silverseek.com / By James Anderson / September 24, 2015
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the policy or position of JM Bullion, Inc.
In this article, I will explain first how and why silver bullion premiums have aggressively increased since the middle of summer 2015 AND how and what I am doing to take advantage of the current premiums via a bullion form sell and buy arbitrage.
So why are silver premiums so damn high right now?!
In short silver premiums have increased due to a recent combination ofhigher Silver Bullion Demand & lower Silver Bullion Supplies.
Silver’s paper spot price has recently fallen to 6+ year lows (touching a low price near $14 oz USD) yet physical silver bullion prices have not fallen. Instead silver bullion prices have remained flat due to a recent lack of physical bullion supplies and higher investor demand.
I can hear the cynics out there saying, “That’s bull! The dealers are taking advantage of everyone!”.
Well, yes and no. I’m not going to deny that dealers partly use these moments of high demand to expand their profit margins and company war-chests via larger premium charges. BUT, I will also point out that, without having an adequate bullion inventory on hand, if a dealer simply sold their smaller stack to the public at standard razor thin bullion premiums, they will quickly run out of inventory, and they may also end up losing both customer base and, potentially, their business in the process.
How is that?
Think about it: without inventory you would essentially become a back-order promise dealer, building up a massive short position in silver while angering your customer-base as you sit on their good funds making them wait on their purchased products’ delivery from the mint.
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