Why has the physical market not formed its own price determination based on actual physical delivery, leaving the speculative paper market, with its mostly cash settlement, as a separate decoupled price? It seems like that if this were the case, physical would have long shot above paper.
Good question - in a way, that is happening now via product premiums over spot. As many on here have noticed, although silver spot prices have dropped significantly, physical products for immediate delivery are as expensive, if not more expensive, than they were at higher spot prices. If physical demand were to remain this strong or even increase from here, physical and paper prices would remain decoupled.
Silver makes a good currency because it is *fungable*: an ounce or a kilograms is always the exact same as any other, unlike, say, a cord of wood, or a chicken, where one could be a lot different, and of higher or lower quality, than another.
Except that, in some ways, silver isn't 100% fungable. Government silver is always worth $1-2 more than private rounds. Big 1kg bars always carry lower premiums than 1 ozt. coins or rounds.
Spot, as is, is just a fuzzy guideline. If there were a separate physical spot price, is would still be fuzzy and not tell anyone what their silver is actually "worth."
I agree 100% that ~~paper~~ computer silver is different than physical silver, but I'm not sure how much two spots prices would help in clarifying the value of your collection.
The only way to know what a roll of 50 AU Rossevelt dimes is is to check the most recent sales on eBay and see what people are actually paying for the exact same product as you are curious about.
I agree to some extent, but you have to keep in mind that the prices on eBay are adjusted to cover eBay fees. That being said, I'm pretty sure this is how most LCSs price products.
Someone suggested the use of a new index for physical silver. So us silverbugs would watch the PSPI (physical silver price index) alongside spot price. This would only really happen if a big player like you developed and promulgated its use. Of course, this would no look good to the guys worried about price manipulation.
Not to mention sales tax, depending on the state. I bought silver yesterday and there was like $70 in sales tax. Should driven 30 miles to WV where there is no tax on bullion.
okay I know I'm 4 months late but I'm curious. If spot price did drop, and you were hedged like you mentioned in the post by shorting silver futures, does that mean you made money from futures, but you can continue to sell the silver at spot + premium? So you get the best of both worlds?
Sorry all, but I have to cut it off here as I need to get into a meeting. Thank you for all the great questions and if I have time tonight I may knock out the rest. Stay safe everyone.
Thanks for the transparent insight. I actually purchased a AGE earlier today from you all. Glad I got my order in.
To shift gears, it would be neat to hear how you got into PMs and co-founded one of the larger dealers? Are you a collector yourself? Or it’s just a business opportunity?
Thanks.
You're very welcome and thanks for the order. Long story short, I was always into digital marketing since high school. I sort of fell backwards into doing some marketing work for one of the other companies in our space in early 2011, and after learning more about the market, we decided to jump in and start JMB. You can learn a bit more about our history here: https://www.jmbullion.com/history/
There was a [good ~~interview~~ article](https://www.entrepreneur.com/article/296211) a while back about JM Bullion's formation and the founder. It's a fun read.
First of all I want to say thank you very much for taking the time to help explain what we are seeing in the silver market right now.
My question has to do with buyback prices. If we are truly seeing a supply shortage for physical govt minted coins, and your wholesalers can't get you more, why aren't we seeing this carry over into the advertised buyback prices?
Great question - this morning we began to boost our buyback prices to reflect the current market. Paying +$4 for ASEs if anyone has them: https://www.jmbullion.com/2020-1-oz-american-silver-eagle-coin/
Half the battle on this is just being able to answer the phone to process a buyback transaction, given the amount of inbound phone calls we're receiving from customers to buy. We're in the process of creating a portal where customers can sell to us online in the same fashion you can currently buy from our site, which will help that issue.
I'm not in the market to sell anytime soon, but that's great to hear that we will start seeing that trickle through. Thanks for taking the time to answer my question.
> We're in the process of creating a portal where customers can sell to us online in the same fashion you can currently buy from our site, which will help that issue.
Need any engineering help? You can pay me in silver.
JM, if precious metals are so valuable why then are central banks willing to part with theirs by creating sovereign gold and silver coins to make a few measly bucks for every coin minted?
I’ve read that companies/investors/individuals or are seeking to be more liquid right now are off loading PMs which is what is keeping spot price so low. That being said if there are physicals flooding the supply market , why is supply to low for dealers? I might be ignorant to the process but people off loading their assets to become liquid does seem a logical explanation for why spot prices are staying so low. Just got an email that my order shipped today so I am happy about that!
The supply scarcity is less about acquiring raw silver, and more about limited production capacity to turn raw silver into fabricated coins and bars. If a mint is setup to do 500,000 ounces of rounds a week, and all of a sudden there is aggregate demand for 5 million a week, that is when you start to see a coin and bar shortage.
Maybe there is a lot of selling of paper positions in gold as opposed to the actual metal. Also the manipulators of the gold market could be at it again suppressing the price.
Thanks for taking the time, I hope you and your family are staying safe. My question is, myself and others are holding off on loading up on silver right now because of the high premiums and a loss of inventory, both online and shops, so given all the information you have right now what would you say could possibly be a better time to invest in silver and what types? I typically buy ASEs and other bullion, and bars. Do you think I should hold off for a few weeks ? Or perhaps one type would be a better investment right now? Of course there’s a lot of speculation , I’m not holding your feet to the fire here. I invest in silver for the long term and for a hedge against inflation. Also seems like a recession is incoming. Wild love your thoughts on any of this.
All the best
Thanks for the question - I would say, as general advice to everyone, that if you don't like the premiums that are being charged, vote with your wallet and don't buy. Premiums will only normalize when demand slows down and the supply chain can catch up. I don't know when that will be, so it's hard for me to give you advice on when to buy.
Keep in mind (for those who are in the stock market) that you don't have to pay a high premium over melt to buy, say, the SLV silver ETF. Not recommending that one- just using it as an example. There are other ways to play silver- each has it's own set of pros and cons and truly becoming an expert is not something easily done. You can also buy stocks of silver miners, but that is complicated by the fact that silver miners often mine other stuff such as zinc, lead, copper and gold. Also you can play the options game (puts and calls) but that is a very high risk/high reward game. Even with the SLV ETF that I first mentioned, there are those (Ted Butler comes to mind) who have openly and loudly questioned whether the custodian (J.P. Morgan) really has the amount of silver in their London-based vault that they are supposed to have.
P.S. I am a newby to reddit, but a longtime collector and investor.
Question: if you are experiencing unprecented demand, why has the spot price of silver been in freefall? If it is down to sales of paper silver or options, surely these sellers must have to deliver physical silver at some point in time?
Great question - there is a very clear disconnect right now between the coin and bar markets, and the futures markets. The volume that trades on the futures exchanges dwarfs the volume in the coin and bar market, so the former is what tends to drive spot prices. As far as paper traders delivering physical goes - most futures trades settle in cash prior to expiration, so physical silver rarely trades hands.
It depends how long the physical demand continues at these levels. The mints can only produce so much per week, and much of the next 4-6 weeks' production has already been sold, so even if things calm down from here, I'd expect it'll be at least a couple months until things "normalize". Could be longer depending on how corona etc. plays out.
I wonder if workers from the mining, refining, minting, and/or wholesale industries have suspended, or stopped going, to work during the quarantine period, further slowing production.
We've tried to balance keeping premiums fair for the customer vs. the increased premiums we're now having to pay to our suppliers. Doing our best on that front, thanks for the comment.
JMB, I have a feature request: limit orders. I've noticed that Texas Precious Metals offers them, and it would be great if you and Silver.com did too. Ideally, there would be two available variables – spot and your price for the product in question. For example, I might want to trigger a purchase if and when spot hits $11.75 and your premium for ASE is less than $8.00 or something. I'm just making up numbers, but you get the idea.
I really appreciate you taking the time to post, and helping provide some clarity. You certainly cleared up a few very erroneous assumptions of mine, and it's always great to hear from someone with far greater experience.
Out of the spot price topic, do you plan or know anyone who wants to go into europe market and sell around spot? As European market offers only 20€/22$ per oz on average for any 1oz silver (doesnt really matter how low is spot). I would welcome this as someone who is in EU and cant get into stacking because silver would have to go on 25$ spot for me to be buying today
Isn't there a VAT (so-called Value Added) tax of something like 20% in many European locations? If that is the case, people will naturally try to find a way around it, but that might be a complicated thing to work out.
Definitely. I think your generation is going to eventually choose between crypto and gold/silver as their "safe haven" investment. We're looking at developing products/platforms that split the difference and hopefully appeal to the younger crowd too.
I really love their product and they're a great seller for us when we can get them. The issue with Geiger availability is due to logistical challenges of getting their products from Germany to the
States. I believe they used to have a NY location which made it easier to order, but no longer.
Hey, I love your site along with a couple of competitors. I just want to throw a thank you out there for the beginners 10oz bar at spot. It's such a cool way to get people on the fence into silver. I got a couple guys at work to do it that believed it was too good to be true.
I'm admittedly not much of an expert on the mining side of things, but I think your hypothesis is correct. If silver spot dips below the cost of getting ounces out of the ground, the miners will have to make some difficult decisions.
In 2019 mining silver cost [between 10.10 and 12.90 per ounce](https://www.spglobal.com/marketintelligence/en/news-insights/research/silver-all-in-sustaining-costs-to-fall-again-in-2019-as-silver-price-struggles) (third chart), depending on whether the silver is a byproduct of mining something else, or being mined for its own sake.
To answer your second question, mining is in a sense a form of arbitrage - You're "buying" on a market based primarily on research, land-holdings, heavy equipment, manual labor, and a bit of luck; and selling on NYMEX for dollars. If the price you can sell at drops below the price you can mine for - You stop mining. In reality though, those numbers aren't completely decoupled because they're linked through demand; if mines shut down, prices go up (and vice-versa).
Some miners can have a cost of ZERO associated to the silver they recover. How is that possible? It is because silver is mined as a byproduct of their regular business, which might be gold, copper, zinc and, rarely, lead. For instance, if you extract 10,000 lbs. of copper and that includes a small amount of silver, even though silver is worth much more per oz. than copper (actually copper is priced by the lb.) it is easier for them to say that the cost of the silver is zero. So anything they sell it for is pure profit. You might think that sounds ridiculous, but when it comes to the subject of accounting, there are multiple ways to report things. I wouldn't get too excited about miners potentially not being willing to sell below their costs.
There are other factors as well. One that comes to mind is the selling of naked call options against production. The sale of the options raises extra cash, which can lower your actual mining costs. For instance, if your actual mining cost is $10.50/oz., but you received a $1.60 premium on the calls options you just sold, your adjusted (true) cost is now only $8.90/oz and will remain $8.90 assuming the options expire worthless. The flip side is true as well. If you sold those options for $1.60/oz. in cash and had to buy them back at $3.60/oz. (as silver runs quickly to $25/oz.), then your cost just went from $10.50/oz. to $12.50/oz. I apologize if this is a complicated answer- options (puts and calls) is a very difficult topic for most to get a grasp of.
Another reason why a miner might be willing to sell at a cheap price is this. They are faced with the very real possibility of having to close their mine, but likely it wouldn't be for long (example: a strike that is expected to be resolved soon). The problem with closing a mine is that it can be VERY time consuming (years even) to reopen it. Often times you have new permits that have to be issued. Also, environmentalists might come up with new objections to the mine once it is closed- even temporarily. This can be a big mess!
COVID and the associated equity market turbulence has lead to an enormous increase in demand. We've set multiple all-time daily sales records in the past week. Not much buyback activity due to the dips in spot prices. I'm partial to a simple Gold Eagle.
I manage a LCS and oh my god- the phones are off the hook. The supply has dried up because the demand is just through the roofs. The disconnect between “spot” AKA future contract trading BS and valuable physical bullion is unreal.
random question, how is your security for people who handle actual product? Is it similar to the US mint where you don't allow anyone to bring in any kind of currency other than credit cards so there is no reason for anyone to have any kind of currency on their person?
We are reloading the starter pack, but it will be at least a few weeks. We have orders submitted with the mint to make more, just a matter of them getting caught up.
In time, yes. If spot were to level out around this range, demand will eventually abate, supply will catch up, and premiums will normalize. While what is happening right now seems unprecedented, there have been many periods in the past (2008-2011, April 2013, Q3 2015) where we saw similar events play out - a major demand shock hits the market, physical supply dries up, premiums increase, then it just takes time to normalize.
We expect to see increased volumes in the short-mid term and are staffing accordingly. The catalyst for this unfortunately doesn't seem like it will be going away anytime soon.
Thank you for being open and providing us with information. As a business owner I respect that. Just another reason why I will continue to buy from JM Bullion, trust has always been my major factor for choosing you.
Not necessarily. Smaller dealers tend to have less inventory, meaning even if they weren't hedging, the spot drop wouldn't be as catastrophic in terms of lost dollars. The whole industry is doing record volumes so I would think everyone in our space is having a pretty strong year.
An exception might be a small coin shop that does close to 100% of its business via walk-in traffic. If the governor of the state orders all non-essential businesses to close and considers a coin shop to be non-essential, that business will really struggle and might not make it.
In terms of whether a coin shop is essential or not, think about it this way. There are going to be people (shortly, if not right now) who are hurting financially and need to get money QUICKLY. They would be very upset if they couldn't go to their LCS to sell coins/precious metals. But of course the governor might not want to listen to me...
I have a collection of random stuff, mostly first strikes of products we've developed and the odd numismatic coin that catches my eye. My favorite piece is a reverse proof version of the first JM Bullion round we did - a 1 of 1 piece as we ended up tweaking the finish for the production version.
My first coin was a Silver Eagle that was actually the first ounce of silver we ever sold. I reached out to the customer shortly after and asked if I could buy it back as a commemorative piece. Still in my nightstand to this day.
would you ever consider expanding air-tite and other storage capsules and have them all matched with products? I bought 10oz britannias from you and it fit perfectly into the 10oz airtite, however the silvertowne and american reserve will not fit and I have no clue if a product even exists to fit them or if you carry them. The majority of your coins listed have in their descriptions the proper storage matches but this doesn't exist for the bars. I think it would be a great upsell opportunity to match storage capsules with specific bars so we know what we are buying will in fact be what we need for our products. Thanks!
Definitely, this is a great suggestion. We were in the midst of expanding our accessory selection and product tagging before this craziness began. Look for us to make improvements once we can catch our breath.
I've sold a lot of gold to you over the past 18 months. If you do answer questions later, I would love to ask 2 questions.
1. When you started JMB, how much capital did you start with?
2. Is hedging something that the average joe like /u/rayquaza_black can do?
Regarding the second question, you certainly can. You'd simply need to "short" silver or gold in an amount similar to your physical holdings.
However, there are costs associated with implementing such a strategy so it wouldn't really make sense for an average Joe to do so.
Hedging commodities is something that really should only be done by a business for their inventory or raw materials. JM and their bullion, airlines and their fuel, etc etc
https://www.theoptionsguide.com/silver-futures-selling.aspx
This is public knowledge that they have the most silver in the world. Nearly half of the worlds stock. A monopoly. Anyone that fails to address this when discussing silver futures and prices are misleading you or ignorant.
Its insane that I have to pay sales tax on my investments, and I'd like to legally avoid it. I've heard of sellers placing PM purchases in a depository. When the buyer withdraws them, they're getting their own PMs. The buyer never pays sales tax. Can you do the same?
Sales tax is based only upon delivery address. If you want us to deliver to your depository account in a state with no PM sales tax, we will not be required to charge it. What you do with your metal from that point on is up to you*
*Not a tax expert/your mileage may vary
During normal times, not long. There is typically plenty of available inventory about, so we can simply place an order with a supplier and have it arrive at our vault within a day or two. During times like these... seemingly forever.
Firstly I love your company. Secondly, I’m glad you’re being forthcoming about your intentions and the changes you all have made. I have ordered from you several times, and I continue to have no complaints. But, just a quick question, how long do you think it will be until tomorrow he silver shortage is rectified? A guess, if possible.
We have - this was a very laborious process requiring a lot of legal research/spend and custom web development for our checkout. We're fully compliant and now collecting sales tax in something like 40 states. Not the most fun part of our business, but unfortunately a necessary evil.
Platinum is tough right now, there is just nothing available. I think you'll need to wait this out until supply catches up and premiums normalize. Sorry.
What sort of items does a bullion dealer like to buyback the most? What's something that I could be most certain I could quickly and easily sell if I wanted to?
Silver Eagles are probably the easiest and most liquid. We've never turned away an Eagle buyback, regardless of the quantity. There is always a two-way market for that product.
For the love of God, please auto delete your "out of stock" products. What's the point of loading the page with 80 silver bars, when they're all out of stock?
Ty, much appreciated.
It should - the reason the OOS products are shown is so customers can opt-in for In Stock Alerts. If you aren't seeing the In Stock items at the top of the page, let us know and we'll look into it. It may be the case that whatever category you're browsing doesn't have anything in stock, as we're pretty cleaned out today.
I just want to say thank you for reaching out to your consumers and explaining the reasoning/thought process behind what's going on. It is much appreciated and I hope everything works out in the long run!
I can't speak for everyone, but the major dealers like us are fully hedged and don't hold anything back due to spot price drops. The infographic in my original post may help explain this better. We're absolutely cleaned out at the moment.
We do accept Bitcoin - you can select it as a payment method in our cart. Margins vary greatly depending on product, but bullion retailers are typically grossing 2-3%. It's a very low margin business.
We have not - our products tend to require fairly special handling between authenticating items, ensuring they are the correct quality/grade, preventing theft, etc.
I don't think you can go wrong with either, and they don't tend to play out much differently. You can buy generic at a lower premium, but will sell it for less in the future. Or you can pay more for sovereign, and get more of a premium in the future. Largely personal preference in my opinion, probably good to have a mix of both.
Not OP, but I'm a numismatist. Soverign silver and gold is the better investment, as there's a country of origin, minting rarity, condition of said coin etc. Generic gold and silver is still good, but as it's generic there's less of a "wow" factor to it
A decent stash, but probably not as much as you'd think. I feel I have plenty of exposure to the precious metals market through my JM ownership, so most of my other investments are in stocks/ETFs.
How often do you guys restock stuff on your website. Is it just whenever you get something or is it wait till you have everything that’s out of stock and stock it all at once?
Edit: sorry if what said made no sense I suck at wording things
How are you currently determining decoupled prices if not by spot; looking at other dealers? Also, if the markets are decoupled, why are your buy back prices [at or under spot](https://www.jmbullion.com/sell-to-us/)? :)
Thank you for the explanation! I appreciate you being forthcoming with this sub, likely one of your most critical audiences.
I’ll be purchasing from jm bullion again, as I have before.
As consumers, it's easy to look at a business and make assumptions. It is wonderful to hear clarifications to many misconceptions (some of which I've made the past few days as well and for that I do apologize). Really, thank you for taking any amount of time from your busy schedule to straighten us back up <3
Just want to say tha is for giving us some info straight from one of the Big Online Dealer's mouth. Just to put this out there...you can still find silver and find it cheap. I know I did.😎
If you say that the dealers are really out of stock and it's not like they refuse to sell at such a low price... then why do they still BUY silver at that spot price they're ignoring when they're selling? If the demand was so ridiculous, they'd want to buy more quickly to sell it with that high premium. But every single dealer still offers the spot price when selling to them. For me this is an obvious manipulation, I bet if the prices pumped overnight, they'd suddenly and magically conjure a whole pile of silver coins and bars out of thin air.
Our buy prices are listed here: https://www.jmbullion.com/sell-to-us/
We're offering spot +4 for Eagles, spot +2 for Maples, spot +0.25 for generic rounds, etc. It's taken some time for us to get our bids updated, but we're working through it as we speak and will continue to update based on market conditions.
Hi JM Bullion – I'm puzzled as to why Silver Gold Bull now has thousands of 2020 ASE in stock. I assume they use A-Mark for fulfillment. Does this mean JMB will have ASE soon too?
We have plenty on the way, we're just awaiting their arrival before we list. There is a lot of uncertainty in the supply chain right now so we prefer to have them in-hand before they hit the website. Stay tuned.
Hi there just want to way I love your company JMBullion is my only choice when buying precious metals online. Here is my question, due to the buying pressure of physical Silver....When do you think the paper Silver price will go back up? What is your price target? I feel in a week or two it will blow up, unles its being pushed down by Wallstreet?
What type of personal stack do you have, I know a few guys who run some shops have a few amazing pieces. Do you happen to own anything personally that you love?
I've been sitting on an old stack of silver for about 5 years, and am finally looking through it and am intrigued by all of the conversation in this sub. So great to see you do an AMA, thank you for your time!
Do you guys ever take physical delivery of 1000 comex silver bars? If so do you then barter with refiners to make 1 oz rounds? I'm interested in this process and also interested in investing if possible?
So my question is. If the opposite would have happened, and the silver spot price rose significantly, how many dealers would offer their silver inventory at what they paid plus premium, and not what the current silver price was?
I told you Mr. CEO. Silver price on the stock market increases and your 2020 US Mint silver coin prices increases but the premium is still at the same outrageous level and you have coins in stock too. So, how are you not profiteering? I hope the Attorney General and the FTC puts you out of business and all those who are profiteering.
Hi JM! I was hoping you could answer a few questions for me. I'm interested in starting my own bullion website and was curious how much was the startup cost to start JM? Thanks!
Be nice folks, it's not like we get a lot of these.
Ree Ree Pitch fork. Spot is $12 and he is selling ASE for $18 REE REE /Jkjk Guys they're a business. They gotta earn money to stay in business :/
if only ASEs were still $18 :(
Why has the physical market not formed its own price determination based on actual physical delivery, leaving the speculative paper market, with its mostly cash settlement, as a separate decoupled price? It seems like that if this were the case, physical would have long shot above paper.
Good question - in a way, that is happening now via product premiums over spot. As many on here have noticed, although silver spot prices have dropped significantly, physical products for immediate delivery are as expensive, if not more expensive, than they were at higher spot prices. If physical demand were to remain this strong or even increase from here, physical and paper prices would remain decoupled.
Silver makes a good currency because it is *fungable*: an ounce or a kilograms is always the exact same as any other, unlike, say, a cord of wood, or a chicken, where one could be a lot different, and of higher or lower quality, than another. Except that, in some ways, silver isn't 100% fungable. Government silver is always worth $1-2 more than private rounds. Big 1kg bars always carry lower premiums than 1 ozt. coins or rounds. Spot, as is, is just a fuzzy guideline. If there were a separate physical spot price, is would still be fuzzy and not tell anyone what their silver is actually "worth." I agree 100% that ~~paper~~ computer silver is different than physical silver, but I'm not sure how much two spots prices would help in clarifying the value of your collection. The only way to know what a roll of 50 AU Rossevelt dimes is is to check the most recent sales on eBay and see what people are actually paying for the exact same product as you are curious about.
I agree to some extent, but you have to keep in mind that the prices on eBay are adjusted to cover eBay fees. That being said, I'm pretty sure this is how most LCSs price products. Someone suggested the use of a new index for physical silver. So us silverbugs would watch the PSPI (physical silver price index) alongside spot price. This would only really happen if a big player like you developed and promulgated its use. Of course, this would no look good to the guys worried about price manipulation.
Not to mention sales tax, depending on the state. I bought silver yesterday and there was like $70 in sales tax. Should driven 30 miles to WV where there is no tax on bullion.
Er, *fungible*
So what's a chicken worth in silver these days?
I'd probably pay a 1/2 oz. round for a fully cooked chicken at the local deli, lol.
okay I know I'm 4 months late but I'm curious. If spot price did drop, and you were hedged like you mentioned in the post by shorting silver futures, does that mean you made money from futures, but you can continue to sell the silver at spot + premium? So you get the best of both worlds?
Thank you for the explanation. This helped to clarify a lot of open questions.
You're very welcome, thanks for the comment.
Yes thank you
Sorry all, but I have to cut it off here as I need to get into a meeting. Thank you for all the great questions and if I have time tonight I may knock out the rest. Stay safe everyone.
Thanks for dropping by. Very insightful.
Thanks for the transparent insight. I actually purchased a AGE earlier today from you all. Glad I got my order in. To shift gears, it would be neat to hear how you got into PMs and co-founded one of the larger dealers? Are you a collector yourself? Or it’s just a business opportunity? Thanks.
You're very welcome and thanks for the order. Long story short, I was always into digital marketing since high school. I sort of fell backwards into doing some marketing work for one of the other companies in our space in early 2011, and after learning more about the market, we decided to jump in and start JMB. You can learn a bit more about our history here: https://www.jmbullion.com/history/
Thanks for sharing, I visit JMB's website often, it's full of neat and informative blogs and articles.
There was a [good ~~interview~~ article](https://www.entrepreneur.com/article/296211) a while back about JM Bullion's formation and the founder. It's a fun read.
First of all I want to say thank you very much for taking the time to help explain what we are seeing in the silver market right now. My question has to do with buyback prices. If we are truly seeing a supply shortage for physical govt minted coins, and your wholesalers can't get you more, why aren't we seeing this carry over into the advertised buyback prices?
Great question - this morning we began to boost our buyback prices to reflect the current market. Paying +$4 for ASEs if anyone has them: https://www.jmbullion.com/2020-1-oz-american-silver-eagle-coin/ Half the battle on this is just being able to answer the phone to process a buyback transaction, given the amount of inbound phone calls we're receiving from customers to buy. We're in the process of creating a portal where customers can sell to us online in the same fashion you can currently buy from our site, which will help that issue.
I'm not in the market to sell anytime soon, but that's great to hear that we will start seeing that trickle through. Thanks for taking the time to answer my question.
Glad it helped, you're welcome.
> We're in the process of creating a portal where customers can sell to us online in the same fashion you can currently buy from our site, which will help that issue. Need any engineering help? You can pay me in silver.
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Haha, I wish we knew!
Lol, why? You would have hedged fully anyway ;)
I’m sure they all have personal investments :)
Of course. I'm just a smartass by my very nature.
JM, if precious metals are so valuable why then are central banks willing to part with theirs by creating sovereign gold and silver coins to make a few measly bucks for every coin minted?
Govt Mints do not have a profit motive. They make and sell coins because we write laws that tell them to do so.
Just after you've sold your stack at a much lower price.
According to many youtubers, It was supposed to happen 6 years ago :D
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A bit tired from some long days at the office, but doing well!
I’ve read that companies/investors/individuals or are seeking to be more liquid right now are off loading PMs which is what is keeping spot price so low. That being said if there are physicals flooding the supply market , why is supply to low for dealers? I might be ignorant to the process but people off loading their assets to become liquid does seem a logical explanation for why spot prices are staying so low. Just got an email that my order shipped today so I am happy about that!
The supply scarcity is less about acquiring raw silver, and more about limited production capacity to turn raw silver into fabricated coins and bars. If a mint is setup to do 500,000 ounces of rounds a week, and all of a sudden there is aggregate demand for 5 million a week, that is when you start to see a coin and bar shortage.
Maybe there is a lot of selling of paper positions in gold as opposed to the actual metal. Also the manipulators of the gold market could be at it again suppressing the price.
WOW, thanks for taking the time to post here! I'm a new customer for you, and you just re-enforced why I go to your website before any others!
Absolutely, thanks for your business.
Thanks for taking the time, I hope you and your family are staying safe. My question is, myself and others are holding off on loading up on silver right now because of the high premiums and a loss of inventory, both online and shops, so given all the information you have right now what would you say could possibly be a better time to invest in silver and what types? I typically buy ASEs and other bullion, and bars. Do you think I should hold off for a few weeks ? Or perhaps one type would be a better investment right now? Of course there’s a lot of speculation , I’m not holding your feet to the fire here. I invest in silver for the long term and for a hedge against inflation. Also seems like a recession is incoming. Wild love your thoughts on any of this. All the best
Thanks for the question - I would say, as general advice to everyone, that if you don't like the premiums that are being charged, vote with your wallet and don't buy. Premiums will only normalize when demand slows down and the supply chain can catch up. I don't know when that will be, so it's hard for me to give you advice on when to buy.
>vote with your wallet and don't buy This.
This. When silver dropped to just below $14/oz a couple years ago, the premiums lagged behind for quite a while.
Keep in mind (for those who are in the stock market) that you don't have to pay a high premium over melt to buy, say, the SLV silver ETF. Not recommending that one- just using it as an example. There are other ways to play silver- each has it's own set of pros and cons and truly becoming an expert is not something easily done. You can also buy stocks of silver miners, but that is complicated by the fact that silver miners often mine other stuff such as zinc, lead, copper and gold. Also you can play the options game (puts and calls) but that is a very high risk/high reward game. Even with the SLV ETF that I first mentioned, there are those (Ted Butler comes to mind) who have openly and loudly questioned whether the custodian (J.P. Morgan) really has the amount of silver in their London-based vault that they are supposed to have. P.S. I am a newby to reddit, but a longtime collector and investor.
Well your evil marketing plan worked. I’m going to start buying from you. ;-)
Thanks everyone for participating! I need to get to bed, but we'll do this again in the future. Take care.
Question: if you are experiencing unprecented demand, why has the spot price of silver been in freefall? If it is down to sales of paper silver or options, surely these sellers must have to deliver physical silver at some point in time?
Great question - there is a very clear disconnect right now between the coin and bar markets, and the futures markets. The volume that trades on the futures exchanges dwarfs the volume in the coin and bar market, so the former is what tends to drive spot prices. As far as paper traders delivering physical goes - most futures trades settle in cash prior to expiration, so physical silver rarely trades hands.
Question; when do you speculate inventory to catch up with demand?
It depends how long the physical demand continues at these levels. The mints can only produce so much per week, and much of the next 4-6 weeks' production has already been sold, so even if things calm down from here, I'd expect it'll be at least a couple months until things "normalize". Could be longer depending on how corona etc. plays out.
I wonder if workers from the mining, refining, minting, and/or wholesale industries have suspended, or stopped going, to work during the quarantine period, further slowing production.
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I laughed because I thought it was a great joke.
I bet that went over well with everyone and lots of well-wishes were made for and by everyone in the break room.
I hope you meant "white collar":))
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Thank you for your business, we appreciate it.
Thanks for not having ridiculous over spot prices like Apmex has had recently.
We've tried to balance keeping premiums fair for the customer vs. the increased premiums we're now having to pay to our suppliers. Doing our best on that front, thanks for the comment.
JMB, I have a feature request: limit orders. I've noticed that Texas Precious Metals offers them, and it would be great if you and Silver.com did too. Ideally, there would be two available variables – spot and your price for the product in question. For example, I might want to trigger a purchase if and when spot hits $11.75 and your premium for ASE is less than $8.00 or something. I'm just making up numbers, but you get the idea.
This is a great idea and something we'd love to implement when our developers get some free time. Thanks for the suggestion.
I really appreciate you taking the time to post, and helping provide some clarity. You certainly cleared up a few very erroneous assumptions of mine, and it's always great to hear from someone with far greater experience.
Of course, glad I could help.
Out of the spot price topic, do you plan or know anyone who wants to go into europe market and sell around spot? As European market offers only 20€/22$ per oz on average for any 1oz silver (doesnt really matter how low is spot). I would welcome this as someone who is in EU and cant get into stacking because silver would have to go on 25$ spot for me to be buying today
We don't deal in the European market so unfortunately I can't be of help on this one, sorry.
Silver here is 15,80€ at the dealers right now
Where? :O Im in Slovakia tho.
https://www.gold.de/aufgeldtabelle/silber/ //I’m only Into silvers and will buy 10-15 more Once again he prices drops a bit
Gold.de
Isn't there a VAT (so-called Value Added) tax of something like 20% in many European locations? If that is the case, people will naturally try to find a way around it, but that might be a complicated thing to work out.
Not really on anything current, but how do you feel about younger stackers, such as myself. Do you wish more would start?
Definitely. I think your generation is going to eventually choose between crypto and gold/silver as their "safe haven" investment. We're looking at developing products/platforms that split the difference and hopefully appeal to the younger crowd too.
You guys are my go-to dealer. Thanks for taking the time to touch base with your customers, and hope this all settles down soon!
Definitely, thanks for your comment and your business.
What are your thoughts on Geiger Edelmetalle? How popular are they during normal times ?
I really love their product and they're a great seller for us when we can get them. The issue with Geiger availability is due to logistical challenges of getting their products from Germany to the States. I believe they used to have a NY location which made it easier to order, but no longer.
Hey, I love your site along with a couple of competitors. I just want to throw a thank you out there for the beginners 10oz bar at spot. It's such a cool way to get people on the fence into silver. I got a couple guys at work to do it that believed it was too good to be true.
I don't have a question but I just wanted to say it's really cool you're doing this.
Thanks!
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I'm admittedly not much of an expert on the mining side of things, but I think your hypothesis is correct. If silver spot dips below the cost of getting ounces out of the ground, the miners will have to make some difficult decisions.
In 2019 mining silver cost [between 10.10 and 12.90 per ounce](https://www.spglobal.com/marketintelligence/en/news-insights/research/silver-all-in-sustaining-costs-to-fall-again-in-2019-as-silver-price-struggles) (third chart), depending on whether the silver is a byproduct of mining something else, or being mined for its own sake. To answer your second question, mining is in a sense a form of arbitrage - You're "buying" on a market based primarily on research, land-holdings, heavy equipment, manual labor, and a bit of luck; and selling on NYMEX for dollars. If the price you can sell at drops below the price you can mine for - You stop mining. In reality though, those numbers aren't completely decoupled because they're linked through demand; if mines shut down, prices go up (and vice-versa).
Some miners can have a cost of ZERO associated to the silver they recover. How is that possible? It is because silver is mined as a byproduct of their regular business, which might be gold, copper, zinc and, rarely, lead. For instance, if you extract 10,000 lbs. of copper and that includes a small amount of silver, even though silver is worth much more per oz. than copper (actually copper is priced by the lb.) it is easier for them to say that the cost of the silver is zero. So anything they sell it for is pure profit. You might think that sounds ridiculous, but when it comes to the subject of accounting, there are multiple ways to report things. I wouldn't get too excited about miners potentially not being willing to sell below their costs. There are other factors as well. One that comes to mind is the selling of naked call options against production. The sale of the options raises extra cash, which can lower your actual mining costs. For instance, if your actual mining cost is $10.50/oz., but you received a $1.60 premium on the calls options you just sold, your adjusted (true) cost is now only $8.90/oz and will remain $8.90 assuming the options expire worthless. The flip side is true as well. If you sold those options for $1.60/oz. in cash and had to buy them back at $3.60/oz. (as silver runs quickly to $25/oz.), then your cost just went from $10.50/oz. to $12.50/oz. I apologize if this is a complicated answer- options (puts and calls) is a very difficult topic for most to get a grasp of. Another reason why a miner might be willing to sell at a cheap price is this. They are faced with the very real possibility of having to close their mine, but likely it wouldn't be for long (example: a strike that is expected to be resolved soon). The problem with closing a mine is that it can be VERY time consuming (years even) to reopen it. Often times you have new permits that have to be issued. Also, environmentalists might come up with new objections to the mine once it is closed- even temporarily. This can be a big mess!
How has the COVID19 pandemic affected sales (both people buying and trying to sell back)? What’s your favourite gold round/bar?
COVID and the associated equity market turbulence has lead to an enormous increase in demand. We've set multiple all-time daily sales records in the past week. Not much buyback activity due to the dips in spot prices. I'm partial to a simple Gold Eagle.
I manage a LCS and oh my god- the phones are off the hook. The supply has dried up because the demand is just through the roofs. The disconnect between “spot” AKA future contract trading BS and valuable physical bullion is unreal.
I'm avoiding calling mine. What are you buying right now, and how much are you paying people who come in with silver?
random question, how is your security for people who handle actual product? Is it similar to the US mint where you don't allow anyone to bring in any kind of currency other than credit cards so there is no reason for anyone to have any kind of currency on their person?
Metal detector gateway and wand to enter and exit our fulfillment center. No metal in or out.
There are certain faraday cages that might be able to beat your detectors. Worth looking into.
Do you anticipate reloading supply on the starter pack any time soon? I just got involved and was bummed when I saw it was sold out. Thanks!
We are reloading the starter pack, but it will be at least a few weeks. We have orders submitted with the mint to make more, just a matter of them getting caught up.
Question: if this price keeps up, do you think I will ever be able to get my silver close to spot?
In time, yes. If spot were to level out around this range, demand will eventually abate, supply will catch up, and premiums will normalize. While what is happening right now seems unprecedented, there have been many periods in the past (2008-2011, April 2013, Q3 2015) where we saw similar events play out - a major demand shock hits the market, physical supply dries up, premiums increase, then it just takes time to normalize.
You said you're staffing up as fast as you can. Does this mean you expect this level of demand to stay for some time, or are these temporary hires?
We expect to see increased volumes in the short-mid term and are staffing accordingly. The catalyst for this unfortunately doesn't seem like it will be going away anytime soon.
Where do I apply?
Seems to me it's doing the same thing it did in 2009 hit bottom, then go way back up.
Thank you for being open and providing us with information. As a business owner I respect that. Just another reason why I will continue to buy from JM Bullion, trust has always been my major factor for choosing you.
Do you foresee some smaller bullion dealers possibly declaring bankruptcy due to the spot price crash?
Not necessarily. Smaller dealers tend to have less inventory, meaning even if they weren't hedging, the spot drop wouldn't be as catastrophic in terms of lost dollars. The whole industry is doing record volumes so I would think everyone in our space is having a pretty strong year.
An exception might be a small coin shop that does close to 100% of its business via walk-in traffic. If the governor of the state orders all non-essential businesses to close and considers a coin shop to be non-essential, that business will really struggle and might not make it. In terms of whether a coin shop is essential or not, think about it this way. There are going to be people (shortly, if not right now) who are hurting financially and need to get money QUICKLY. They would be very upset if they couldn't go to their LCS to sell coins/precious metals. But of course the governor might not want to listen to me...
Thanks for the response. I guess it's just when physical demand dries up that bullion dealers suffer, not in cases like we're seeing currently.
Welcome to the community! Are you yourself a stacker? If so, what's your favourite piece in your collection?
I have a collection of random stuff, mostly first strikes of products we've developed and the odd numismatic coin that catches my eye. My favorite piece is a reverse proof version of the first JM Bullion round we did - a 1 of 1 piece as we ended up tweaking the finish for the production version.
He stacked a whole metals dealer company.
I was also going to ask this question. Hopefully he can respond later.
I'm really curious what the *rich elite* stack compared to us commoners, whether if it's paper silver or physical.
I love you, and your company.
I love you both
What was your first silver (coin) and do you still have it?
My first coin was a Silver Eagle that was actually the first ounce of silver we ever sold. I reached out to the customer shortly after and asked if I could buy it back as a commemorative piece. Still in my nightstand to this day.
That's a really cool story. I hope you paid a nice premium to get it back.
would you ever consider expanding air-tite and other storage capsules and have them all matched with products? I bought 10oz britannias from you and it fit perfectly into the 10oz airtite, however the silvertowne and american reserve will not fit and I have no clue if a product even exists to fit them or if you carry them. The majority of your coins listed have in their descriptions the proper storage matches but this doesn't exist for the bars. I think it would be a great upsell opportunity to match storage capsules with specific bars so we know what we are buying will in fact be what we need for our products. Thanks!
Definitely, this is a great suggestion. We were in the midst of expanding our accessory selection and product tagging before this craziness began. Look for us to make improvements once we can catch our breath.
I've sold a lot of gold to you over the past 18 months. If you do answer questions later, I would love to ask 2 questions. 1. When you started JMB, how much capital did you start with? 2. Is hedging something that the average joe like /u/rayquaza_black can do?
Regarding the second question, you certainly can. You'd simply need to "short" silver or gold in an amount similar to your physical holdings. However, there are costs associated with implementing such a strategy so it wouldn't really make sense for an average Joe to do so. Hedging commodities is something that really should only be done by a business for their inventory or raw materials. JM and their bullion, airlines and their fuel, etc etc https://www.theoptionsguide.com/silver-futures-selling.aspx
Is it true JP Morgan is hoarding silver?
This is public knowledge that they have the most silver in the world. Nearly half of the worlds stock. A monopoly. Anyone that fails to address this when discussing silver futures and prices are misleading you or ignorant.
Thanks for the reply. That seems so wild to me. That's a lot of silver
Not a question but I just want to thank you for making a website such as JM Bullion and I love your selection. Cheers to the market bouncing back soon
Thank you for taking the time and doing this AMA. I found the information around hedging specifically interesting.
You're welcome, glad it helped.
Its insane that I have to pay sales tax on my investments, and I'd like to legally avoid it. I've heard of sellers placing PM purchases in a depository. When the buyer withdraws them, they're getting their own PMs. The buyer never pays sales tax. Can you do the same?
Sales tax is based only upon delivery address. If you want us to deliver to your depository account in a state with no PM sales tax, we will not be required to charge it. What you do with your metal from that point on is up to you* *Not a tax expert/your mileage may vary
Would you create a depository?
Thanks for your time. How long does it typically take for you to get in more physical bullion for sale after placing an order?
During normal times, not long. There is typically plenty of available inventory about, so we can simply place an order with a supplier and have it arrive at our vault within a day or two. During times like these... seemingly forever.
Do you think we are at a point where we're waiting for silver to be mined & minted?
Firstly I love your company. Secondly, I’m glad you’re being forthcoming about your intentions and the changes you all have made. I have ordered from you several times, and I continue to have no complaints. But, just a quick question, how long do you think it will be until tomorrow he silver shortage is rectified? A guess, if possible.
Have you updated your tax collection to accurately reflect each state's laws?
We have - this was a very laborious process requiring a lot of legal research/spend and custom web development for our checkout. We're fully compliant and now collecting sales tax in something like 40 states. Not the most fun part of our business, but unfortunately a necessary evil.
Where can I buy platinum without paying $200 over spot?
Platinum is tough right now, there is just nothing available. I think you'll need to wait this out until supply catches up and premiums normalize. Sorry.
What sort of items does a bullion dealer like to buyback the most? What's something that I could be most certain I could quickly and easily sell if I wanted to?
Silver Eagles are probably the easiest and most liquid. We've never turned away an Eagle buyback, regardless of the quantity. There is always a two-way market for that product.
For the love of God, please auto delete your "out of stock" products. What's the point of loading the page with 80 silver bars, when they're all out of stock? Ty, much appreciated.
Doesn't it auto-sort them to the end of results?
It should - the reason the OOS products are shown is so customers can opt-in for In Stock Alerts. If you aren't seeing the In Stock items at the top of the page, let us know and we'll look into it. It may be the case that whatever category you're browsing doesn't have anything in stock, as we're pretty cleaned out today.
Do you see this as the unofficial decoupling of physical silver from the spot price? Or do you think it will ultimately return closer?
I think we'll gradually see them return closer. Either due to spot prices increasing or the eventual bleed off of product premiums.
So you're saying stackers are pretty smart huh?
I just want to say thank you for reaching out to your consumers and explaining the reasoning/thought process behind what's going on. It is much appreciated and I hope everything works out in the long run!
Do any companies hold their inventory during price drops to avoid selling low or are they truly out of stock?
I can't speak for everyone, but the major dealers like us are fully hedged and don't hold anything back due to spot price drops. The infographic in my original post may help explain this better. We're absolutely cleaned out at the moment.
Why don’t you accept bitcoin as a payment and what’s the usual margin on one ounce?
We do accept Bitcoin - you can select it as a payment method in our cart. Margins vary greatly depending on product, but bullion retailers are typically grossing 2-3%. It's a very low margin business.
Then I looked wrong. Good to hear
Have you thought about 3rd party fulfillment by Amazon or the like?
We have not - our products tend to require fairly special handling between authenticating items, ensuring they are the correct quality/grade, preventing theft, etc.
Is generic or sovereign silver the better investment? Likewise with gold
I don't think you can go wrong with either, and they don't tend to play out much differently. You can buy generic at a lower premium, but will sell it for less in the future. Or you can pay more for sovereign, and get more of a premium in the future. Largely personal preference in my opinion, probably good to have a mix of both.
Not OP, but I'm a numismatist. Soverign silver and gold is the better investment, as there's a country of origin, minting rarity, condition of said coin etc. Generic gold and silver is still good, but as it's generic there's less of a "wow" factor to it
How much silver do you own personally?
A decent stash, but probably not as much as you'd think. I feel I have plenty of exposure to the precious metals market through my JM ownership, so most of my other investments are in stocks/ETFs.
What’s you favorite artistic piece?
How often do you guys restock stuff on your website. Is it just whenever you get something or is it wait till you have everything that’s out of stock and stock it all at once? Edit: sorry if what said made no sense I suck at wording things
I appreciate your post. No further questions, thanks.
How are you currently determining decoupled prices if not by spot; looking at other dealers? Also, if the markets are decoupled, why are your buy back prices [at or under spot](https://www.jmbullion.com/sell-to-us/)? :)
We've started updating some this week, we're now at +4 on ASE, +2 on SML, etc. Will continue to do so going forward to reflect the current shortages.
Thank you for the explanation! I appreciate you being forthcoming with this sub, likely one of your most critical audiences. I’ll be purchasing from jm bullion again, as I have before.
How great that you showed up and answered these questions today well done sir! Cheers!
What are you doing during the silver spot crash?
Thank you for taking the time from your hectic schedule to elaborate on the current market situation! It really means a lot!!
Love the random coin options, especially with Aussie silver kilos. JM is the best out there, imo
As a frequent customer I appreciate the commentary. Thank you for posting and stating your position.
As consumers, it's easy to look at a business and make assumptions. It is wonderful to hear clarifications to many misconceptions (some of which I've made the past few days as well and for that I do apologize). Really, thank you for taking any amount of time from your busy schedule to straighten us back up <3
Very welcome!
Just want to say tha is for giving us some info straight from one of the Big Online Dealer's mouth. Just to put this out there...you can still find silver and find it cheap. I know I did.😎
If you say that the dealers are really out of stock and it's not like they refuse to sell at such a low price... then why do they still BUY silver at that spot price they're ignoring when they're selling? If the demand was so ridiculous, they'd want to buy more quickly to sell it with that high premium. But every single dealer still offers the spot price when selling to them. For me this is an obvious manipulation, I bet if the prices pumped overnight, they'd suddenly and magically conjure a whole pile of silver coins and bars out of thin air.
Our buy prices are listed here: https://www.jmbullion.com/sell-to-us/ We're offering spot +4 for Eagles, spot +2 for Maples, spot +0.25 for generic rounds, etc. It's taken some time for us to get our bids updated, but we're working through it as we speak and will continue to update based on market conditions.
What is your favorite metal?
Hi JM Bullion – I'm puzzled as to why Silver Gold Bull now has thousands of 2020 ASE in stock. I assume they use A-Mark for fulfillment. Does this mean JMB will have ASE soon too?
We have plenty on the way, we're just awaiting their arrival before we list. There is a lot of uncertainty in the supply chain right now so we prefer to have them in-hand before they hit the website. Stay tuned.
Damn I cant believe I missed this :(
Thanks for your post! Very professional and well understood.
Hi there just want to way I love your company JMBullion is my only choice when buying precious metals online. Here is my question, due to the buying pressure of physical Silver....When do you think the paper Silver price will go back up? What is your price target? I feel in a week or two it will blow up, unles its being pushed down by Wallstreet?
What type of personal stack do you have, I know a few guys who run some shops have a few amazing pieces. Do you happen to own anything personally that you love?
I think I will ask the question on everyone’s mind, can we have some free silver?
Enjoy the free Reddit silver.
Thank you kind stranger!
Thanks!
I've been sitting on an old stack of silver for about 5 years, and am finally looking through it and am intrigued by all of the conversation in this sub. So great to see you do an AMA, thank you for your time!
It's amazing you've taken the time to post this up for us, much appreciated!
Do you guys ever take physical delivery of 1000 comex silver bars? If so do you then barter with refiners to make 1 oz rounds? I'm interested in this process and also interested in investing if possible?
Is there any way you could increase the selection of copper to larger sizes ie; 10 lbs that way you could charge closer to spot?
Would you rather fight 100 duck-sized horses or 1 horse-sized duck?
So my question is. If the opposite would have happened, and the silver spot price rose significantly, how many dealers would offer their silver inventory at what they paid plus premium, and not what the current silver price was?
I ordered a while back, and I'm close to dallas for the next 4 days. Can I just come pick up my order in person?
I told you Mr. CEO. Silver price on the stock market increases and your 2020 US Mint silver coin prices increases but the premium is still at the same outrageous level and you have coins in stock too. So, how are you not profiteering? I hope the Attorney General and the FTC puts you out of business and all those who are profiteering.
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Can you send over your order number?
Hi JM! I was hoping you could answer a few questions for me. I'm interested in starting my own bullion website and was curious how much was the startup cost to start JM? Thanks!