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Physical Silver Premium


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#1 Woody

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Posted 04 June 2008 - 12:41 PM

Hi folks,

First off: hi! I listen to Cuthbert Calculus' excellent podcast and found you through that - great to see some of the guests featuring so prominently here. Look forward to speaking to you all.

I wanted to pick brains on the premium for physical silver in the UK as my heart and head are having something of a tussle at the moment. I hold ETFs and leveraged ETFs in both Gold and Silver in my SIPP and other accounts but for the reasons most often put forward have been looking to accumulate physical gold and silver alongside these.

Gold is no problem, low premiums and it all makes sense. Somewhat disappointing how little one gets for the money when you hold it in your hand but I expect to get a lot less soon!

Silver is a different story. I've been looking at the bullion bars Baird have for sale. 500g is the biggest they do with today's price being 208.50. Ignoring the VAT (I'll buy them through my business) this is a 29% premium to the price. To add insult to injury they indicate repurchase terms as 95% of the spot price. That pushes the spread to 37%. This is the lowest premium product and supplier I can find, others are > 50%.

Now, I pay nothing like that premium through the ETFs or would do through GoldMoney etc. but I really really want physical delivery for this portion.

Naturally, I'm not looking to sell this tomorrow and my expectations for silver, like many of yours, render it insignificant but I'm struggling to ignore it.

The justification I'm given for this is that nobody wants physical silver, which I struggle to believe. I'm wondering if this premium is actually illustrating the physical shortage that has yet to feed through to paper? On that basis, there's no premium in physical but an artificial discount in paper. There we go, almost selling it to myself but does anyone have any insight into this that can convince my head that my heart is right!?

Thanks,
Woody




#2 Pixel8r

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Posted 04 June 2008 - 01:16 PM

QUOTE (Woody @ Jun 4 2008, 01:41 PM) <{POST_SNAPBACK}>
Hi folks,

First off: hi! I listen to Cuthbert Calculus' excellent podcast and found you through that - great to see some of the guests featuring so prominently here. Look forward to speaking to you all.

I wanted to pick brains on the premium for physical silver in the UK as my heart and head are having something of a tussle at the moment. I hold ETFs and leveraged ETFs in both Gold and Silver in my SIPP and other accounts but for the reasons most often put forward have been looking to accumulate physical gold and silver alongside these.

Gold is no problem, low premiums and it all makes sense. Somewhat disappointing how little one gets for the money when you hold it in your hand but I expect to get a lot less soon!

Silver is a different story. I've been looking at the bullion bars Baird have for sale. 500g is the biggest they do with today's price being 208.50. Ignoring the VAT (I'll buy them through my business) this is a 29% premium to the price. To add insult to injury they indicate repurchase terms as 95% of the spot price. That pushes the spread to 37%. This is the lowest premium product and supplier I can find, others are > 50%.

Now, I pay nothing like that premium through the ETFs or would do through GoldMoney etc. but I really really want physical delivery for this portion.

Naturally, I'm not looking to sell this tomorrow and my expectations for silver, like many of yours, render it insignificant but I'm struggling to ignore it.

The justification I'm given for this is that nobody wants physical silver, which I struggle to believe. I'm wondering if this premium is actually illustrating the physical shortage that has yet to feed through to paper? On that basis, there's no premium in physical but an artificial discount in paper. There we go, almost selling it to myself but does anyone have any insight into this that can convince my head that my heart is right!?

Thanks,
Woody



Why not buy through GoldMoney and then take delivery. I think you need to have a 1000oz to take delivery, There is no charge for it, but there would be a charge for delivery from the vault.

Why do you want to take delivery? I have a few bars held with GoldMoney and it seems very safe to me, regular audits, which are all accurate, and insurance.

#3 Steve Netwriter

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Posted 04 June 2008 - 08:29 PM

Welcome to the forum Woody biggrin.gif

I think your dilemma must be common. I have the same thoughts.
I can't really add anything, except that in NZ you can get silver for about +16%, and I think -5% to sell it back.

GoldMoney does look a like a very good option for that reason.
And you have the advantage of being able to swap metals if you want.

But, I can understand the desire to hold physical silver, specially in coin form.
Maybe the answer is to accept the extra costs for some silver, and use GM for the rest ?

Fiat: What starts becoming worth less eventually becomes worthless.

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#4 Woody

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Posted 05 June 2008 - 07:51 AM

Steve and Pixel8r,

Thanks for your quick replies.

GoldMoney with delivery sounds like an option I need to look more closely at, although I think as you suggest Steve, indulging myself with a little physical delivery and keeping the rest somewhere sensible is probably the way to go.

To answer you Pixel8r as to why I want to hold physical: My reasons for being a gold and silver bull stem from financial turbulence and insecurity, and with that in mind trusting a third party is counter-intuitive. Whilst GM is far superior to unallocated metal via paper it has some of the same vulnerabilities such as confiscation.

In a country where an old man can be charged as a terrorist for heckling a politician, and the Government persists in pushing for powers to lock terrorists up for 42 days without just cause, do I want to be a named holder of an instrument which benefits from currency turmoil or could be deemed a 'weapon of financial destruction'!?! I am making several leaps in using my sentiments on the Orwellian state of the UK (and US) to justify holding physical silver so directly but they are at the back of my mind. Nobody knows what is under my floorboards or in the pantry etc., I can't get in trouble for it, and it can't be taken away - it is the ultimate in financial security. Ironic sentiments coming from a former fund-manager I know rolleyes.gif

Thanks!
Woody



#5 Steve Netwriter

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Posted 05 June 2008 - 10:46 AM

Woody,
The thing is, it sounds like the mad ravings of a mad person......until it happens.
Then he turns into someone with foresight biggrin.gif

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#6 Woody

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Posted 05 June 2008 - 10:32 PM

I'll take that positively Steve :-) Seems to be one of the nice things about this site actually - I don't feel half as mad and any foresight seems so late! Quite humbling.

W



#7 Steve Netwriter

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Posted 06 June 2008 - 04:04 AM

Woody,
You raise an interesting point. Most people go about their normal daily lives, and never hear the initial warning from the very first "crackpot".
And even when the number of "crackpots" has increased, still there is no mainstream coverage or knowledge of it.

In many ways it's amazing how long this goes on for. To think that many people on here and other places have (long before I got here), been talking about a coming house price crash, and yet "who knew?" !

What is interesting is that finding a haven of sense, discussion & foresight like this is a very hit and miss thing.
What's the chance of finding it ?
And most people won't have found it.

And to think that when house prices started to go down in the UK, it came as a surprise to most people in the UK, while no surprise at all to people on here.

Most of the time you can lead your life without looking for imminent catastrophe, but sometimes, just sometimes, you really want to know before it hits.

I'm not sure where I'm going with this, but I'm sure there's something in this.

Fiat: What starts becoming worth less eventually becomes worthless.

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#8 Chips

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Posted 08 June 2008 - 02:27 PM

Interesting. I just posted this same question on another thread without realising Woody had started a dedicated thread for it.

The premium seems difficult to swallow but after the latest news about the GoldMoney investigation (BullionVault may not be totally safe either) i'd rather have the safety of some nice shiny bars stuffed in the mattress. I'll be calling a few of the London bullion dealers tomorrow to try and get more information.

#9 Mr P

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Posted 08 June 2008 - 06:32 PM

QUOTE (Chips @ Jun 8 2008, 03:27 PM) <{POST_SNAPBACK}>
Interesting. I just posted this same question on another thread without realising Woody had started a dedicated thread for it.

The premium seems difficult to swallow but after the latest news about the GoldMoney investigation (BullionVault may not be totally safe either) i'd rather have the safety of some nice shiny bars stuffed in the mattress. I'll be calling a few of the London bullion dealers tomorrow to try and get more information.


GoldMoney investigation? What's the story there then?

#10 Woody

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Posted 08 June 2008 - 10:48 PM

QUOTE (Chips @ Jun 8 2008, 03:27 PM) <{POST_SNAPBACK}>
Interesting. I just posted this same question on another thread without realising Woody had started a dedicated thread for it.

The premium seems difficult to swallow but after the latest news about the GoldMoney investigation (BullionVault may not be totally safe either) i'd rather have the safety of some nice shiny bars stuffed in the mattress. I'll be calling a few of the London bullion dealers tomorrow to try and get more information.


Hi Chips,

I swallowed it in the end and bought some off ATS (they have the 1kg bars and Baird was just too much paperwork even though the premium was marginally better!).

I took the view that if I were to sell them privately, the premium would remain. If I wasn't to sell them, the case for doing so dwarfs the premium. The other thing is with a bit of physical, I can be a little more outlandish with my paper metals and the hopefully enhanced return will offset the premium!

Woody

#11 Steve Netwriter

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Posted 09 June 2008 - 01:27 AM

QUOTE (Mr Pipples @ Jun 9 2008, 06:32 AM) <{POST_SNAPBACK}>
GoldMoney investigation? What's the story there then?


I don't think GM is under investigation.
I think it might be this article:

Government Raids and Seizures- How Safe Is Your Gold?
Commodities / Gold & Silver Jun 06, 2008 - 01:48 PM

By: Mike_Shedlock
http://www.marketora...rticle4976.html


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