RE: RE: Silver Premium?So APMEX is working on a 5% margin. Must be a nice tight business they're running, with lots of volume.
https://www.bullioncoinsandbars.com/products-silver-coins.htm?cur=USD is currently offering about $1.50 over spot for one ounce silver coins, and will sell them to you for $4.00 over spot. Similar margins. So what's this tell us about the "real" price of physical silver?
eBay, OTOH, is a different kettle of fish. I used to think that their auction format gave a very good "price discovery" mechanism, but I've changed my mind on that in the last year and a half, and I'll tell you why.
About a year and a half ago, I started to try to accumulate a little bit of physical silver. There is no silver dealer where I live, and I use eBay for a lot of other things, so it was a natural place to look. I chose Canadian junk silver (pre- 1966 80% silver circulated coins) for a couple of reasons, and started to bid. Being a cautions sort, I bid 10% below spot, including the shipping (which is about what the site I linked to above will pay - probably because the wear on circulated coins reduces the actual silver content). I didn't expect to win any at that price because I'd been watching some, and the vast majority of auctions end above spot. But I found that I won about one auction in 10, and occasionally I won them at discounts as much as 50% to spot. The final prices of auctions on eBay are widely variable (at least on Canadian junk silver), and if you don't mind "losing" 9 times out of 10 (which costs you nothing), you can accumulate a bit of physical silver at a significant discount.
I only mention it now because I'm done. I've got all I want. But it is hard to understand how in an efficient auction market, I could buy something at a price below what a dealer advertises that he would pay for it. I've had 18 months to try to figure it out, and I have a theory.
I've noticed that this does not happen with the one ounce coins - they always go above what a dealer would pay. I think that's because it's easy to figure out the current melt value of a one ounce coin but it's not so easy to figure out the current melt value of 13 quarters, 7 dimes, 3 half dollars, and four 1968 quarters (that are 50% silver). Because of this, sometimes the eBay market makes a mistake valuing an item (just like the stock market is making a mistake valuing SLX right now).
Myself, I made up a little excel spreadsheet that would go out on the net and get the current spot price, and do the calculations for me, discount it by 10%, subtract the shipping, and tell me what to bid - that simplified things. I bid on hundreds of auctions over that time frame. You can't accumulate a lot of silver this way - if you're after thousands of ounces they just aren't available. But if you want a small stash, cheap, this worked for me. It just takes a little time.
Anyway, what started my rambling was my distrust of eBay as a price discovery mechanism. Perhaps it is good for the one ounce bullion coins, given that their pricing seems much more consistent. I think I might have just talked myself out of my own position (lol)