Premiums Paid for 100 Ounce Silver Bars 23 comments
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There has been much recent coverage of the rising premiums being paid to purchase physical gold and silver bullion. This has been cited as a consequence of the extreme demand for precious metals and evidence of the growing disconnect between market prices and physical prices.
I decided to look at some data to calculate exactly what kind of premiums are being paid and see if any trend or patterns in the data could be determined.
Specifically, I looked at selling prices for 100 ounce silver bars on eBay (EBAY). I decided to use this as a source of data since 100 ounce silver bars have historically been a low premium method to acquire silver. Also, bars of silver are relatively undifferentiated. Bullion coins from different countries or with different dates often carry premiums based on those differences.
I used eBay data because it was accessible. Completed auction records can be obtained for the prior two weeks or more. Also, I believe that eBay represents a real time, liquid market of buyers and sellers who discover prices through a bidding process. Quoted dealer prices may be for delivery at a later date and may not represent actual available supplies.
There are some possible flaws with this method. It does not take into account potential premiums for different manufacturers. I don’t know if people pay more for different makes of bars. Also, shipping costs are not included in the price data used. Some auctions may carry higher shipping charges which would impact the final selling prices. And lastly, some auctions were “true auctions” which start at a minimal opening bid while others were fixed price listings.
Data was available from October 13 to yesterday’s date. I did not include data for yesterday or October 13, since it may represent partial data. I determined the average price for each day’s auctions which closed with a sale. I compared this to the closing market price of silver for each day.
Here is a summary of the data:
Average Price for 100 Ounce Silver Bars on eBay Compared to Market Price of Silver
Some charts based on this data appear below. The data is only for a limited time frame, but it does spur some interesting observations (click to enlarge images).
The premium paid for a 100 ounce silver bar has ranged from 39.62% to 56.45%. The premium represents the amount paid in excess of the so-called “market price” of silver. People are clearly paying astounding premiums to acquire physical silver.
On October 15 and 22, the market price of silver dropped. In each instance this caused the percentage premium to rise. This lends some evidence to the anecdotal observation that a decline in market price only spurs greater demand for the physical metal.
Two distinct prices for silver seem to exist. The paper price for the contractual right to acquire future silver, and the physical price to acquire real silver, in hand. How and when will this situation resolve itself?
There have been several recent reports of bullion buyers seeking to take physical delivery of silver and gold from the COMEX. This would allow buyers to purchase real silver at the heretofore “fictional” paper price. If these deliveries take place and become a dependable source of purchasing physical silver, premiums for 100 ounce bars and other physical silver would likely begin to subside.
On the other hand, some are voicing the possibility that since the COMEX only has small coverage of physical metal for outstanding contacts, if enough contact holders demand delivery they will be forced to default and settle in cash. If this occurs, the likely result would be soaring market prices for silver and potentially greater premiums as the argument for physical scarcity gains another leg of support.
Disclosure: Author owns physical gold and silver.
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This article has 23 comments:
All manufacturers are not equal. Bulliondirect's nucleo auction site has Engelhard and JM bars for about a 50% premium but other brands at 36% premium. Last week there were 200 bars auctioned at seekbullion.com. Historical data is not available but I seem to remember a premium of about 30-35% for Engelhard bars. This morning Apmex has them for about a 30% premium for delivery in 4 weeks. That is not immediate, but they are reputable and I have bought from them frequently.
Ebay may be an easy place to check the prices but it is not the only place to look and it is not the first place I look when trying to buy. Plus, their fees are ridiculous (up to 15%) so it is not a good place to judge what you could sell your silver for. Other sites produce more reliable data.
I do agree with you about the high premiums, but don't think they are uniformly as high as you claim.
Also various Precious Metal PM dealers are buying 1000 oz silver bars from the comex and selling them individually. Tulving.com is selling 1000 oz Silver bars at a 7% premium or .69 over spot. Although the US Silver Eagles are going for 6.99 over spot about 70% premium with other silver items having premiums from 25% on up. The Smart money is selling Gold and Buying Silver as you can get almost 80 oz Silver for 1 oz Gold. Trade back when the ratio reaches 40 or 20. At 20 Gold to Silver ratio you would then receive 4 oz Gold for your 80 oz Silver. A nice 400% gain and you got to keep your PM's the whole time.
I'm continuing to buy silver and gold as I find it.
Hey, sakata, WHERE do you look FIRST when you are buying? Thanks.
above spot. I only sold about 20 of them. So I'm not so sure if this shortage is really real. E-bay is just way to expansive.
If anyone is intersted you can e-mail me. I have an office in midtown NY
kahanj at optonline.net
There's another very important factor at work here, however. Because you are looking at eBay, you must extract the live.com 25% discount. When Microsoft began offering cash back on purchases at certain merchants to boost their search engine's market share, eBay was, and remains as far as I can tell, part of the program. At that time, canny sellers of metals products immediately added a similar amount to their prices. In effect, 2500bp of that premium is being paid by Microsoft. But this still does not explain the 20-25% premiums on 100 oz silver products.
The real reason to buy silver is to have a convenient medium of exchange for ordinary goods in a scenario in which the dollar or other fiat money is no longer valued or accepted at anything like its current price. Gold has too much purchasing power for this purpose, so one needs somewhere between a few dozen and a few hundred one ounce silver coins, or perhaps a similar amount of old coin of the realm containing silver. 100 ounce bars do not serve this purpose at all, so the premium is inexplicable.
Unlike the 1 & 100 oz products.
and sometimes you can be surprised, my last 6+ pound bar assayed had .009% gold in it too. ;)
I thought it was the "live.com" phenomena (up to $200 off a single item) plus eBay's October 10% coupon (up to $100 off a single item) skewing the pricing for the month.
I couldn't bring myself to handing an extra $250-$300 over spot to someone for the right to buy a gold coin (though I could pay the $300 with eBay/live funny money and not "real" money). I guess I should rethink this if spot X 1.35 and up is closer to physical pricing reality - I could still get one more coin for spot price while they are handing out the funny money.
Every little bit counts.
i searched craigs list in my and surrounding states, there was nothing selling, only wanted.
I went to my local pawn shops, there buying silver and gold for 10% under spot and selling Eagles for 22 bucks a piece.....LOL then they give you the excuss that they bought em when silver was over 20 bucks, but you know its bs cuzz they have been selling those same Eagles in the same display case for the last 5+ years
That 'market', represents less than 5% of the global silver market. When we are talking the OTHER 95%, i.e. actual global silver market in 1000 oz bar form, warehouse stocks of Comex and LBME, etc., there simply is no shortage.
You can buy 1000 oz bars from many sources immediately for way less than $1.00 over spot. Kitoc, Monex, Apmex, etc.
Silver mining and reclamation is running approx 150 million ounces higher annually than silver consumption. The current retail 'shortage' will resolve itself within a few months as the financial panic wanes and the Mints / refiners greatly increase production of those forms.
Meanwhile, in the true global market, which is 95% of actual physical silver, there is a growing SURPLUS of silver, not a decline. This may change if silver prices stay low since some marginal producers may scale back production, but of course industrial consumption will decline in recession also.
I don't know what people are buying when they buy SLV or GLD but it isn't gold or silver. I suppose since it can be traded for cash which can be traded for things that people want to buy SLV and GLD represent some kind of investment. But they're not gold or silver. They're something else.
Gold is a piece of metal and is in your hand. Anything else is not the same thing and should not have the same "price".
I also can aqcuire 1,000oz bars for another exceptional price-up to 1,000 of them.
20% down of the total sale to the source for commitment-and you can have them delivered within one to two weeks max. I can also acquire 100 ounce JM bars within 2-3 weeks. I can make future commitments happen as well with the same source--NOTE: the source physically has the silver for future commitments as well
970-308-7173
Josh-Modern Thought Investments
modern19thought@gmail....
commodities777@yahoo.c... BUY NOW before SILVER goes back up to $20 an oz again because of DEMAND!!!!!!!!!!!!!!!!...