That means some short-term hikes in premiums. Since there are no great hoards of physical product waiting to be dumped into the hands of the general public, these moves take place for a week or two every few years. Web sites and chat rooms are full of people who say they will buy silver coins once the price drops a few dollars or more. Those who make such statements usually assume they will be able to obtain the metal at something near spot, but recent developments prove once again that reality stomps on theory when dealing with physical product.
At that time, buy prices ranged just below spot to spot. Fast forward to now for an entirely different situation. Two bullion industry market makers are currently paying significant premiums over spot for 90 percent silver. Even those who are willing to pay the new levels may not be able to acquire silver. Although the thought of market prices and precious metals as a business might seem daunting to a collector just dipping their toes into the water, spot pricing and precious metal bullion should never be a scary subject to any novice looking to gain information about the process.
Here at SilverTowne, employees and customers alike continue to learn more and more about the ins and outs of the business every day. There are no silly questions simply due to the fact that it is a fast-paced business that changes in seconds!
SilverTowne welcomes your questions and is willing to aid in your quest to move from novice to expert in no time! Toggle navigation Login 0. What Is A "Spot" Price? SilverTowne Pricing Bullion Like many other dealers and retail shops, we determine our precious metal pricing based on the same factors mentioned above.
Posted in: The Vault Blog. Shopping Cart: 0 Items. Your Shopping Cart is Currently Empty Let's Go Shopping! Online bullion dealers, in particular, seem to be very cognizant of their pricing structure and what the competition may be charging. Dealers that can buy directly from a mint may be at an advantage when it comes to price.
This is because there are only two markups in this case. The mint will make the coins or bars and mark them up to make money, and then the dealer will purchase them from the mint and mark them up again. When it comes to dealers that cannot buy directly from a mint, they must buy from another dealer. Now, there is a third markup added to the equation. The mint marks the product up, the dealer who buys from the mint marks it up further and finally the third or retailing dealer marks it up again.
Another factor to consider is that the mints may have to outsource the refining of the gold and silver. This can potentially add more cost to the retail price. This refining cost that is incurred is simply another layer of costs associated with precious metals. Generally, but not always, dealers will look to sell above the spot price and will look to purchase at or below the spot price. The spread between the dealer buy price and sell price represents the dealer profit.
Of course, there are some coins and products that are always bought and sold above spot depending on their scarcity, grade and other factors. The spot price of gold, silver or other metals is a guide. Various coins, bars and other bullion products will sell for varying amounts above the spot price depending on a number of factors, such as product, mintage, relative scarcity, year and dealer markup.
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