Crazy $9 Physical Silver Premiums.. Paper-Physical Disconnect Upon Us?

S

Silver2012

New Member
So i was perusing the online bullion dealers this afternoon and was astounded by the premiums.. I mean $9 premium for 2013 Kooks?? Really? That is insane.

[youtube]http://www.youtube.com/watch?v=2_8rlT1Crbg[/youtube]

Here's my main question: If you believe the "paper" markets are set for another correction, is it really worth waiting? Will the premiums eventually come down or have the paper and physical market truly been seperated? I'm starting to believe that no matter how low the market goes, semi-numismatic coins such as Chinese Pandas and Kookaburras will not drop at the same pace. The demand is just too high and collectors know what these coins will be worth in a few years.
 
You know what to do...Boycot those dealers that have rediculous premiums on bullion and support those that don't. ;) :D

It wasn't that long ago miners were making good bucks when spot was 9 bucks an ounce and dealers were also doing just dandy! :)

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http://www.kitco.com/LFgif/ag00-pres.gif
 
Silver2012 said:
So i was perusing the online bullion dealers this afternoon and was astounded by the premiums.. I mean $9 premium for 2013 Kooks?? Really? That is insane.

[youtube]http://www.youtube.com/watch?v=2_8rlT1Crbg[/youtube]

Here's my main question: If you believe the "paper" markets are set for another correction, is it really worth waiting? Will the premiums eventually come down or have the paper and physical market truly been seperated? I'm starting to believe that no matter how low the market goes, semi-numismatic coins such as Chinese Pandas and Kookaburras will not drop at the same pace. The demand is just too high and collectors know what these coins will be worth in a few years.
Click to expand...

Kooks have been discontinued at perth mint, they capped the run at 500,000 this month so the increase you see from the dealers are just them trying to profit on the remaining stocks they have left as customers may perceive there is numismatic value in paying extra.

see thread here: http://forums.silverstackers.com/topic-39789-a-little-birdie-told-me.html

Instead have a look at the values of Koala coins to determine spot premiums as there is no limit to the amount the Perth mint will coin.
 
To get a feel for premiums as of today I went to Apmex and looked at 2013 1oz prices for the following bullion coins. Used a spot price of $23.79

Eagle: $5.59
Koala: $6.09
Panda: $9.10
Kookaburra: $10.10
Maple: $5.39
Britannia: $8.09
Philharmonic: $5.09
 
In euro, spot of 18,41, Philharmonic 60 coins per coin price 23,40, being 5 euro, the same in euro as yours in dollar, so even higher premium for the euro side.
Who is running away with those extra % premiums?
Someone has to receive these extra bucks. Dealer? Wholeseller? Joe?
 
Well, dealers around here usually sell Libertads for more than ASE's/Maples/Phils, and now its vice versa. So it's shortage of specific coins, not shortage of all.
I hope the situation stays long enough till I can buy a bunch libertads.
 
bullion premiums will get higher percentagewise compared to spot as spot decreases. I remember that in '09 premiums were huge not a disconnect between phys and paper
 
if premiums disconnect on 1000oz bars then I will admit there is disconnection .. but 1 oz coins?!

1oz coins could go to 3X spot and there could still be no disconnect in my book
 
Premiums should be measured in dollars, not %, else when spot falls, premiums rise, when spot rise, premiums decrease.
 
Phiber said:
Premiums should be measured in dollars, not %, else when spot falls, premiums rise, when spot rise, premiums decrease.
Click to expand...
When spot price is driven down, premiums increase (temporarly).
When spot price is driven up, premiums decrease (temporarly).
Spot price movement is the major reason for premium changes.
Sellers that ask at the lower spot price X% more than they asked at the higher spot price.
Then why the 'else'?

It's the % you pay more that matters.

That's why Spotmex shows:
Tube (25x1oz) Canadian Maple Leafs 2012 Moose Coins SPOT + 18.00%
Roll (20x1oz) Perth Mint 2012 Koala 1 ounce SPOT + 21.00%
1/2oz Silver Rounds Northwest Territorial Mint SPOT + 7.00%
2oz Silver Coins 2013 Perth Mint 2 ounce Silver Snakes SPOT + 25.00%
5oz Silver Coins 2013 Perth Mint 5 ounce Silver Snakes SPOT + 21.00%
AU 50c Coin !966 50 cent Coins 80% silver SPOT + 16.00%

Because that determines the amount silver you get less for your dollars.
All a dollar-measured premium does, is making it appear less 'worse', so maybe those that decreased their price less than spot decreased, like a premium dollar measurement.
But I think we are talking here from the perspective of the buying side, and there the % you pay more matters.
 
If you compare premiums on a % of spot when spot is $30 or when spot is $23 you are bound to find higher premiums when the spot is lower. Yet, you paid the same $ premiums for a given coin. Comparing different coins and their relative premium is a different matter altogether - you are comparing different products, each carrying a different premium, regardless of spot action (e.g: pandas will always carry a higher premiums than koalas).
 
thatguy said:
if premiums disconnect on 1000oz bars then I will admit there is disconnection .. but 1 oz coins?!

1oz coins could go to 3X spot and there could still be no disconnect in my book
Click to expand...

Hey thatguy how many 1000oz bars do you buy ?
 
Phiber said:
Premiums should be measured in dollars, not %, else when spot falls, premiums rise, when spot rise, premiums decrease.
Click to expand...

The flip side of this is that most people budget how much they can buy in AUD - as spot rises, a dealer might only sell 4 units, not 5, if spot rose 25%. Suddenly the dealer is facing a 20% drop in gross profit just because spot rose. Fixed margins means that the dealer will be making a lower profit on the same dollar value of sales, which isn't conducive to long term viability. As spot rises, the number of units sold will be reduced for the same amount of revenue, leading to lower profits, less ability to create jobs & hire, and ultimately viability of remaining in business. Customers think of a $5k sale as $5k - as a business owner, I think of it as $xx margin.

Wholesale premiums are mixed - I see wholesale prices that are a mixture of flat fixed amount over spot, flat fixed amount per item, fixed amounts in USD from Australian providers, percentages over spot, percentages over a fixed amount over spot, variable premiums based on tier pricing volumes, the permutations of how a manufacturer or distributor prices their products is mind numbing. A retailer then has to figure out how they are going to price their products against this backdrop of variable cost margins, balancing remaining competitive and remaining viable. Ends up a bit mixed - some products have a flat margin, some have percentage over spot, some have percentage over cost, etc. Lots of moving variables.
 
Phiber said:
If you compare premiums on a % of spot when spot is $30 or when spot is $23 you are bound to find higher premiums when the spot is lower. Yet, you paid the same $ premiums for a given coin. Comparing different coins and their relative premium is a different matter altogether - you are comparing different products, each carrying a different premium, regardless of spot action (e.g: pandas will always carry a higher premiums than koalas).
Click to expand...

Oh here we go... deja vu.... http://forums.silverstackers.com/topic-39676-gold-to-drop-to-1000-or-maybe-900-page-4.html

Good luck with presenting a logically correct case Phiber, some choose not to believe anything except what they are hoping to see, no matter what the evidence. ;)
 
Ronnie 666 said:
thatguy said:
if premiums disconnect on 1000oz bars then I will admit there is disconnection .. but 1 oz coins?!

1oz coins could go to 3X spot and there could still be no disconnect in my book
Click to expand...

Hey thatguy how many 1000oz bars do you buy ?
Click to expand...
zippo... don't buy any PMs at the mo, not even 1oz
 
thatguy said:
Ronnie 666 said:
thatguy said:
if premiums disconnect on 1000oz bars then I will admit there is disconnection .. but 1 oz coins?!

1oz coins could go to 3X spot and there could still be no disconnect in my book
Click to expand...

Hey thatguy how many 1000oz bars do you buy ?
Click to expand...
zippo... don't buy any PMs at the mo, not even 1oz
Click to expand...

Good then you don't pay any premiums. Also why do you then care if there is a disconnect or not if you don't buy any PM?
 
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