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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