-- Posted 29 August, 2008 | | Discuss This Article - Comments:
(List of final bids!)
Silver Stock Report
For interested silver investors, here are the final bids, showing depth of bids and overall market interest.
$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 -- bid withdrawn due to "lack of disclosure of the process".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 told him Tulving was paying 60 cents per bar over spot.) 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 sure to tell him about good sources, such as fidelitrade.com, amark.com ($50,000 minimum), wexfordcoin.com ($10,000 minimum), apmex.com, tulving.com, and others where he can buy in bulk, cheaply, if he needs to.
5. 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!
For the price of just a few ounces of silver per month, you can look at my silver stock portfolio. Once a month, at the end/beginning of the month, around the 31st or 1st, for paying subscribers, I update the stocks I own and the percent of each stock or position in my portfolio. It's very simple. Very revealing. Very useful. It's not trading advice. It's not a model portfolio. It's my portfolio. Sign up here:
Paying subscribers also get access to the member's forum where some very, very smart people discuss silver, stocks, economic issues, growth rates, why peak oil & global warming are frauds, and many other things.
-- Posted 29 August, 2008 | | Discuss This Article - Comments:
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