I'm trying to learn more about premiums on different PM formats. I do realise this is a bit of an art but I'd like a guide. It seems that premiums have been increasing over the last few months and I'd like to get the feelings of people here on what is a fair and reasonable premium to expect on gold and silver and their fractionals. e.g currently I see premiums of 6-7% on bullion rounds etc. usually gathering percentages as you divide - Au ounce = 6%, half ounce 10%, quarter ounce 20% etc. Does anyone have a breakdown sheet they use to see if premiums are reasonable, or perhaps a chart indicating premiums growth along with price rises?
for ag i use spot + 20% i think spot + 20% is pretty much common place here on stackers. As a guide I usually use Aurora's and ws davis advertised prices as they seem the most reasonable.
Price = spot + manufacturing premium + shipping cost + scarcity premium Spot is self explanatory. Manufacturing premium is the work that goes into getting the silver to that form. Also add capsules, boxes, printing, marketing etc. Shipping is self explanatory. The cost everyone pays to one degree or another. Metal is heavy and needs to be moved many times sometimes to reach its endpoint. Scarcity premium is the combination of rarity and desirability of a particular form of silver. Covetousness is what drives this component.
Are you including postage in that spot price? (another newbie who has been pondering the mysteries of spot and pricing and wondering if I have been paying too much.. and wondering where to find said 66s at spot). Actually, today I made up a little spreadsheet on purchases so far and figured that the average price paid so far, including postage, on pre-decimal and 66s is $33.81 per oz. Is it still too much? I figured it was less than the current price for 1oz kooks with postage.
I was just going on spot for the circulated items, as I can pick it up from the shops ftf. As for whether your price is too much, we'd have to ask "is it too much, relative to the future price?". And there's no cast iron promise of what will happen next. We're all matadors here. In fact, the only stuff that I have bought with pph for a very long time has been here. These items were not bought with an eye on the spot price. Clearly if you are away from a major urban centre you are at a relative disadvantage for ftf transactions. A possibility is to set up an account at a shop you trust, paying as you go. Some places may hold purchases for you until you get to the weight you feel is worth sending (to minimise the pph costs)
Thanks for your reply. I am in Adelaide but apart from a local pawn shop that had nothing, I haven't found/visited anywhere irl to purchase. AEJ is on my list for a visit. I'm not real comfortable visiting pawn shops generally unless you think they are generally worthwhile? (a bit on the seedy/desperate side, did I mention I'm female? ) In fact the whole idea of walking out of a pm shop makes me worry about getting mugged lol. Sorry to OP for hijacking the thread, but I am glad the question was asked and to read the answers. I wasn't quite sure of the questionto ask to get the answer I needed. Just winging it pretty much.
Thanks everyone. My method is to also check prices from Aurora and Davis and Co and decide if the offer or purchase (including postage) is worth the offer from those two. The main difference is seeing the buy back versus sell rates and comparing them. If you plan to sell at some stage then the prices quoted on buy back are the ones to watch. Aurora has spot +1% currently on silver bullion. Davis on 50c pieces buys back around spot -5% (someone correct me if my calc.exe is wrong). Some interesting perspectives above - thanks. I think there is also the issue of supporting businesses which are honest and ethical and so I also consider that is something to keep in mind. I've seen that many of the sale/swap offers here are using Aurora/Davis pricing and - no offense to sellers - I'm disinclined to follow many of those up when dealers like Aurora and Davis are offering the same premium deal with a number of guarantees already in place - including most likely, buy back options that are not punitive on regular customers (they are not 'Buy Gold Now' shops) As I say - no offense - I assume it is part of the market dynamics so hence the question on premiums. I think this issue is core to stacking. (mind you, the offers under Aurora/Davis are usually snapped up before I find the 'Any' key lol
Somewhat off topic, being a collector I always consider the spot price as a relative starting point. Then for better or worse, if I like what I see I just follow my heart. It has worked for me in the past. Stacking is pretty mundane & risk free. Numismatics on the other hand are more of a challenge & represent a bigger potential return if your prepared to work at it. EG: I was able to purchase some older Pandas a year or so ago & they have been a real investment winner. Forget spot value it pales into insignificance yet the coins were originally released as spot + premium coins. So there is real value to be had if you can pick the trends & find the bargains. The Redback silver coin is an excellent example.
Pandas are great Dynoman I bought very old dealers stock in bulk from a very larger dealer in June for $45 each and seeling them around 170 .
