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Silver Rises; Investors Pause

By: Jason Hommel, Silver Stock Report

-- Posted 10 February, 2009 | | Discuss This Article - Comments: Source:

Monday's auctions are always the slowest ever, and thus, the best time for you to buy.  Why is this?  Are most people just hung over from the weekend, or what?

Last night on Monday, we offered 9500 ounces in about 30 auctions, and we sold about 1900 ounces.   I mention this because I feel it's important for you to know the buying sentiment out there.  On Saturday, we sold about 5500 oz., less than a record, but significantly more.

Meanwhile, silver prices continue to march ever higher.

Again, this market seems like it is NOT driven by investor demand, not in the slightest.  Investors are still a very tiny part of the overall market, maybe 10%.  It appears as if the paper futures contract sellers remain in control.

But physical silver demand still remains stronger than it has been in 15-20 years. 

Some of my more cautious customers ask me about selling back the rounds, asking what my buy back price will be.  Well, that's the thing.  Nobody is selling.  That's why nobody has them for sale, unless they are making them new, like I'm doing.  I suppose I could offer to buy them back at about $1.00 over spot.  But again, we are just not set up to take any incoming orders to sell, since none of my readers really want to sell.  Or, they offer me high prices like $3-5/oz. over spot, thinking that will raise the price.  It will raise the price, because it means their product is basically not for sale. 

I'm a silver buyer, but the flow is only one way right now, from 1000 oz. bars, to rounds, and back out the door.  I don't hold cash to be able to buy, but I have cash coming in daily from the auctions that I could divert into buying from the public, if need be, but again, the public is not selling.

Some may think that "the spread" is bad, as I would buy silver at $1 over spot, yet sell it at $2.25 over spot.  But the spread is actually better than that, since I see some of my customers re-selling the same silver I sold them, for more money, at ebay!  So, in that sense, there is no spread, it's profits only! 

Some of my readers think that my selling silver is depressing prices.  No, it's not.   My selling is only helping to lower premiums over spot, not actually lowering spot.  As I sell silver, I continue to buy, so other potential silver buyers are denied the silver that goes into making the rounds.

Mexico strike hits Penoles silver, gold refining, Feb 9th

In my experience, these strikes generally don't seem to affect silver prices much, and are generally resolved quickly.  Penoles produces about 90% of the silver output of Mexico, which is about 90 million ounce of silver per year.  Short sellers might be concerned.

I was a bit concerned, since Penoles is one of the three best North American refiners who makes premium .9999 1000 oz. bars that I like to buy for rounds, if I can get them.  But there are other suppliers as well, and my business should not be affected, unless those who used to buy Penoles bars start buying the other bars that I'm currently getting.  I'll let you know as time goes on.

Several people, for weeks, have emailed me

It may seem like an unprofessional site, but if the counter is to be believed, it's gotten over 1 million hits.  My site only gets about 30,000 to 100,000 visits in a month.

Many people seem to be more successful at creating pages and youtube videos on the money issue that can go "viral" much better than my content, which I suppose is more cerebral and more tedious to read.  I encourage you to produce content if you can do so.  It can help put you in business, and re-sell our rounds to the public. 

We will continue to offer as many silver rounds as we can at wholesale prices.

As in most businesses, sales seems to be the most important part of any business, and to succeed in this business, you just need to be able to do a better job than I'm doing, which is not so good to be quite honest.

For tonight's auctions, we will again list about 10,000 ounces, 10 of 100 oz., 10 of 500 oz., and 4 of 1000 oz. at

Our reserve prices for 1 oz. rounds is $2.25 over spot, and spot is to be determined about an hour before the auctions close.
The price for the bars are $1.50 over spot.

We have at least 7-8 new coin designs in the works.  Again, email your suggestions to if you would like to see an idea turn into reality.

We sold out of our first Pirate design quickly.

We have a new Pirate Design that is selling well.

The primary difference between these and the Government Eagles is that these sell for much less.  More silver for your dollar is a better value.  I have found that most people prefer 1 oz. rounds over expensive alternatives, and even more than 90% bullion.  I still like the silver bars myself, and we have new Academy stackable bars, too.


    Jason Hommel


    I will be be speaking at the
    2009 Phoenix Resource Investment Conference & Silver Summit
    Feb 21 & Feb 22, 2009

    If you have never attended a natural resource show, it's a great learning experience to hear from some of the best speakers who are newsletter writers and investors in many natural resource stocks.  This year's Phoenix show is co-sponsored the Silver Summit, so many silver mining and exploration companies will be there. 

    The show is no longer free, but is $35 if you pre-register, and $70 at the door. 

    -- Posted 10 February, 2009 | | Discuss This Article - Comments:

    Last Three Articles by Jason Hommel, Silver Stock Report

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