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Minyan Mailbag: Physical Ownership of Silver


Owning physical metal versus owning a paper very different and has a very different price structure.



As a newcomer to the silver market, I think you should warn the readers, if you can, about the way the physical market operates. It turns out that I made a purchase from a firm called "investment rarities." What I did not realize was that unlike the stock market, where the broker makes a commission on the sale and purchase, and the market makers get you on the spread, these people wrap it all up into one. They sell dear and buy low, and they create the spread. Thus, although my purchase went up in price from the time of acquisition, they would not buy it at the market price. In the end I concluded, that if in the end it becomes such a hot item that everybody wants it, it really will not matter. However, it seems that there are only a few dealers who will buy it from you when the price is hot. The people I bought from claim that they'll always buy it from you. However, some others sell it cheaper than they do. I guess they are expensive because, as the "broker" tells me, they've been in business since 1976. To me that's nothing but he makes it sound like an eternity.

I also found that they seem to give a better deal in silver coins than in the metal, I guess because of the numismatic value, of which I know nothing. So what is best, 75% silver on the coins but a rare item, or 100% silver on the bars with lesser upside? Your call.

In the end, if you think it's appropriate, tell the readers that they are stepping into a different world than what they are used to. I know I am. Hope it helps.

p.s. The silver is for my son who is just turned eight. I figure he will be able to pretty much sell it when the time comes.

Minyan Leon


Hi and thanks for your observations. I have my kids for X-mas break and so I am strapped for time at present. I think I have offered to the 'Ville a few of my sentiments about "Allocated" vs. "Unallocated" metals over the past few years and please hit the great "archive section" of the 'Ville to see what ever I wrote at that time. It hasn't changed, it just got more expensive! Why would anyone ever hold metal in some one else's vault (especially if it is an institution!!!!). Owning physical metal versus owning a paper claim over said metals, issued by any clown on the planet is very different and has a very different price structure. I mentioned the other day that spot silver for physical delivery was some 80c over Comex. For real metal in your own possession (not unallocated via a bank) costs a lotta percent. That's why hedge funds, etc. trade paper metals - Leverage to Price is their only game. They will never take delivery and so the casino rolls on, more violently as the physical market asserts its true ownership of "price." Commodity futures must have a physical delivery- if it doesn't, then anyone can set the price via paper trades. Physical metal will rule this whole game at some stage in the near future and those with paper "claims" will be sadly disappointed, IMO. It could well be a case of "put up or shut up" as we say down here. Those that have, will. Those that don't, never really had. Those that don't, will have to beg, borrow, or steal it! Leased metal?? Sorry - my applicable confidentiality agreements are in perpetuity, so no comment from me. BUT- owning metal in your own custody is the standout way I see of anyone protecting one's financial wellbeing. Just an idiot Aussie's opinion.

It costs a lot of extra paper dollars to actually have the metal in your hands. What is a piece of paper that someone printed for you saying "we'll look after ya," worth?? Nothing. IMO. History says that "ya won't get looked after!" (There are heaps more historical facts to this than just plain old "crazy Laurie in Australia" sayin' so. Read ya books!)

The bid offer spread on physical is close to a dollar. There is nothing you can do about it. It is a credit and ownership issue, basically.

Silver coins aren't such a bad idea as they don't have to be assayed or anything due to the minting. A U.S. Government issued coin of silver content is pretty bloody good. Do the math prior. The day someone can come up with a 100 oz bar of gold made of IRON that has the SAME physical properties as gold, I know we have an "Alchemist" amongst us.
I share your concerns Leon, physical silver in one's own possession is very different to paper metal and is priced accordingly. I won't get much better either, FYI, IMO.

Coulda talked about this forever and I will do so in the early new year - these children of mine keep waking up at 6am (30 mins after Comex closes) .

Don'tcha just love ya kids?!?!?!?!?!!!!!!!!!!!!!!!!!

Anyone reading or watching the "race riots" in Sydney on those awful news services we receive globally, might think it's a bloody civil war down here in old Sydney Town,. What a crock. This is a social issue not a racial one. This is no "LA Rodney King episode." I grew up in the "hot area" and my parents and 2 brothers to this day still live in the "Shire." Note that no one got shot or killed. A few quiet stabbings, coupla black eyes, a few busted up cars and so what?? Both sides have grievances, some more-so than others. It's just a schoolyard fight that the media and authorities are blowing outta all proportion. Note the new laws introduced on the back of the whole mess!!! Sorry, I live here and am in the middle of it. I live in what is now classified as Australia's most crime ridden suburb. Lisa just laughed.

Enjoy the day and speak ASAP if my kids let me!!

Gold and silver can be physically delivered TO YOU, at the same price paper metal was trading 48 hours ago. Don't think hard çoz ya ain't got much time, IMO.

I'm going to water the children and take the plants out for a pee.


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