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Riddle me this

rk (6314) writes | more than 5 years ago

The Almighty Buck 2

Why is gold and and especially silver not higher in price? I challenge you to find a place where you can actually buy small unit silver like Silver Eagles and Silver Maples at anything close to the spot price. Not a pool or investment account, but a transaction where the end result is you getting shiny bits of metal in your grubby paws. The official bid price is not telling the whole story. As I write this, the spot price for silver is 12.21, but the 800 pound gorilla of precious m

Why is gold and and especially silver not higher in price? I challenge you to find a place where you can actually buy small unit silver like Silver Eagles and Silver Maples at anything close to the spot price. Not a pool or investment account, but a transaction where the end result is you getting shiny bits of metal in your grubby paws. The official bid price is not telling the whole story. As I write this, the spot price for silver is 12.21, but the 800 pound gorilla of precious metals, Kitco will buy Silver Maples and Eagles from you at 13.56, or 11% ABOVE spot. For those of you unaware, when dealing in immediate settlement, a commodities broker usually buys at a certain percentage below spot, and sells at a percentage above spot. This is how they make money, regardless of the market price. I've never seen a broker buying above spot, and 11% above spot is crazy high. Normally, I would consider a broker who tried to sell to me at 11% above spot a rip-off artist (3 to 4% is more normal), but they are voluntarily paying that high a premium to get their hands on the stuff. So, just what's going on here?

The only sensible reasons I can think of for them doing this is either A) They have contractual obligations to provide physical metal to someone, maybe to keep a pool account solid and the premium they are paying is cheaper than any sort of penalty they would have to pay, or B) They have a very good reason to expect that silver will increase in price dramatically in the short-term. If you can meet my challenge, then you should be able to make a tidy sum in arbitrage. Good luck with that.

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checkout zogger's journal (1)

tqft (619476) | more than 5 years ago | (#25209763)

sometime a few months back zogger noticed something similar going on.

I actually went to a bullion dealer here in Brisbane australia and asked about availability of metal (silver) and was told none today - hold up in the supply chain - maybe Friday. Not coins - metal ignots. I don't where they process the silver into ingots but one of the bigger (at least most profitable silver mines) in the world is north-west of here (a fair way but still we are the closest major city to it).

Saw a comment elsewhere that the best soft commodity bet at the moment is cotton - with all the currency the US is going to need to print you are going to need a lot to keep the presses rolling.

Financial Times on Gold Hoarding - the very rich (1)

tqft (619476) | more than 5 years ago | (#25229059)

via cryptogon.com
http://cryptogon.com/?p=4304 [cryptogon.com]

http://www.ft.com/cms/s/bf8246aa-8f13-11dd-946c-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fbf8246aa-8f13-11dd-946c-0000779fd18c.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fcryptogon.com&nclick_check=1 [ft.com] (subscriber only though the cryptogon link seems to have most of it)

"Jeremy Charles, chairman of the LBMA. "The gold refineries cannot produce enough bars.""
""Vault staff are also doing overtime," another banker at the LBMA meeting said, adding that investors in some countries were paying premiums of up to $25 an ounce above the London spot price to secure scarce gold bars."

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