I was browsing Reddit posts about silver earlier this afternoon, and it was a great reminder to everyone. In other Reddit posts there have been complaints about how someone's local coin store is buying $5-10 back from spot and selling for $5+ over spot. The market has been highly volatile, and if you think we as buyers are sweating it, how much more are those who rely on profiting from margin spread to earn a living?
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Here's the original post from Reddit. I will summarize it and add my thoughts down below for those who don't want to read the entire thing.
Key Takeaways
- Large price swings carry a higher risk of a price crash, so stores have to price this into their buyback and sell prices
The store owners have bills to pay, need to make a profit to feed themselves, their family, pay their mortgage and utilities just like all of us.
- Higher silver prices typically mean fewer buyers and more sellers
You're more likely to get a higher price selling when everyone else is buying because demand is high and supply is low. Being a contrarian mindset investors has its benefits if you have the stomach for it.
- This store owner was asked their professional opinion and warned people they felt $110/ounce was too high of a price to be buying.
Don't hesitate to ask for their expertise. They've likely seen more than us. My coin store owner told me when people were selling at $50/ounce that they thought this was just the start of entering price discovery. I believe they were right. When we ask for expertise and it's given, we should pay extra close attention to it.
So What Do We Do?
The coin store owner makes a fair assessment that if you're concerned about buying high and the price then crashing, then don't buy silver. With such high volatility they are correct in saying it's a gamble buying silver right now. We don't know what it's going to do next and when the desperate futures markets will try to crash the price even further. For those of us who are long-time stackers, we know the drill: keep stacking and buy the dips.
I decided I don't want to buy even at $50/ounce. It's not that silver isn't worth it, but my budget wouldn't allow me to buy much silver and still feed my kids, who both have two hollow legs and won't stop eating. So, instead of buying silver bullion and coins, I'm buying Sterling scrap under melt and sending it to a refiner. They send me bars back and I sell enough of them to cover most of the cost and add the silver that's left into my stack. I pay considerably less overall, but it's not without risk and requires some effort, knowledge and patience. Whatever you decide to do while the price is so volatile, make sure you're re-assessing your plan to make sure it still makes sense for your personal goals.
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