a stiff double digit premium even a year ago).

Anyone care to opine on what this portends or is telling us? It's a bit confusing to me.

http://www.apmex.com/Category/17/90_...lls__Bags.aspx

[Andreuccio]

Re: Premium on Junk Silver Narrowing

I've noticed the premium over spot on bags of 90% Ag US coins narrow from +25% a few months ago to ~6% today (and remember there being a stiff double digit premium even a year ago).

Anyone care to opine on what this portends or is telling us? It's a bit confusing to me.

http://www.apmex.com/Category/17/90_...lls__Bags.aspx

There's a comment on the bulliondirect forums attributing it to manufacturing of PM coins and such catching up with demand. The lower spreads are now trickling down to the junk categories.

[Judas]

Re: Premium on Junk Silver Narrowing

Perhaps it's just the spot price moving up towards the real price.

[grapejelly]

Re: Premium on Junk Silver Narrowing

it means less optimism about the future price of silver. It is very bullish for silver.

[Master Shake]

Re: Premium on Junk Silver Narrowing

it means less optimism about the future price of silver. It is very bullish for silver.

Narrowing premium = less optimism = Bullish => contrary indicator?

[grapejelly]

Re: Premium on Junk Silver Narrowing

Narrowing premium = less optimism = Bullish => contrary indicator?

bullish sentiment = bearish indicator and vice versa

[cjppjc]

Re: Premium on Junk Silver Narrowing

I've bought almost all my silver at higher prices. Bullish indicator;)

[LargoWinch]

Re: Premium on Junk Silver Narrowing

I've noticed the premium over spot on bags of 90% Ag US coins narrow from +25% a few months ago to ~6% today (and remember there being a stiff double digit premium even a year ago).

Anyone care to opine on what this portends or is telling us? It's a bit confusing to me.

http://www.apmex.com/Category/17/90_...lls__Bags.aspx

The premium on Silver Eagle and Silver Maple remains very lofty however
(45% and 32% respectively, but keep in mind ebay's fees):
http://www.24hgold.com/english/buy_s...s.aspx?co_id=0

I do not follow the junk silver, as I prefer pure bullion/coins for easy and painless resale if needed at any ScotiaBank or Kitco here in Canada (much increased liquidity).

[vinoveri]

Re: Premium on Junk Silver Narrowing

The premium on Silver Eagle and Silver Maple remains very lofty however
(45% and 32% respectively, but keep in mind ebay's fees):
http://www.24hgold.com/english/buy_s...s.aspx?co_id=0

I do not follow the junk silver, as I prefer pure bullion/coins for easy and painless resale if needed at any ScotiaBank or Kitco here in Canada (much increased liquidity).

LW,
have you checked out APMEX lately; they look like they're selling silver eagles and maples for <20% premium.
http://www.apmex.com/Category/2/Silv...09__Prior.aspx


they also have some canadian junk silver
http://www.apmex.com/Product/9705/Ca...ncrements.aspx

[doom&gloom]

Re: Premium on Junk Silver Narrowing

all I know is that 'junk silver' takes up a lot of storage space...

[LargoWinch]

Re: Premium on Junk Silver Narrowing

LW,
have you checked out APMEX lately; they look like they're selling silver eagles and maples for <20% premium.
http://www.apmex.com/Category/2/Silv...09__Prior.aspx


they also have some canadian junk silver
http://www.apmex.com/Product/9705/Ca...ncrements.aspx

Thanks vinoveri for the link. APMEX even has palladium in stock! In kilo bars as well.

A not so small issue is the fact that I have to pay duty taxes if purchased from the US, which would add 13% to any order (5% Federal plus 8% Ontario tax).

So I am basically stuck with Canadian Bullion dealers with poor inventories and larger spreads .

[vinoveri]

Re: Premium on Junk Silver Narrowing

Thanks vinoveri for the link. APMEX even has palladium in stock! In kilo bars as well.

A not so small issue is the fact that I have to pay duty taxes if purchased from the US, which would add 13% to any order (5% Federal plus 8% Ontario tax).

So I am basically stuck with Canadian Bullion dealers with poor inventories and larger spreads .

that's a bummer LW ....

how are business imports treated?
maybe there's an arbritage opportunity as an import business to avoid the hefty tax and service all those PM savvy Canadians?

[LargoWinch]

Re: Premium on Junk Silver Narrowing

how are business imports treated?
maybe there's an arbritage opportunity as an import business to avoid the hefty tax and service all those PM savvy Canadians?

That is a good question, which I do not have the answer to. I will do some research however; nothing to lose.

Perhaps NAFTA can save me! ;)

[Starving Steve]

Re: Premium on Junk Silver Narrowing

all I know is that 'junk silver' takes up a lot of storage space...

I like junk silver, especially good mixes of dates and denominations of junk silver, because silver coin is historic. So it is quite collectable.

The junk silver of the U.S. is pre-1965 dimes, quarters, and halves. In Canada, junk silver is pre-1967 dimes, quarters, and halves. Junk also does include the 1967 half dollar in Canada because it was not de-based.

Junk silver also tends to trade near its bullion content, and for many years, until the current silver insanity, junk silver traded well under silver content. The closer junk silver trades to content, the better, and if junk trades under silver, it sometimes can be an investment opportunity.

As for silver as an investment, the only reason why I like silver at this price is because the idiots running the world's central banks--- especially the idiots running the U.S. Federal Reserve--- are determined to inflate their way out of any mess.

As for notions that silver has a great industrial demand, those ideas are laughable. Silver is in huge surplus, especially since silver is a by-product (sp?)of copper mining. Also silver is a by-product of lead mining. Also silver is a by-product of gold mining; in fact, silver is a by-product of just about every mining. As a by-product, silver is produced free-of-charge.

And the demand for silver is gone because of digital photography. X-ray demand for silver is also declining. Also, silver coin is gone because the world's mints are into this inflation thingy thanks to the central bankers which direct the mints. And you can thank the economics departments of the world's universities for this inflation-mania. ( We've had this discussion before. )

But stupidity always wins, so the central bankers will get their inflation, and silver is headed up, not a lot, but up. It could double in value.... Anything will turn-out to be better than owning paper money, especially Bernanke's play money in the long-run.

We have to get rid of the economists and the ecologists. That is the bottom-line in this discussion.

Meanwhile, you sit with your junk silver and enjoy your passive income. And it is safe from Bernie Madeoff, and people like that. It is safe from Bernanke at the Fed and safe from Carney at the Bank of Canada; it's safe from the Bank of England, and safe from the Bank of Zimbabwe, too.

Yes, the idiots will make the hyper-inflation, and you will have to make space to store your junk silver. So get going...

[santafe2]

Re: Premium on Junk Silver Narrowing

I've noticed the premium over spot on bags of 90% Ag US coins narrow from +25% a few months ago to ~6% today (and remember there being a stiff double digit premium even a year ago).

I have a longer term perspective on this. I had to go back and check my records to see when I'd actually begun buying silver. It was late 1999. It was so painful for so long, I'd forgotten how early I'd started. When I first purchased it was over $5 an ounce and it had gone down far enough after two years that 9/11 only caused a bounce up around $4.70. I don't think silver moved permanently above $5 until almost 2004. It was about 4 years of watching silver bounce around and do nothing an investor can take advantage of before it made a move.

Probably because I'm such a long term investor, I don't consider silver, or metals for that matter, to be as magical an investment as many other might. It's a good investment and a great hedge.

I've never purchased junk or bag silver as it tends to be complete crap. Bag silver is sold by the US$ value, not by weight and it tends to be quite worn. Your 90% bag will likely be much less by weight. It also carries an aggregator's charge and it has no secondary collector market. If a coin is average circulated 90% silver without damage, it's now at least 45 years old and collectable. It won't find it's way into a bag many times before a coin dealer will pull them out and re-classify them.

For the first four years I bought collectable silver and bullion silver and they carried almost no premium. While collectable silver carries some premium now it's not high like it was in 2006. Bullion has moved up almost 50% in the last 6 months and carries a very small premium if you are a careful buyer.

As silver moved up to $20 in 2008, premiums for all categories moved up. That premiums are now reasonable at ~$14 reflects investors understanding that silver like all other investments will not move straight up. Investors should see a chart of the 70s to understand how volitale the metals markets can be.

For myself, I'm not selling fast but trimming non core holdings here and looking for a more favorable point to reinvest. The low premium portends an interim top to me, not a buying opportunity. This is a very difficult environment for a quasi-industrial metal to rally. JMO, make your own decisions.