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Wakum Mata!
Politcally Incorrect Musings
Supply and demand 
18th-Aug-2008 07:33 am
It is hard to buy gold or silver right now. Maybe you'll get lucky. If you want bullion, then go ahead and place your order with Kitco. Be prepared to WAIT.

The dealers stocked up and paid a premium. Precious metals are currently (10:35 ET US 18-08-2008) below that premium (NY spot Au: $792.50, Ag: $13.12).

For example, if you want to buy a Gold Eagle from the U.S. Mint, you'll have to pay $1119.95 per 1oz uncirculated coin. That is a markup of 41.32% over market!!!

What a RIPOFF!

They paid a premium for their metal and now they don't want to lose money. There are two questions: 1) how long are the the sellers willing to hold on to their losses? 2) How long will prices remain below the dealer purchase price?

You see, the dealers can't hold out forever. They have to earn a living, too, and they do that by selling precious metals. So if the metal prices continue to remain low long enough, they will be forced to sell at a loss. You get to reap the rewards when they reach their pain threshold. The government can hold out longer on its premium since its operations are based on tax revenue and not the price of gold.

Now if you want to go into the conspiracy side of this, and the U.S. Mint continuing to have their premium is not helping the imagination, maybe the dealers know something that we don't. It may be that this price dip is temporary and they know they can hold out until an expected return to higher prices.

But that is a lot of people keeping quiet, which is why I don't hold well with conspiracy, in general.

"Three can keep a secret if two are dead."
--Benjamin Franklin
19th-Aug-2008 04:50 pm (UTC) - Duh...
Sometimes my day job interferes with my train of thought.

A third question: WHY is the metal market spot price so low when availability is so limited? Shouldn't the price be higher?

Seriously. This is weird when you think about it.
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