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Historically Low Premiums on Bullion Now Beckon... Just Be Careful to Look Before You Leap

Holding some physical gold and silver has been a good idea for a few thousand years. That never changes. However, some moments are better than others when it comes to picking an entry point. Now may be one of those auspicious times.

Plentiful inventory and soft demand have pushed premiums for bullion products to their lowest levels in years. U.S. 90% silver coins minted before 1965 – aka “junk silver” – can now be had for less than $1/oz over the spot price.

Extremely Low Prices

Pre-1933 U.S. gold coins have also fallen dramatically in price.

Mints, refiners, and dealers are cutting prices in an effort to keep customers and gin up retail buying.

Spot market prices are still relatively low. Gold and silver got off to a good start in 2017, but overall prices are not too far off of the 2015 lows. They are well below last summer’s highs when gold neared $1,400 per ounce and silver approached $21. And they are miles beneath their 2011 peaks.

Metals prices are low relative to other asset classes. Gold and silver have spent the past few years as the redheaded stepchildren of Wall Street. Stocks, real estate, and even the flea-bitten U.S. dollar have all outperformed metals on average over the past half decade. Today these other markets are flirting with all-time highs.

Anyone wondering how much further stock valuations can be stretched and what rising mortgage rates might mean for the housing markets should take a look at gold and silver. They offer a safe-haven and better relative value.

Sentiment may be signaling the bottom is in. Investors are finding lots of reasons to buy other assets and few reasons to buy precious metals. As we’ve outlined, the high expectations around economic growth and federal reforms are not likely to be met.

The Atlanta regional Fed bank revised estimates for first quarter GDP lower once again. Economists there now expect growth below 1%. If their 0.9% projection winds up being accurate, it will take a miracle for overall 2017 growth to meet expectations.

Federal debt and deficits will persist. And bubbles pop. It is only a matter of time before investors look once again to metals as refuge and a hedge against the decline of the dollar and all the world’s fiat currencies.

For those who decide now is an opportune time to buy the monetary metals, we also suggest it is especially important to do some basic due diligence when it comes to choosing a dealer.

Buyer Beware

The slowing demand and squeezed profit margins spell trouble for the weaker operators. Probably not all will survive.

Check with the Better Business Bureau. Do an online search to see what customers have to say about dealers. Inventory is plentiful and customers should put up with zero delays on shipping for nearly all products.

If dealers are slow getting orders shipped in the current environment of ample supply, it is a serious red flag.

Always remember the lowest premium only represents the best deal if the company actually delivers your order. You want to be confident of that first and foremost.

Bullion is a very competitive business, and Money Metals is proud to be one of the best national dealers in terms of value, sales volume, and educational content. But if any dealer’s premium pricing is way below that of others, it could mean they are hurting for cash – particularly if there are other signs of trouble such as unexplained delivery delays and unhappy customers online.


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