Dealers cannot afford to sit on thousands of ounces to speculate on premium increases. It's all about the velocity of cash-flow - why sit on a coin for months hoping it goes up $20-30 when you can simply sell and make a few dollars, and rinse/repeat. Holding is the game of the end consumer.
I understand the theory but don't believe it applies in this situation. You assume that dumping thousands of coins onto the market is going to all of a sudden mean that there is an excess of supply. This is not the case - the demand will soak up that supply very quickly. We heard this morning (whether to believe it or not is another matter) that there was interest for over 2,000,000 of the silver 1 oz rounds. Dumping tens of thousands of coins into that demand won't even make a dent. Demand will stay high and prices will stay high to match IMO.
Are you sure about that? There are at least two different types of dealers, the ones who probably depend on velocity and move stock fast (like BB) and the ones that rely on amazing markups and profit margins while having thin volume. I cannot fathom how for example, "$90/oz" will have a high amount of velocity. All speculation of course but I wouldn't put it past some dealers to do exactly what Matthew speculates. After all, $10k set aside on 200oz dragons isn't all that much. Wait a few months and bam, massive profits.
I agree with fishball, Tulving has stated in an interview that he will hold gold unhedged, if he believes the price will rise.
In the normal course of events I agree. But if you take a large US dealer, the 1oz Dragons might represent just 1% of their entire stock. Given the rarity of this dragon mania event on demand surrounding its release, it might be worth for such a dealer to sit on a substantial amount of coins although to the dealer this "substantial amount" might only be 1% of their entire silver holdings. So they would go on trading 99% of their other stock as per usual to generate cash flow but take a punt on holding just 1% of their stock (1oz dragons) as a bit of a speculative investment in their portfolio of metals.
