17 November 2014

Gold & Silver Product Availability & Premiums

With the recent price drop and rise in demand of physical silver and gold products we would like to update everyone on the current developments.

In general there is a waiting time on almost all gold bars above 20 grams and Krugerrand gold coins. The South African Mint who mints the Krugerrands messed up two batches of coins which adds to the delay. The gold bar manufacturers need some time to ramp up production.
 
Always the same: Prices fall + Demand rises = Premiums rise
In the article „The Secret to Physical Gold...“ we showed how tiny the gold and silver market for physical bars and coins is. Because of lower prices, CelticGold order volumes increased by 500% over night. This is the same for almost all bullion companies in Europe. Buying got a bit slower in the last days which allows us to take a breather.
 
We had quite a few customers that asked why premiums rise. The first thing to know is that whenever prices fall premiums have to rise as production costs remain the same. It‘s an equation.
 
For example: 
Silver Spot Price
Production Costs
Premium
10.00 Euro
1.50 Euro
15.0 %
20.00 Euro
1.50 Euro
7.5 %

 

The reason why it doesn‘t show with gold is because of the ratios. Say minting a gold coins costs 25.00 Euro and the gold price trades at 1,000 Euro = 2.5% premium. If gold goes down to 900 Euro the premium rises to 2.78%. A 0.28% increase.
This is the reason why the premium change is more noted with silver than with gold.
Next to the mathematical formula premiums are always on the rise when shortages appear. Many bullion companies that have inventory and are not hedged need to raise premiums in order to not loose money. 
Big bullion banks where inventory and supply is depleted need to buy in the secondary market where premiums are higher in general. And in order to get inventory many agree to pay higher prices.
The premiums for a 1oz gold coin in October 2008 rose to 35% due to high demand. But people didn‘t care as they wanted to get their hands on physical gold. For example , 1 ounce traded at 650 Euro buying price (incl. premium) at that time.
CelticGold Product Availability & Premiums
We needed to raise premiums on gold bars and coins as we can‘t get them in at the lower premiums. The premium with silver coins except Maple Leaf and American Eagle (the 2014 Eagles are sold out with the US Mint) remains low given the circumstances.
 
We have good availability for Britannia silver coins and enough stock for Philharmonics. We should be able to reduce waiting times from 2 weeks to 1 week for most of the products by mid next week.
Prices are guaranteed with CelticGold

Even if you buy a product that has a displayed delivery time you can be assured that we have secured the allocation and your price is guaranteed. Obviously payment needs to clear within 3 working days.
 
We thank you for your business.

Author: celticgold.eu

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