New Lower Low Prices
Silver Stock Report
by Jason Hommel, October 6th, 2010
A lot of people are trading in gold for silver, and we are good sellers of silver, so we convince many people to buy silver, instead of gold. This has left us gold heavy recently.
So, I decided to lower the prices over spot on all of our gold items for the lowest mark-up ever!
We have 12 oz. of unique gold items offered at 2% over spot! Items like 5 of the 1 oz. "Universaro" gold coins, minted circa 1980 when the world thought the world might return to honest money. We also have 2 of the 1 oz. "California" gold coins, 3 Engelhard 1 oz. gold coins, a 1 oz. gold bar, and a few fractional gold coins.
We have 40 Corona Gold coins which are not being minted anymore, and are hard to obtain in bulk. These contain .98/oz. of gold per coin, and are offered at 4.1% over the spot contained gold content.
Special Offer! If you would like to sell silver for gold, we will offer to buy your silver at spot, for credit for gold, minimum $2000 worth. (Offer valid for our first 150 oz. of gold sold, -- so, while the gold lasts.) (Offer valid only for 100 oz. bars, 10 oz. bars, 1 oz. rounds/Eagles.) (Not valid for 1000 oz. bars, or 90%, which we can buy for this offer at 3% under spot.)
These low prices and premiums might not last, and probably will not last.
Prices on two silver items went up this week at the wholesale level, the 10 oz. silver bars, and the 1 oz. silver Eagles.
The price you pay over spot for gold and silver is really at historic lows.
Back when silver was money, in the 1930's, the US government bought silver at 29 cents per ounce from the miners, and minted that silver into about $1.40 worth of silver coinage like dimes, quarters and half dollars that contained .72 of an ounce of silver in every $1 worth of coins. That's a 500% markup!
Imagine if the only silver you could buy today was government minted silver Eagles, available for only $100 per coin, while silver was $20/oz., and all other forms of silver were forbidden.
A silver standard is not necessarily ideal, it all depends on how that standard is implemented!
Remember, a silver quarter was approximately worth a day's wages back in 1930, and in the late 1800's, some people earned only a silver dime! The high risk, high paying job of a gold miner earned about $1 in silver!
So, not only are silver prices remaining at historic lows at $23/oz. compared to the long view of history, but also, the markup of what you pay, over the intrinsic value of the metal, is remaining at historic lows.
Buyers of precious metals today have it even better.
There is now a bullish price trend! The bullish trend will tend to pull more and more buyers on board, and continue to push prices up for years to come.
The silver market is nowhere near a top.
The Silver Institute estimates that investors purchased 137 million oz. of silver in 2009.
At $23/oz., that's $3.1 billion being spent on silver per year.
But there's over $17,000 billion in the US Banking system:
$3.1 / $17,000 = 1.8% of 1% of money going into silver per year.
Silver investment per year needs to increase 50 times more than it is right now, in order for 1% of US money to be spent on silver per year.
Of course, a few astute readers have noticed that these are understatements. The rest of the world uses paper money too, that could also be spent on silver.
But also, paper money spent on silver is not destroyed, it remains to be spent on silver again.
For example, if you buy silver from us, we don't just keep the paper money, because if we did, we'd be out of business. We buy more, cheaper, in bulk. Then, our wholesale suppliers or refiners or mints that we buy from, then do the same. So then, the money ends back up in people's pockets who could then buy more silver. It goes back out to the miners, the refiners, the scrappers, the seller of scrap gold.
Just yesterday, we had a seller of scrap gold cash it in for 15 silver rounds. Paper cash never touched his hands!
We had a customer in our shop this week who bought 20 bars of 100 oz. of silver. She said, "The best thing about silver is that it makes you feel wealthy!"
I jumped out of my seat, and I asked her further. "Did getting that much cash out of the bank make you feel like you were robbing the bank?" She answered, "A little bit. It feels like you are doing something a bit wrong."
I replied, "That's because our society has been brainwashed by over 100 years of propaganda by central bankers! The Federal Reserve was founded in 1913, but that was the nation's third central bank! An earlier one was fought and destroyed by Andrew Jackson who is now on the $20 bill. He'd be hopping mad that his image is being used as an icon on paper money!"
Enough of my ranting.
It's very rare that you can buy silver or gold for near the intrinsic value of the metals themselves. It's a rare fluke of history right now.
There was another time in the USA when this was possible, and it was in 1964 until 1968. When the price of silver exceeded the cost of the face value of the coins, the US government did the typical government actions against all free market principles, and they minted tons and tons of 1964 coins, in an effort to "cap" the market price of silver. They failed.
It's just a rare historic opportunity to be able to get silver at silver prices. Normally, under a "silver" or "gold" standard, the government marks up the coins earning a huge "seiniorage" profit of anywhere from 100% to 500%.
It is important to remember that the Seigniorage on a $100 bill is enormous, as it costs the Federal Reserve only about 4 cents to make one.
That's a 249,900% markup on the price of used paper.
4 growing to 10,000.
The Seigniorage is a key component to understand the future of the silver and gold markets. It's why the world is guaranteed to go back to silver and gold currency one day. How?
Because when the governments of the world can no longer profit by printing value on paper, they will print value on silver and gold!
And skeptics think we overcharge at 2-7% over spot? Compared to what? Compared to other dealers who take 2-6 months to deliver, and who are obviously walking bankrupt by floating on customer money? If we took 1 month to deliver, we would have the capital of an entire month's worth of trades just to play with. That's quite a big scam, and we don't do it!
With the entire silver investment market at $3 billion per year, and with an average industry profit of about 1% after costs, that leaves only $30 million in profit for the entire world wide silver investment industry. That's the profits for the honest side of the trade.
Obviously, that ignores the instant profits (and long term risk) inherent of selling $200 billion worth of silver on paper, and delivering nothing to most market participants, who are foolishly content to let banks deceive them into thinking they have purchased some sort of "silver value" when they have no value at all.
The BIS produces a report showing that the banks have a $200 billion "other precious metals" notional value liability. That's code for "silver debt"; and there's no way it can be paid when it's denominated in ounces, and when the entire world barely produces $15 billion of new silver per year.
Well, it just went down to $107 billion for Dec. 2009. Interesting development, looks like the banks covered back then as the market prices were moving up from $12 to $17 in the last half of 2009.
The profit on selling silver on paper is obviously 100% of what is sold, that's the $107-200 billion, if you don't deliver anything to the customer other than paper bank statements. (Hello US Department of Justice, that's mail fraud!) And what do the banks care if they can just get a bail out from the Federal Reserve if their trades go bad, they can just print up more $100 bills at 4 cents each! That's just another fraudulent Ponzi scheme for those with the discernment to know.
If you would like to cash in your paper silver for real silver, at the JH MINT, just remember, you still need to pay for real silver with real cash, or a wire transfer only.
In this volatile market, remember, you don't have to cash out your paper silver all in one day, especially as you may "be in cash" for up to three or four days from between when you sell, and when your money is good for a lock on silver prices.
Money is great because it is divisible.
So, spread out your trades, and move only some at one time.
Call the JH MINT to get real silver, or gold today!
I strongly advise you to take possession of real gold and silver, at anywhere near today's price, while you still can. The fundamentals indicate rising prices for decades to come.
Our Coin Shops are open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends.
JH MINT & Coin Shop, Grass Valley, CA -- our largest store, minimum $1500 to ship, USA shipping only, free shipping.
Kerri: (530) 273-8822
Mom's Silver Shop, Sacramento, CA
3510 Auburn Blvd., #12
Sacramento, CA 95821
(916) 481 5656
(Mom will ship with no minimum order size, and overseas, and take credit cards and paypal.)
Oakland Silver and Gold
3929 Piedmont Ave.,
Oakland, CA 94611