Auction Closed: 25 silver 100 oz. bars, JM or Engelhards
(List of final bids!)
Silver Stock Report
by Jason Hommel, August 29th, 2008
For interested silver
investors, here are the final bids, showing depth of bids and overall
market interest.
http://silverstockreport.com/2008/auction.html
Final bids:
$4.01 over spot, for the lot.
$3.76 over spot, for the lot.
$16.31 per ounce for
the lot. (This is about $2.55 over spot now, at Friday's fix of $13.76/oz.)
$16.01 per ounce
for the lot. (This is about $2.25 over spot now, at Friday's
fix of $13.76/oz.)
$2.00 over spot for the lot.
$1.95 over spot for
the lot.
$1.85 over spot for the lot.
$1.75 over spot for 1/2 the lot. (partial lot
bids not wanted)
$1.60 over spot for the lot. -- bid withdrawn due
to "lack of disclosure of the process". I don't understand that,
because I disclosed everything except the names of other bidders,
something even ebay does not disclose.
$1.00 over spot for the lot.
They say that an auction like
this is 9.5 times over subscribed. In other words, there were buyers
who were willing to buy 9.5 times as much silver as I had up for
auction.
That's expressed interest for 237
bars.
I discovered that there are no Federal Regulations for
Auctions, so any type or style of auction or rule variation is
ok. In some auctions, for many of similar items, I've seen them
change the price of the item for all participants, as follows. For
example, if 25 bars are sold, and if one bids for 10 bars at $5 over spot,
and the next highest bid is for 15 bars at $4.50, then all the bars
are sold at $4.50. In this case, since the winning bid was for the
full lot, there is no discount. However, the winning bidder and I
recognized that the winning bidder did slightly overpay. So, we
decided to split the difference between the winning bid, and the second
highest bid, which seemed the most fair. (This was new to both of
us.) So we settled on a final sales price for $3.885 over spot for the
lot, which is where we settled.
The risk in my approach, if I
standardize it, I can see, is if the second highest bid is
fraudulent. I don't think any of them are. It seems quite a
normal spread of bids. (The risk of fraud here could be if
the bidder, or I, could be inventing all of the bids, of course.)
But that's still a small risk, given that the top bidder was willing to
pay more, and my process of taking the middle of the top two bids is
a way to give a discount. The top bid was not fraudulent, he's a very
interested and solid and informed buyer who has been following the
market and is familiar with the major dealers in our industry. He
also wants to buy more bars if, or when, they become available. We
spoke at length.
The terms and style of my auction are in
contrast with the "open outcry" market approach of the futures contract
pits. But their problems are also evident; as it appears
that they have more contracts being sold than silver available for
shipment.
My approach, in contrast with the futures
market, is to not sell silver unless I see the physical. But I
goofed. I started this auction when one man claimed he had bars to
sell, and he claimed nobody would offer him a premium. I was challenged, and I "put
up". But he wanted me to pay first, for his bars. At
first, I was planning on trusting the man who had bars to sell, because he
has a shop, and that's the way they always do business. But he
contacted me. I did not contact him, asking for bars to buy, he
contacted me, wanting to sell bars at a premium that I said existed in the
market, and which he could not find.
Wondering what to do, I then
did further research, and found out I could not trust him. So,
I said he would have to send the bars first. He countered with
saying he would send half the bars, then upon payment, send the second
half. So, I may not receive his bars after all. But the
auction will still work, since I'm selling MY bars, to guarantee the
auction. I'll just end up with more cash than I have immediate use
for, and that's ok, for now.
An axiom of gold dealing is to
have others send the cash, or gold, first. That way, you are never
defaulted on payment. And avoiding default risk is key,
especially today. The ideal way would be to never fix a price,
until after payment is received!
There will be a
lot of thinking required to figure out how to optimize this free market
auction process, and to figure out if I can automate some of it
using web forms. The email approach is one way.
It is my hope
that dealers learn from my approach, and start auctioning off product to
the highest bidder, rather than forcing people to wait in lines, or
refusing orders.
Interestingly, the prices for this auction are
very close to that at ebay.com.
======
May I suggest to
Meet up other Silver Stock Report readers at YOUR LOCAL COIN SHOP, on Tuesday, September
2, at 2PM.
Suppose if all buyers during a month show up all at
once? Clearly, the shop will be sold out immediately, if it isn't
already. I think that would leave an impression on the
owner.
This will serve several purposes:
1. You
will find out that you are not alone.
2. You will impress upon
your dealer the amount of demand for silver.
3. The coin shop
owner will be more confident and more likely to raise his bids to get
silver for everyone, so it's in your own best long term interests to show
up.
4. Be prepared to network with
other buyers. Other buyers may have bars to sell if they are
retired, and "all in"; they may have to sell bars for normal life
expenses.
I suggest that everyone visit their favorite local coin
shop on September 2, at 2PM. That's Tuesday, 4 days from
now. (TWO's-Day) Easy to remember!
Sincerely,
Jason Hommel
In case you miss an email,
check the archives:
http://silverstockreport.com/ssrarchive.htm
www.bibleprophesy.org
You can buy silver in
lots of 100-500 oz. at my auctions at www.seekbullion.com
Auctions end M-Th, Sat, At 7PM Pacific, but you can place bids anytime, 24/7.
Wires only. USA Shipping only.
You can also buy silver at www.momsilvershop.com
Mom will
ship overseas, and also in lots of more or less than 100
ounces.
See us also at:
Rocklin Coin
Shop
4870 Granite Drive, Rocklin, CA 95677
http://rocklincoinshop.com/
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