Will we see a repeat of 2008 this year? On 11 July 2008 silver was $18.84/oz, and 3 months later it was $9.35/oz. This is how much the price can drop, once people lose faith in silver.
Very possible with DOW down perhaps 30% , but it might be hard to buy much physical at that point. But I'm really off with this market stuff. None of it makes sense.
But were you able to buy physical at $9.35? I have vague memories of 2008 and definitely had no knowledge of PM's back then. Surely dealers would have been buying a fair bit higher before the plunge so hedging wouldn't have covered such a big loss.
Quick Googling only turned up US figures but the premium increase seems to be from 20-55% so guessing similar number for Aus. Read reports that some dealers simply refused to sell monster boxes and only sold their numi stuff during that time. From a Bloomberg article about gold premiums back then; Graph showing huge spike in 'junk' silver premiums from 2006-2013, this stuff usually trades on par with spot
You do keep hearing that physical is impossible to get when the price is so low but I found it harder to buy silver when the price was rising, queues outside bullion retailers, eBay sales well over spot for junk silver, sales for junk silver being cancelled because they 'couldn't find the stock' (and then seeing the same stock being sold again at the higher prices). I was buying plenty of silver at $14, mostly junk and most for spot.
They all sold to buy back in lower. Even at that $9.35 And they all sold US houses too. Some others bought instead. 2008 price average was $15. It's peak was $21, a couple hits over a couple weeks. Just some figures. Maybe after $15 it's now $9.35 by christmas. Don't know. Won't be due to me, that's all I know.
I'm newer to this and right now, I'm holding on to what I have bought. I only have 130 oz in 10 oz bars and some coins. Price goes down to $10 per oz... I'm a huge buyer. I'd probably look to sell some items of mine and buy silver with the money. Could see spending 2-3k at that price instead of investing in my Roth IRA. I'm in America. Another post said most of you guys are in Austrailia. A Roth IRA Is a retirement fund here.
Of course you can always buy silver. It's just silly to say that when the price drops to xx, you can no longer find silver. Economics 101 will tell you that if there is a lot of demand (compared to supply) then the price will go up. Saying that you can't find silver at a low price means that there is more demand, so the price will go up. It's just a silly argument. As for House's graph, in 2011 silver was sold for below spot??
2008 through 2009 in particular silver had very very long delivery times. kitco got to the point they were selling silver shot bags demand for physical was so strong. a downturn is a possibility. if the US keeps turning the liquidity tap off a real possibility unless perhaps the EU finally turns the tap on and pumps some liquidity into the system.
I just read on Kitco that Economists Allege Error in ISM Data, Say Index Actually Rose: http://www.kitco.com/news/2014-06-0...rror-In-ISM-Data-Say-Index-Actually-Rose.html So yes, the liquidity tap is being turned off, as positive news keep coming out.
The more it goes down... the more Oz i'll be able to buy each month I'm going to fluctuate between the 1oz and 10oz coins. If it drops significantly then i'll be flushing as much as I can into buying physical silver to throw in the safe.
Guys, here's some old bid and ask figures that show real-time volatility in October / November 2008 and Early Feb 2009. 10 October 2008 13 October 2008 31 October 2008 21 November 2008 11 February 2009 http://www.kitco.com/market/ Source:
A couple of things here I am not clear on. First the last comment that junk 'trades' on a par with spot. Currently if I were to trade my fiat for US junk (at SDBullion) the premium is 12%. I can do better locally. So I assume that when you say 'trade', you don't mean actual buying by the likes of me, but.........instead......? The other thing is the premium for silver increase, expressed in percentage. The silver I am buying, both high and low premium, is spot + $x.xx. So the premium is flat in absolute terms. Same premium, whether silver is $1 or $100. Naturally if the premium is $10, it is not the same percentage for $1 as $100 - 1000% compared to 10%, and not a single penny change in the dollar amount. I understand why minters charge a flat amount above spot, and I understand why buyers think in terms of percentage, both make sense. The bottom line is, I would rather pay 25% at spot $15, compared to 15% at $30 spot. It seems to me that is a reasonable perspective. When spot is low, premium is high, when considering not money, but percentage. Just not very relevant that I can see. What am I missing? Thanks.
Going from memory, premiums on ASEs went from around $1.70US to $5-6US (at the most extreme) and that was Apmex pricing. Could have had some 1oz series 1 tigers for spot of $13 + $3 premium, but I took a day to think over the purchase and someone grabbed all of them. Mike Baloney talks about much higher premiums, but he is using the semi numi 1996 ASE premium and that premium was much higher long before the GFC.
Yet when spot dropped below $20 USD, I received several emails promoting short term drop of premium - for ASE from some, and for generics rounds for others. I have not noticed a drop of premiums since the first of the year, but I have not been watching closely. So, premium can increase in absolute terms, with a drop in spot. Increase in percentage, even if flat in absolute terms, and another increase in absolute $. Double whammy. Is the reverse true? If spot goes to $40, should I expect my $15 premium to drop, and by how much? If it dropped to $7.50, the percentage would remain the same, but somehow I doubt that. IOW, are premiums lower in dollar amounts when spot increases?
Short term vs long term: For much of the past decade "90%" has traded at "par" or at a small discount to spot silver. Over the past three months, as silver has corrected from the $31.50 level to the $27s, CDN reports that dealers have been willing to up what they pay in dealer-to-dealer arm's length transactions from a tiny discount of $0.08 per ounce in January to a $1.28** per ounce premium over spot the first week of April. IOW, it used to be that way (long term), not any more (short term). But why? So when dealers sell 90% junk at spot, they are buying it for much less than spot, unlike current circumstances. Where is the cause and effect? Dealers who want to sell 90% junk, must be able to buy, and they can only buy if they offer to pay more, so they pay more, and price goes up when they sell? OR - Dealers are offered a lot of 90% to buy, and cheaply at that, so they drop the resale premium. OR - (as I suspect) None of the above. Predict effect of market forces - yeah, right. ~ ~ And of course the rest of the story is, does the 90% junk market act like the bullion market? - I suspect it does not. As if we didn't know, this is very complicated stuff. ~ ~ From a blog a year ago - April 2013 - Silver spot was about $30 The real shocker to people will be when physical sells out everywhere. Large dealers like Tulving and APMEX are buying 90% junk silver $1.50-1.80 over spot prices. regardless of coin. So buying at about 5% over spot. When is bullion bought by dealers for OVER spot?
I think the spread dealers use is a function of how volatile the price is. Meaning that it's not the absolute silver price (relative to 0) so regardless 'low' and 'high', but the relative price. The higher a spread, the less those that buy and sell and cause that price volatility succeed, so basically it's correcting. Then, when price volatility drops, spread/premiums drop too. Regardless whether silvers price is $40 or $10. Of course, if a price appears to have been driven up or down more than other prices, then there is still a big risk. So the key is price volatility, not price.
