Possible Buying Opportunity with "Junk" Silver?
With silver now surpassing $100/ounce, it seems most everyone has become a seller. The refineries are stretching their payment terms, and there continues to be a backlog in the refining process that is causing local coin stores to buy at a significant discount. You can't blame them. With more sellers than buyers, they don't want to run the risk of a sharp spot price reversal and find themselves suddenly taking a huge loss.
I was browsing the Silverbugs subreddit and one person gave a report on what they were seeing at their local coin store. There's a lot to unpack, but one opportunity stuck out to me. They mentioned their LCS is buying "junk" silver at almost 20% under spot. (Source)
The problem is caused by refineries stretching out their payment timelines. Most coin shops aren't wanting to hold onto junk silver and instead send it to the refinery. This means they run a risk of spot price seeing a correction and losing money on any junk silver they buy.
(Created with Bing)
For those who are buying, this could be a great opportunity. Someone could offer sellers 10-15% under spot and still get a good deal. With how quickly spot price has been rising, you theoretically would only need to wait a short while for spot price to rise.
(Source: Kitco)
This is how rapidly spot price has risen just in the past month. Someone could easily buy junk silver at 10-15% under spot, wait a week or two, then sell a portion of it to cover their original cost and keep what's left. It's not a guarantee and does carry some risk, but for those who are more risk-averse this could be an alternative to scrapping Sterling silver and doing the same. If you're considering doing this, make sure you have an exit plan in place.
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As per my “Fine Tuned” version of the Reset, our 90% Silver Coins will do 10 Times better than our Common U.S. Coinage… I’m sure you know by now where I think our Common U.S. Coinage is going…
Not a bad strategy and does carry some risk, but not much with the prices on the rise. A good way to cash in as silver moves up the charts!
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Right? I'm tempted to try it, but I'll probably hold off until I get the lady batch of scrap Sterling back from the refiner.
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I'm a bit worried that when I am ready to sell there isn't going to be any buyers out there. I guess we will just have to wait and see.
Right now it's the volatility that's causing so much uncertainty. I think once it peaks, we should be fine so long as the price stabilizes.
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My LCS wont buy anything but high end collector coins and pure bullion until the refineries catch up.
I can't say that I blame them. Anything less and they take a huge risk of quickly becoming insolvent.
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Not smart to be selling now when it’s going multiples higher. Trading silver for dying currency, doesn't make sense, unless you really need the money I suppose.
I think it all depends on what you're doing. I've seen some people converting to gold, buying land, or other assets. If you're just selling for paper then you'll absolutely regret it later.
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Taking profits into gold does make some sense, and land, I guess it depends on how much you hold and how much land you don't.
That's why my local dealer likes to see me. I'm always there to buy, but not as much as I used to.
The rapid price rise and volatility has caused pipeline and distribution issues.
I think I will go visit my LCS again and buy my dealer a nice lunch.
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I'm sure they'll appreciate the gesture!
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