Is Silver Already Worth $40 - Why Are Premiums On Physical Bullion So High?

hey everybody smart silverstacker here today i want to talk to you about silver premiums because right now the spot price of silver is back under 25 an ounce but if you want to buy a us silver eagle you're going to be paying close to 40 bucks so what's going on with that why are silver premiums so high is there a silver squeeze going on are dealers just being extremely greedy and conspiring to rob us stackers of our hard-earned fiat currency well maybe it's a little bit of both maybe there's some other factors going on that's what we're going to talk about in this video so let's get to it [Music] all right so like i mentioned the spot price of silver has been pulling back over the past couple days it's back under 25 bucks so you'd think now would be a great time to be stacking silver but if you want to buy an american silver eagle right now over at sd bullion even if you're buying 1500 of them the best price you can get is 38 dollars and 21 cents and i don't know about you guys but usually i'm not buying in 1500 ounce increments so let's say you want to buy a tube of u.s silver eagles that would be 20 of them you're going to be paying 39.41 now that's over a 50 markup over the spot price of silver so what is going on with that premiums on silver eagles have always been a little bit higher than other forms of bullion obviously they've risen much faster than premiums on other types of bullion and part of that i think does reflect just the fact that silver eagles are a very desirable form of silver for many people now i'm not saying i'm buying them at these prices i'm absolutely not this is far too high a premium for me but you know it's not just silver eagles anymore because like i said those have always had a little bit more of a premium attached to them but right now if we go take a look at the one ounce silver rounds listing on sd bullion you can see that if you want to buy one silver round or even if you buy a tube of 20 of them and these are just generic rounds design of the dealer's choice so who knows what you're even going to be getting it'll be at least .999 silver of course but that's all you really know you're gonna be paying over 30 bucks so more than a five dollar markup for a generic one ounce round and that is almost unheard of you know there have been a few times over the past 10 or so years that i've been stacking that i have seen premiums rise this high but usually it's kind of a fluke thing and it's on some kind of a news that triggers a supply squeeze you know back in 2021 when the silver squeeze thing was going on when that was really trending a lot the premiums did rise significantly i mean that was really kind of the the start of the crazy premium situation that we're seeing today but they had kind of come down off of that high a little bit but now premiums are definitely way back up and we can see if we take a look at 90 junk silver premiums on that are still very high if you guys have seen some of my other videos on junk silver you know that my forecast is that premiums on junk silver specifically will be rising even more in the future just based on the fact that they're not making this stuff anymore so you know a fixed supply of a product and increase in demand i think you can expect the price on these coins to rise faster than the spot price of the metal but you can see these right now if you want to buy 10 face value that's 224 dollars and 26 cents and that comes out to a little over 31. per troy ounce so a very significant markup greater than 25 percent markup over the spot price if we take a look at 100 ounce generic silver bars at st bullion if you want to buy one of these you're going to be paying 28.86 per ounce so quite a significant markup four dollar markup over spot for what really should be the lowest premium form of bullying you can find a generic 100 ounce bar i mean other than maybe a thousand ounce bar or something like that you would expect this to have the lowest price now i know sd bullion's tagline is the lowest price period but the fact is there are dealerships online that sometimes have better prices so we will take a look at hero bullion today this was some of the lowest premium silver i was able to find just doing a quick look around online now hero bullion's a smaller dealer they're newer they're not as well established you know i like sd bullion's just fine i've purchased from them many times but you know silver is a fungible product so as long as you have confidence that the dealership you're dealing with is honest and reputable then you really just want to get the lowest price possible i can't really vouch for hero bullying too much i have bought from them one time i had a good experience and they do have low prices so they've got these 10 ounce silver generic bars over at hero bullion so basically you'd be paying the same four dollar markup over spot for these that you were paying for a 100 ounce bar over at sd bullion in fact these are smaller and more divisible and you don't have to buy so much silver in one shot you know does make these a little bit advantageous but you'll notice that this is a pre-sale so these aren't even going to be available until april 7th of 2022 one feature i've noticed over at the hero bullion website you can put quantities here into this field and it will tell you if the quantity is more than is available so they don't even have a hundred of these coming in pretty tight supply i think they've got what if we put in 97 they they'll allow you to purchase 97 of these but you can't buy 98 so they've got 97 10 ounce bars coming in for sale so not a huge supply now this was the lowest premium silver i was able to find this nadir 100 ounce silver bar this was over at hero bullion you can see all of their other 100 ounce bars are sold out but they've got these left so nadir that's a turkish silver refinery and these are pretty nice bars they've got serial numbers just a large cast bar these are going for 27.54 per ounce so that is a fairly low markup normally i would even consider a 2.69 markup over spot kind of high for a 100 ounce bar but given the circumstances i this is the best deal i was able to find this is a pretty good price for it the supply on these though is also very tight you can see they've got two in stock okay what about three nope that's more than is available so they've got two of these left in stock so after this video goes live and you stackers see this deal on silver i don't know how much longer these are going to remain in stock and of course this isn't any kind of specific recommendation or financial advice i'm not a financial advisor i'm just showing you where you can get a lower price on silver and this hero bullion listing is a nice illustration of how yeah maybe there is a little bit of low premium silver out there but it's in a very short supply and so i do think that part of what is contributing to these high silver premiums is just a tight silver supply overall and you know our dealers being greedy are they just trying to rip off their customers and charge too much one thing we can take a look at to assess that is what dealers are buying coins for and then what they're selling them for so jm bullion is nice because they actually have a page where they will give you the buyback price for various types of bullion so you can see right now they're buying back a one ounce american silver eagle from any year for 30 dollars and 87 cents and then if you want to buy that same coin on their website you've got to pay 40.77 so about a 10 markup if you're buying one coin if you're buying a bunch it'd be about an eight dollar markup over their buyback price so that is a pretty good margin for them i'm sure that these high premiums are contributing to the profits of bullion dealers but you know are they being excessively greedy i don't know i mean they're just charging what the market will bear all of us are greedy to a large extent in these transactions you know in the same way that as stackers we're all trying to get the lowest price possible you know that's us being greedy the bullion dealers are just trying to get the most money for their product so yeah they're being greedy and so are we you know everybody in a free market doing exchanges that are in their best interest everybody's got to be greedy to some extent i don't think there's any collusion between bullying dealers or anything like that to drive up premiums i do think it's just a function of market forces supply and demand but definitely you know the bullion dealers do benefit from the fact that premiums are elevated they're making a good margin now you do have to wonder how many silver eagles jam bullion is actually buying for 30.87 of course somebody has to sell it to them at that price and i don't think i would sell my eagles at that price to them considering how high the premiums have gone on the product now it is nice that you're getting still five dollars or six dollars over the spot price when you go to sell your silver eagles so if you bought them for a two or three or four dollar premium back in the day because that's what the premium used to be you're still benefiting you know there's no reason really to sell your silver eagles to a dealer and take that discount on them we can take a look at this ebay listing that just ended today march 15th overnight and it's a listing for three silver eagles and you can see this seller doesn't have a tremendous amount of feedback they've got 361 feedback score so you know these are probably real coins i don't think i would be too concerned purchasing them i don't tend to buy bullion on ebay but you can see there's nothing too special about these coins it's just three 2015 silver eagles and this auction ended for a hundred and eighteen dollars now it does have free shipping so the seller is going to have to pay shipping but you know if you were selling more coins in a lot i don't think that the shipping would eat into your profits as much this is going for basically the same price that dealers are selling them for so you know if you've got silver eagles and you want to sell them you can always just go on to the open market in a place like ebay i just like ebay because you can view sold auctions so you can see actual real prices for items you know what sellers are able to get for them what buyers are paying but you know you don't have to necessarily sell on ebay there's other ways you could locate purchasers of silver eagles you could go on the reddit pms for sale subreddit maybe go to a coin show or something like that there's lots of ways you can sell to other end users and cut out the middlemen like the dealers but you know if you don't want to go to that trouble you always can go to a place like jm bullion and sell your bullying back and you can see right now if you've got one ounce silver rounds that you want to unload they're actually paying a little bit over spot for those so i mean that goes to show that this premium situation cuts both ways yeah you do have to pay more for silver when you buy it but when big online dealers start paying over spot for generic silver you can see that there is some benefit to the elevated premiums for the stacker and the seller of silver as well and it's not just the greed of the dealers that is driving prices up and when you see a silver eagle coin for 40 bucks or more when the spot price is under 25 yeah that does set off some alarm bills it probably does make you want to say jm bullion's just being greedy but you know part of it too is that this represents this elevated price for physical bullying it represents the real physical silver market because that spot price that 2487 that is something that is set in futures markets it's a paper price for silver it doesn't actually represent any transfer of real physical bullion it is just a paper contract it's whatever futures contract is trading at the highest volume that's how you get the spot price one thing i'll draw your attention to is over at usdetclock.org they have this statistic it's the paper to silver ratio and right now that number is 371.6121 and that number number's been ticking up over time if you've been paying attention to that if we mouse over that statistic it'll give us their definition for it and the way they calculate that is it's the number of paper silver ounces traded on major world silver exchanges divided by the actual world production of silver in ounces so for every one ounce of silver that is being mined this year 371.61 paper silver contracts paper ounces are being traded now why would that be happening well you know maybe there's some price suppression in the market maybe some actors are using fiat currency to suppress the price of metal i'll leave that for you to decide on your own it just it does seem a little unusual that there would be so much paper silver traded and that the trading of that paper silver is what you would actually derive the value of the physical underlying asset for i do find that to be kind of a strange situation and you might say you know hey why are you using the annual silver production why aren't you using say the above ground available supply of silver well there's not a huge difference really because there's not a ton of silver available above ground it's not like gold almost every ounce of gold that has ever been mined is still available above ground but you gotta remember silver is an industrial metal so it gets used up and we can take a look at this chart from the silver institute this is available at silverinstitute.org this is a chart of silver supply and demand going back 10 years goes back to 2012 and you can see that every year this is the total supply on this line here and then it lists total demand and typically the supply does outpace the demand or at least it has for the past 10 years by a few million ounces but there even were times like in 2013 for example the total supply and that's both from mining and recycling was 1039 million ounces and the total demand so basically the total amount of silver consumed that year 1071 million ounces so sometimes the consumption actually exceeds silver production this does give us a little bit more of a breakdown of the demand side of things and you will notice also that the trend here for industrial consumption has been increasing so 2021 524 million ounces used for industrial purposes back in 2012 that number was 450 million so that has been going up significantly and then here it says of which was photovoltaics back then it was only 55 million ounces were used for photovoltaics now we're using 105 million so that is growing that is not the only portion of industrial demand that is growing because you can see while that grew by 50 million ounces from 2012 to 2021 the total industrial consumption grew from 450 million to 524 million ounces so what's that extra 20 million ounces coming from electric vehicle production electronics you know there's a lot of high-tech uses for silver silver is the best conductor of heat and electricity of all the metals so it's very useful in many applications involving electronics and with the advent of electric cars with the electrification of society with you know the internet of things with 5g with the transition to clean energy and the need for more batteries and the need for more solar and the need for more wind all of those things use silver so i think that we will continue to see this industrial demand for silver move up higher and that's going to continue to contribute to elevated silver premiums because you know on the one hand you've got industry consuming more and more of the physical metal and then on the other hand you have a manipulated paper market for silver which is keeping the price lower and so what that's going to lead to is a squeeze in the price of silver so you're going to see real physical silver move up even higher and you may see the spot price languish i mean look at what happened to nickel you know they basically had to freeze the spot price because they wanted to save all of the naked shorts we had that short squeeze in nickel just last week and you know the same thing could happen in silver where you might just get a paper market that's broken i mean still to this day if you go try to look up what the nickel price is it's really kind of hard to tell because the lme isn't really resuming open trading in nickel and who knows i mean it might be some time before they do so you know are silver premiums just dealers being greedy i don't think so i mean obviously dealers are greedy to an extent everybody is but really i think it has more to do with the fact that silver is being consumed at a faster rate and also the paper price you know what everybody's looking at to determine these premiums at the 24.99 price that's not real silver that's paper you know if you want to find the real price of physical silver you got to just go find whatever lowest premium silver you can find the lowest premium silver i was able to find today was this bar so a real accurate price for silver i would say is 27.54 that's the actual price of physical and then if you want to get it in a different form like smaller increments a one ounce round for example you're gonna have to pay a little bit more because clearly that's a more desirable form for investors and stackers and the same can be said for the silver eagle because i mean i'm not buying silver eagles for 40 or 39.99 i'm not going to pay that much but somebody is guarantees someone's buying these so you know that's the real price of a silver eagle there's something about the fact that it comes from a government mint and it's kind of the gold standard in silver bullion investments that just makes it really desirable to people so anyway let me know what you guys think about silver premiums is it just greedy dealers trying to rip us off or do you think there's a little bit more to it do you think that there's an issue with supply and demand and silver do you think there's some manipulation in the paper market do you think the physical market could detach from the paper market let me know in the comments below and if you like this video and you'd like to see more videos about physical silver bullion and precious metals then check out the videos that are popping up on your screen right now and i will catch you guys next time thank you all very much for watching don't forget to like comment subscribe smart silver stacker out [Music] you

Channel: Smart Silver Stacker

Views: 65,966

Keywords: physical silver, investing in silver, invest in silver, investing in silver coins, stacking silver, stack silver, best silver to buy, silver investments, silver stacking, silver stacker, smart silver stacker, silver coins, silver bars, junk silver, constitutional silver, 90% silver coins, 90% silver, .9999 silver, .925 silver, silver rounds, silver premiums, silver eagle premiums, cost of silver eagle, silver eagle price, bullion premiums, silver bullion, paper silver

Id: TdpBpgkmKY8

Length: 17min 49sec (1069 seconds)

Published: Tue Mar 15 2022