The Tale of Three Premium Spikes

4 comments to The Tale of Three Premium Spikes

  • omg

    Sigh…I apologize for not having the time to construct an eloquent rebuttal to this post (I actually have to work for a living). But, for those of us that bought the trivium coin, lets begin to apply it by deconstructing the arguments and hopefully, learning something new.

    1.) “Premiums on silver eagles were way over 100% (1:04) – true. But premiums on eagles don’t necessarily represent the demand for silver itself, only for that particular coin. I myself bought industrial bars AT SPOT (~$9/oz) during that time.

    2.) (1:30) “being s physical silver owner, its difficult to unload a couple hundred oz.” no it isn’t, I do it from time to time as the price fluctuates. It’s actually quite easy! Has anyone actually ever sold any silver? Why or why not…if yes, was it difficult? If no, how do you know how difficult it is? Please discuss. …

    2.) (1:56) “I literally bet the house on silver” – Chris has said before that he has a mortgage on his home. I think that is a good call due to the eventual rise in interest rates and devaluation in the dollar. But he really hasn’t bet the house on silver, he has bet the house on a devalued dollar and paid for it in the “death and debt paradigm” – with a mortgage…

    3.) (2:57) “I’m not interested in the dollar profits” – ummm. Then why did he sell me his silver coins for my fiat dollars?

    4.) (3:30) “paradoxically consume more as the price rises…” First of all, to use the word “consume” when talking about investors is disingenuous. Investors don’t consume silver… they save it. To those that consume it, as Chris has stated previously, the price is essentially inelastic. In this light, it is not paradoxical, people who are “investing” are chasing returns…

    4.) (4:20) to base the trading volume to global production is not necessarily accurate or relevant. Supply is dependant on a number of factors other than current year mining output. Supply (for investment) = number of Oz mined + scrap+ ALL PREVIOUS YEARS SURPLUS – industrial demand. The numbers may be currently out-of-wack, but we should take an objective (think trivium) view on what the numbers really are and base our opinions on the observed facts. I have heard it said that the “above ground silver supply for investment is ~1B oz”. I find this number to be suspect base on the number of oz the US mint sales report since 1986. (Over 300 M OZ):
    “http://www.usmint.gov/mint_programs/american_eagles/?action=sales&year=2012.
    This is one coin, from one mint, for only the past 20+ years. What happened to all the other silver that has been minded from the dawn of civilization? As an Electrical Engineer, I can tell you that all of that silver was/is not “consumed” in iPhones, or solar panels…the numbers just don’t add up.

    5.) (5:00) “ we are keeping our premiums the same…” This is related to comment #1. Premiums are based on cost of production + some factor of demand. Production cost = raw silver+ plant and equipment+ Overhead (support staff, marketing, travel, etc). If your premiums do not rise, that tells me that demand is drying up (all other things being equal), and/or, you have some margins in your operating costs (otherwise, you would be losing money (fiat $$) and go out of business. Some other observations would be:
    • Designing and minting your own coins would be a great way to transform low-premium bars (that you have previously purchased) into high premium coins (no charge for the business advice)
    • Using bars that you purchased in 2008-2009 would net a large profit margin.
    • Offering coins at $2-$3 over spot to your “loyal members” then planning a $10 – 20$ premium for the second and third minting is brilliant. (Did anyone read the “flyer” that came with the SBSS coins?)

    I don’t like to point these things out. But as a student of the Trivium, I feel obligated to do so. After all:

    Listen to all and follow none…right?
    Make your own opinion….

    • Silver Shield

      Sigh…
      1.) Did I mention 1,000 oz bars that are illiquid and mostly bought through paper vehicles with margin, debt and counter party risk??? My 100 oz bars did take a hit but I noticed Eagles and 1 oz in general held much higher premiums, which is the point of this video.

      2.) When you own physical, the mental process of emotional sells like paper traders is vastly different. Seeing what it takes to create these bars and the REAL value of them is nothing like the quick electronic release of a sell order to make the red stop on your computer screen.

      3.) Well I take your money buy industrial silver and create value in unique 1 oz historically significant silver for profit.. to stack MORE silver. I have never sold one ounce of my personal silver and using the Ultimate Exit Strategy, hopefully never will.

      4.) No the markets trade upon the inventory of the CRIMEX which if I remember right was only 100 million ounces available and that week those oz traded something like 7 billion ounces traded. Clear paper manipulation. Oh and I forgot to mention that there was only 30 million in the registered available for deliver category, so it was magnitudes worse.

      5.) As I mentioned before I have never sold 1 ounce of MY silver and all if it comes from silver shot form that is either newly mined or recycled silver. Premiums during these times are based on the availability of the physical in the cash market. The higher the premium the quicker delivery. The higher premium proof coins we offer are for greater level of difficulty and lower mintage.

      This was a good effort to test your logical wings…

      And yes… Listen to all and follow none, including me.

  • Mark K

    omg, your point in item 4 (the second one) about silver not being consumed in electronics is not true. Due to the industry drive to eliminate lead from solder in electronics, a reformulation of the solder involving silver was instituted to meet ROHS standards. A small amount of silver is consumed in each and every piece of electronics that complies to this standard. Pure tin makes very poor solder because it suffers from “tin whiskering” which shorts connections over time. The silver in the solder formula eliminates this and still maintains the required temperature to complete the solder joint within reasonable levels.

    • omg

      Hi Mark,

      Oops, guess I like the number 4 so much I used it twice.
      I know exactly what you mean with the solder. I actually came across a Ball Grid Array that used different solder types on the same board (with different set temperatures (it was a disaster! – and hard to troubleshoot).

      I was not trying to say that silver isn’t consumed (although more and more of electronics is being recycled these days), I was commenting on the amount of silver used industrially (consumed) in comparison to the overall available supply (mining + scrap + reserves). I just can’t make the numbers jive to get to the often quoted 1B oz of above ground silver reserves. Even with all of the silver that is used in solder, and the like and may be essentially “unrecoverable”. I would enjoy a second, third, fourth,…opinion on this. Thanks!

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