The TRUTH on Gold and Silver Spot Price and Premiums

GoldSilver Pros
4 Apr 202449:04

Summary

TLDR本视频由Gold Silver Pros的Rob Kings主讲,深入探讨了金银现货价格与市场供需动态之间的关系。他指出,现货价格并不能完全反映零售市场的供需情况,而零售溢价则受多种因素影响,包括工业和零售需求、市场流动性及地区差异等。此外,他还讨论了金银市场的季节性波动、零售商和批发商面临的挑战,以及消费者如何根据市场变化做出明智的购买决策。视频内容丰富,为金银投资者提供了宝贵的市场洞察。

Takeaways

  • 📈 现货价格是黄金和白银衍生品价格的广泛引用但被误解的指标,与实际的物理交易关系不大。
  • 🌐 现货价格主要反映的是纸张合同交易,而非实际的物理交易,尤其是在美国和英国的市场中。
  • 💡 零售溢价是根据市场对产品相对于现货价格的估值而变化的,它与现货价格脱节,更多地受到供需关系的影响。
  • 🔄 供需关系不仅影响零售溢价,也影响整个供应链,从矿工到经销商。
  • 📊 零售市场需求的波动性很大,这导致了溢价的不可预测性和价格的波动。
  • 🏭 工业需求和零售需求对现货价格影响不大,因为现货价格并不反映这两种市场的实际供需情况。
  • 🔄 零售溢价的变化受到多种因素的影响,包括供应链中的成本、仓储、分销、保险、租金、公用事业、行政管理、合规性、广告等。
  • 📈 现货价格的波动对零售溢价有直接影响,价格上涨可能导致溢价下降,反之亦然。
  • 🏦 零售商和批发商通过销售高溢价产品来提高利润,尤其在市场低迷时期。
  • 🚀 未来市场的趋势可能会看到零售客户向高溢价产品转移,以及批发商和零售商之间的进一步整合。
  • 🛒 零售买家需要对价格和产品有深入的了解,并明智地选择零售商,以确保他们能够获得最佳的价格和产品选择。

Q & A

  • 什么是现货价格?

    -现货价格是广泛引用但被误解的黄金和白银现货价格。它是通过美国COMEX交易所和英国LBMA市场的价格交叉得出的,由在这两个市场交易的银行收集信息,并通过电子接口分发给经销商、批发商和网站等。

  • 现货价格真的代表了黄金和白银的实物交易价格吗?

    -不是的。现货价格并不反映大多数实际的物理交易,无论是在工业市场还是零售黄金和白银市场。现货价格主要反映的是纸质合同交易,而这些纸质合同交易并不涉及任何实物成分。

  • 为什么不同经销商的黄金和白银产品价格会有所不同?

    -不同经销商的价格差异主要是由于每个地区的供需状况不同,以及他们所面临的成本结构(如仓储、分销、保险、租金、公用事业、行政管理、合规、广告等)不同。此外,每个经销商的利润边际也会影响他们设定的价格。

  • 零售溢价是什么,它包括哪些因素?

    -零售溢价是指消费者在购买黄金和白银产品时支付的价格高于或低于现货价格的部分。它受多种因素影响,包括零售需求、产品供应、批发商和零售商的成本(如仓储、分销、保险等)以及利润边际。

  • 为什么在牛市期间,黄金和白银的零售溢价会上涨?

    -在牛市期间,由于市场对黄金和白银的需求增加,供应可能跟不上需求的增长,导致溢价上涨。此外,价格上涨也会增加经销商的利润边际,使他们有能力提高溢价。

  • 为什么说黄金和白银市场是一个低利润行业?

    -黄金和白银市场是一个低利润行业,因为大部分时间里,批发商、经销商、矿商和精炼商的利润边际非常低。只有在市场需求和价格大幅上涨时,他们才能获得较好的利润。此外,这个行业的供应链非常复杂,涉及多个环节的成本,这也限制了利润空间。

  • 什么是PTO原则?

    -PTO原则,即帕累托原则,是指在许多情况下,大约20%的努力会产生80%的收益或效益。在黄金和白银市场中,这意味着批发商和经销商可能只在20%的时间里赚取良好的利润,而在其余80%的时间里,他们可能只是在努力维持生计。

  • 为什么说零售买家必须教育自己关于定价和产品?

    -零售买家必须教育自己关于定价和产品,因为在黄金和白银市场中,买家的购买模式是决定未来市场价格趋势和价格的关键因素之一。了解市场动态和产品特性可以帮助买家做出更明智的购买决策,避免支付过高的溢价或购买不适合自己的产品。

  • 为什么说在黄金和白银市场中,供应变化比需求变化慢?

    -在黄金和白银市场中,供应变化比需求变化慢,因为供应链涉及多个环节,从采矿、精炼到批发和零售,每个环节都需要时间来响应市场变化。例如,矿山增加产量或精炼厂扩大产能都需要时间和大量投资。而需求变化通常较快,可能受到经济波动、市场情绪或政策变化的影响。

  • 为什么说零售买家的选择对市场有重要影响?

    -零售买家的选择对市场有重要影响,因为他们的购买行为直接影响市场的供需平衡。如果大量买家倾向于购买某一类产品,这可能会导致这类产品的溢价上涨。此外,买家选择不同的零售商也会影响市场的竞争格局和价格设定。

Outlines

00:00

📢 介绍与现货价格的误解

本段落介绍了演讲者Rob Kings以及Gold Silver Pros的背景信息,并提出了现货价格这一主题。演讲者指出,尽管现货价格被广泛引用,但普遍存在误解。他强调,现货价格并不能准确反映黄金和白银实物交易的真实情况,而是基于大量数据和分析得出的理论值。演讲者意图通过本次演讲,揭示现货价格的真相,并解释价格波动背后的原因。

05:01

🌐 现货价格的全球差异

这一段讨论了现货价格在全球范围内的差异性。演讲者指出,尽管美国和英国的市场系统相似,但两国之间的现货价格存在差异。这种差异性证明了现货价格并不是一个全球统一的指标。此外,演讲者还提到了期货市场和现货市场的区别,以及它们如何影响价格的形成。

10:01

🏭 现货价格与实体交易的脱节

在这一段中,演讲者深入探讨了现货价格与实体交易之间的脱节。他指出,现货价格主要反映的是纸质合同交易,而非实际的物理交易。在美国和英国的市场中,大部分交易并不涉及实物黄金或白银的交割。因此,现货价格并不能准确反映黄金和白银的实体供需情况。

15:02

📈 现货价格的构成与误区

演讲者在这一段中继续解释现货价格的构成,并指出了一些常见的误区。他强调,现货价格并不反映实际的物理市场,而是基于期货和期权市场的交易活动。此外,现货价格的波动与零售需求的关系并不大,因为这些价格变动是基于对未来市场走势的预测,而非基于当前的物理交易。

20:02

💰 零售溢价的决定因素

本段落讨论了零售溢价的计算方式及其影响因素。零售溢价是消费者在购买黄金和白银产品时支付的高于现货价格的费用。演讲者指出,溢价受到多种成本因素的影响,包括仓储、分销、保险、租金、公用事业、行政管理、合规、广告等。此外,溢价还受到供需关系的影响,特别是零售需求对溢价有显著影响。

25:02

📊 零售溢价的市场动态

在这一段中,演讲者通过数据展示了零售溢价的市场动态。他指出,在牛市期间,溢价可能会上升,但在其他时候,溢价通常较低。零售商和批发商在大部分时间里要么处于亏损状态,要么只能维持生存,只有在市场繁荣时期才能获得较好的利润。这种现象导致了市场的周期性波动,包括零售商和批发商的破产和行业整合。

30:03

⚖️ 现货价格与零售溢价的脱节

演讲者在这一段中强调了现货价格与零售溢价之间的脱节。他指出,现货价格的变动并不直接影响最终零售需求,因为现货价格是基于期货市场的交易,而零售溢价则与实际的物理交易有关。零售溢价的波动反映了市场对特定产品的估值,而这一估值并不包含在现货价格中。

35:05

🔄 零售市场的供需关系

本段落讨论了零售市场的供需关系及其对价格的影响。演讲者指出,零售市场的供需关系是复杂的,受到多种因素的影响,包括消费者的购买行为、产品的供应情况以及市场的地域性特点。他还提到,零售商和批发商必须维持一定的利润率才能保持业务运营,而这通常通过调整零售溢价来实现。

40:06

🏦 行业未来的趋势与挑战

在这最后一段中,演讲者对黄金和白银行业的未来趋势和挑战进行了展望。他提到,行业的未来取决于未来五到十年的市场教育和理解。如果消费者对溢价和现货价格有更深入的理解,零售市场将更加稳健。他还警告说,如果市场继续经历困难时期,可能会导致更多的破产和行业整合,从而减少市场的竞争和选择。

Mindmap

Keywords

💡现货价格

现货价格是指金、银等贵金属的即时市场价格,通常由大型交易所如COMEX和LBMA提供。在视频中,现货价格被认为是一个广泛引用但被误解的概念,它并不完全反映实际的物理交易情况,而更多地与纸面衍生品市场相关。

💡溢价

溢价是指购买金、银产品时所支付的高于现货价格的费用。溢价受多种因素影响,包括供应和需求、生产成本、市场预期等。在视频中,溢价被视为市场对金、银产品相对于现货价格的估值,它与现货价格的波动和地区市场的特定条件密切相关。

💡供应和需求

供应和需求是经济学中的基本概念,指的是市场上商品或服务的可供量和消费者对该商品或服务的需求量。在视频中,供应和需求是决定溢价的关键因素,它们影响着金、银产品的最终售价。

💡纸面交易

纸面交易指的是不涉及实际物理商品交换的金融交易,通常涉及期货、期权等金融衍生品。在视频中,纸面交易与现货价格紧密相关,但并不反映实际的物理金、银交易情况。

💡市场局部化

市场局部化是指市场条件、供需关系和价格在不同地区表现出明显差异的现象。在视频中,金、银产品的溢价受到地区市场供需状况的影响,不同地区的买家和卖家面临的市场条件可能截然不同。

💡工业市场

工业市场指的是金、银等贵金属在工业领域的应用和交易,包括从矿业公司开采、精炼到制成可以交易的大型金、银条的过程。在视频中,工业市场与零售市场是贵金属市场的两大支柱,工业市场的特点是由大宗交易和期货合约构成。

💡零售市场

零售市场指的是金、银等贵金属在零售层面的销售和购买,包括各种形式的金、银币、条以及珠宝等。在视频中,零售市场与工业市场相对,它更多地涉及到消费者和小规模买家的交易。

💡市场整合

市场整合是指在特定行业内,企业通过合并、收购等方式减少竞争者数量,增强市场控制力的过程。在视频中,市场整合可能导致金、银供应和定价权集中在少数大型企业手中,影响整个行业的运作和消费者的选择。

💡市场预测

市场预测是指对未来市场趋势、价格变动等进行预估的行为。在视频中,市场预测对于零售买家来说尤为重要,因为他们的购买行为是决定未来市场趋势和价格的关键因素之一。

💡供需失衡

供需失衡是指市场上商品或服务的供应量与需求量不相匹配的情况,可能导致价格波动。在视频中,供需失衡是导致金、银溢价波动的主要原因,尤其是在市场紧张或出现危机时。

Highlights

介绍了黄金和白银现货价格的概念及其在零售市场中的实际意义。

分析了现货价格与黄金和白银实物交易之间的关系,指出现货价格并不反映大多数实际物理交易。

讨论了美国和英国市场之间现货价格的差异,以及这些差异如何影响全球定价。

强调了零售溢价的概念,以及它们是如何受到供求、生产成本和市场动态等多种因素的影响。

通过实例说明了在牛市期间,零售溢价如何变化,并讨论了这对投资者意味着什么。

探讨了零售市场和工业市场之间的供应链差异,以及这些差异如何导致价格变化。

指出了零售溢价与现货价格的独立性,并讨论了为什么零售需求对价格有重大影响。

讨论了零售商和批发商如何通过控制产品供应来影响溢价和价格。

分析了市场整合对零售买家的影响,包括产品选择和价格设定。

强调了教育对零售买家在理解和导航黄金和白银市场的重要性。

预测了未来市场趋势,包括零售客户向高溢价产品的转移以及市场整合的潜在后果。

讨论了现货价格的历史背景,以及它如何成为市场过时的遗留物。

总结了现货价格与零售供求动态的脱节,以及溢价如何尝试使市场达到供需平衡。

Transcripts

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welcome to gold silver

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Pros hi everybody this is Rob Kings with

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gold silver pros at www.gold Silver

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pros.com and it is Thursday April 4th

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2024 and a long awaited and as promised

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uh presentation on spot price that I

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promise that I would give last week I've

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been working on this for a while lots of

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data in here lots of analysis about spot

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price but the whole point of this

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presentation today is to walk you

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through what the spot price for gold and

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silver bullion is and what the spot

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price for gold and silver bullion is not

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uh some likely outcomes as a result of

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This research as well as uh maybe some

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collusions about where we're going to go

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and some caveats for you as you

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participate in the market and what you

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want to look for you have to be very

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careful uh when buying your products

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buying and selling your products in the

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market as to what other people going to

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pay what other people going to charge

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and I'm going to prove to you that

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despite the fact that we have a national

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spot price that largely an addition spot

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price the premiums that you buy and sell

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at are locally determined and not

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necessarily nationally determined and I

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we're basically going to prove that as

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much as humanly possible with data one

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of the reasons I wanted to do this

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presentation is there seems to be a lot

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of misconceptions about how prices go

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for gold and silver why they rise why

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they fall when they rise when they fall

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why products are priced differently why

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you can go to different dealers both

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online locally and get different

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premiums on things and different rates

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on different things there are all reason

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reasons for that so it's basically to

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educate on what we believe to be the

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truth based on available data versus

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debunking some common myth about how

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prices are actually determined and as

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I've become a dealer and been closer to

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the ground and closer to the public on

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this part of the conversation uh both um

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positively on on how people are are

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approaching the market and also

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negatively on how on things that people

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think they're true that aren't true um

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you know I wanted to to do this

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presentation to kind of explain how it

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all really works so this is the truth on

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spot pricing in premiums in the gold and

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silver market given orange the markets

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and the best data that we have available

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one caveat we don't have all the data

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and that's one of the points I'm going

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to use to prove to you that spot price

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means Buck kiss with regards to actual

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supply and demand especially locally uh

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but we do have some data for you on that

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and we're going to go through it so

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without further Ado let's jump into the

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presentation this presentation is called

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spot pricing and the bullion Market by

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gold silver pros and let's jump right

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into it so essentially what is spot

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really well it's believed to be and is

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the widely quoted but wholly

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misunderstood price for gold and silver

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bullion what's gold spot price today

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well at the time that I'm doing this

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video as I look on kito's app gold is at

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22950 and silver is at 2692 and that's

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of about 1:30 p.m. central Time on

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Thursday April 4th 2024 but is that

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really the price of gold and silver and

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this spot really should spot be the

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center of the universe when it comes to

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gold and silver dealing in the retail

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Market or even in the industrial Market

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well I've got issues with that but let's

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get into the presentation you'll see the

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spot price everywhere it's quoted

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everywhere but do you know what really

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goes into it do you really really know

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well this presentation is aimed at

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educating you on that because from

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speaking with you guys all the time via

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email social media in the store at

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conferences out you know in the wild

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when I get recognized and people want to

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engage me in these sometimes hourlong

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conversations you guys really don't know

play03:34

what goes into the spot price or what

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even goes into the premiums above or

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below spot we're going to try attempt to

play03:41

um educate you on that and sort of make

play03:44

that a little bit more clear for you for

play03:46

those of you that don't know do you know

play03:48

how it affects the pricing actual

play03:49

fysical gold and silver we discuss all

play03:51

those things in this presentation if you

play03:53

believe the conventional wisdom spot

play03:55

price is the intersection of pricing for

play03:57

both gold and silver across the American

play04:00

comx exchange and the UK lbma markets

play04:03

this information is collected by the

play04:04

banks that trade in both markets and

play04:06

distributed to dealers and wholesalers

play04:08

and website and everybody via electronic

play04:10

interface it's all electronic now uses

play04:12

application programming interfaces for

play04:14

the most part or you can just download

play04:16

an app and Eyeball it if you you're on

play04:17

the retail end and you just want to know

play04:19

what it is at a point in time but for

play04:20

everybody buying and selling in the

play04:22

market we all got to grab it

play04:23

electronically because that spot price

play04:24

can move a thousand times a day because

play04:27

it's based on something called uh the

play04:29

paper derivatives Market which I'll

play04:31

explain all the market participates

play04:33

quote Market participants quote it when

play04:35

talking about gold and silver that

play04:36

includes wholesalers dealers refineries

play04:38

news media industrial and Retail buyers

play04:40

etc

play04:42

etc there is a difference however

play04:44

between uh the US price and the UK price

play04:47

which we'll go over here by looking at

play04:49

this all right so resuming the

play04:51

presentation there are differences

play04:52

between KX and lbma so the reason why uh

play04:56

there uh differences in the markets is

play04:59

they're different markets lbma is an

play05:01

unallocated Market that works very much

play05:04

in an opaque way in which a lot of paper

play05:06

traded it's very private information

play05:08

it's very hard to get trading

play05:09

information off of it the comx has more

play05:11

information but it's more of a Futures

play05:13

and an options market so the models are

play05:15

different and the markets are different

play05:17

and this is the easiest way sort of at a

play05:19

top- down level to explain why you're

play05:22

going to get different pricing across

play05:24

the world there is an Arbitrage

play05:26

opportunity between the US and the UK

play05:28

even though there's similar uh Market

play05:31

systems and there're supposed to be um

play05:34

sister markets that kind of work

play05:35

together and have some products that you

play05:37

can move back and for such as exchange

play05:38

for physicals which we won't get into in

play05:40

this program but if you watch our

play05:42

Tuesday video we talk about exchange for

play05:43

physicals all the time even though these

play05:45

are sort of sister markets there has

play05:47

been increasingly price differentials

play05:49

between those two and so that basically

play05:51

goes to prove that when you're looking

play05:52

at spot price which the banks take into

play05:55

account both across the pond and over

play05:57

here uh rates it really is not the same

play06:02

between the two countries and as we'll

play06:04

see as we drill down the data it's not

play06:05

the same between vendors and it's not

play06:07

the same in

play06:09

localities uh and that's kind of uh at

play06:11

the very top ofel a way to explain that

play06:13

prices are different everywhere in spot

play06:15

itself is an amalgamation of a couple of

play06:17

different markets that doesn't

play06:19

necessarily reflect what you're seeing

play06:21

in your local or even in your state or

play06:23

even in your country uh but that's

play06:25

basically a good chart to illustrate

play06:27

that as we continue to move on the

play06:28

presentation what spot is not it does

play06:32

not reflect the majority of actual

play06:34

fysical transactions in either the

play06:37

industrial or the retail bullion markets

play06:39

and we're going to show that throughout

play06:40

the presentation more specifically spot

play06:43

reflects mostly paper contract trading

play06:45

in the US uh the paper contracts consume

play06:50

99.9% of all transactions that do not

play06:52

have any physical component only about

play06:55

0.1% or less on a given day of the comx

play06:59

Market is actually physically traded as

play07:01

well as paper contracts in the UK Market

play07:03

in an unallocated scheme different

play07:05

scheme for which we don't even have a

play07:06

lot of data so we have to trust the data

play07:08

that the banks are giving us because

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there's very little uh publicly

play07:12

available data on how that market

play07:14

actually works so there's some um

play07:17

opaqueness to how spot price is even

play07:20

determined and then spot itself does not

play07:23

reflect actual physical trading it's

play07:24

more of a paper trade across two wholly

play07:26

completely different markets both of

play07:28

which really have different price

play07:29

pricing and both of which don't uptake a

play07:31

lot of physical trade now there is some

play07:33

physical trade supposedly component to

play07:35

the UK being unallocated because you can

play07:37

get physical gold supposedly in comx but

play07:39

a lot of these transactions uh are not

play07:42

based upon actual physical trade uh

play07:44

those markets especially comex do not

play07:47

uptake data in a systematic and periodic

play07:49

manner on the wholesale and Retail

play07:52

physical buying from the market to

play07:53

determine buum prices how could they I

play07:55

don't report my data does atmx report

play07:58

their data do all of these places report

play08:00

their data to the comic no that's not a

play08:01

requirement in the industry so how in

play08:03

the hell do they know what's trading and

play08:05

what's selling and at what prices the

play08:06

answer is they don't so spot is not a

play08:09

reflection of the physical Market

play08:11

whether from an industrial perspective

play08:13

or the retail perspective here's an

play08:15

example of us spot this is as of today

play08:17

earlier today now on a lot of days I

play08:19

want to point out that there are no

play08:20

fysical deliveries there are only about

play08:22

six months of the year in which you get

play08:23

a substantive amount of physical

play08:24

deliveries for each of gold and silver

play08:26

and those months can be different with

play08:28

the exception of December which is the

play08:29

same

play08:30

the rest of the months there could be

play08:31

some physical deliveries but there isn't

play08:32

a lot of trading on the Futures market

play08:34

so those physical deliveries have to be

play08:36

less because to physically deliver you

play08:39

have to have an open paper trade so if

play08:41

you have an open paper trade and you

play08:43

want to take possession you can declare

play08:44

it but on six months of the year the

play08:46

paper trading is somewhat muted it's

play08:48

still there there could be a lot of

play08:49

paper trading but there are less overall

play08:51

contracts and it's not considered a

play08:52

delivery month and in this particular

play08:54

case for today U this is actually I

play08:57

believe uh Wednesday's data so so it was

play09:00

printed today but it's Wednesday stayed

play09:01

on this Top Line the total volume of

play09:04

26735 3 contracts traded only 1,40 of

play09:08

those contracts had a fiscal delivery

play09:10

for a ratio of0 39%

play09:12

0.39% and again on a lot of days

play09:14

there'll be a lot of contracts to trade

play09:16

and there will be zero% delivery so

play09:18

again this is not physically determined

play09:20

this is a paper traded Market those of

play09:22

you who watch my Tuesday weekly Market

play09:24

wrap-up I show this every single week

play09:26

and I go in a lot more detail than I go

play09:27

here I'm going to save that for those

play09:29

Tuesday videos all you have to do is go

play09:30

to any of my Tuesday videos and I'll

play09:32

talk about it but I just wanted to point

play09:34

at the top line that the comx market

play09:37

here in the US has very little to do

play09:39

with actual physical trade and that is a

play09:41

fact that is a substantiated fact and an

play09:43

undeniable fact an uncontestable fact so

play09:47

some conclusions on spot price spot

play09:49

prices trade thousands of times per day

play09:52

but most days they see no deliveries for

play09:55

each of gold and silver each of the gold

play09:56

and silver contracts that are traded on

play09:58

the uh that paper Market only six months

play10:01

see a substantial amount of deliveries

play10:02

because by Design is a Futures Market

play10:04

it's not a current real-time Market

play10:06

you're betting on the price of those

play10:07

Commodities in the future mostly in a

play10:09

paper format not in a physical format in

play10:12

addition uh in addition to what we

play10:13

normally talk about there's also this

play10:15

huge options trading Market uh also in

play10:18

the Comax it's very seldom understood

play10:20

and it adds a very significant paper

play10:22

trading volume onto the metals complex

play10:24

with no substan substantive physical

play10:26

trade backing those aren't

play10:30

physically delivered at any greater rate

play10:31

than the Futures but it adds a lot more

play10:34

paper on top which helps determine

play10:35

prices because in options you're going

play10:37

for a strike price whether you're in or

play10:38

out of the money and that is U takes a

play10:42

lot of demand from the speculative end

play10:43

of the market and also affects prices

play10:45

because if you're in the Futures market

play10:47

and you're trying and you also have an

play10:48

option you're trying to hit your options

play10:49

price you may put in Futures contracts

play10:51

to try to hit that that options price or

play10:53

to try to influence that options price

play10:54

and that occurs quite a bit now on the

play10:56

UK Market data it's not fully publicized

play10:59

but every analyst I've spoken to that's

play11:01

been in that market or analyzed that

play11:02

market says it's unallocated and

play11:04

contracts are at least 10 times or more

play11:06

leverag to the actual physical supplies

play11:08

so even though there are physical

play11:09

deliveries in the UK a lot of that paper

play11:11

trading exists on top of it that cannot

play11:13

be tied to a specific set amount of gold

play11:17

or silver that is unique to that

play11:19

contract it is a leveraged Market just

play11:22

like comx all right we're getting into

play11:24

part two the physical Market this is the

play11:26

majority of slides there 25 slides total

play11:28

the majority go into the physical

play11:30

there's a lot of data I'm going to

play11:31

narrate that data at times you may want

play11:33

to go back and watch rewatch sections of

play11:35

this video or pause the video and just

play11:37

kind of stare at it and think think

play11:39

about it for yourself but I encourage

play11:40

you to go through this part of the

play11:42

presentation to the end more than one

play11:44

time if you really want to understand

play11:46

because it's a lot more complex than you

play11:48

may think when you're showing up to your

play11:50

local coin dealer just buying some gold

play11:52

and silver or selling some golden silver

play11:53

or even buying gold and silver jewelry

play11:55

or going online and say what's the price

play11:57

of gold and silver it's very complex

play11:59

so here we go what determines the prices

play12:01

you will pay online at your local coin

play12:03

dealer we're going to answer that

play12:04

question isn't spot reflecting that

play12:06

local market we're going to answer that

play12:08

question we're going to answer the

play12:09

question of if not how does the market

play12:11

actually price products how come

play12:13

different products are priced

play12:14

differently for example American Silver

play12:15

Eagles versus 10 oun bars why do

play12:18

different retailers charge different

play12:19

prices why isn't everybody the same spot

play12:21

is one price why can everybody damn it

play12:24

why can everybody be the same why can

play12:26

everybody have the exact same premium at

play12:27

the exact same time all the time well

play12:29

ask yourself the question why isn't the

play12:31

automobile you bought in Dallas Texas

play12:32

the exact same prices you bought in Los

play12:34

Angeles California exactly the same

play12:36

price as you bought in New York why

play12:38

isn't the price of eggs the same

play12:39

everywhere why isn't the price of oil

play12:40

the same everywhere why isn't the price

play12:42

of gas the same everywhere why isn't the

play12:43

price of jewelry the same everywhere

play12:45

well it's a localized Market we're going

play12:47

to show that through the data or the

play12:49

lack of data and why do different

play12:52

retailers buy back at different rates

play12:54

well there's a reason for that too it's

play12:55

supply and demand we're going to go on

play12:57

throughout this presentation to talk

play12:59

about all of this data in Greater detail

play13:02

starting

play13:05

now and looking at the supply chain for

play13:07

the precious metals markets we really

play13:09

have two Supply chains and this is

play13:11

simplified because it's not 100% correct

play13:14

in all cases but these are the two major

play13:16

legs of the supply chain and for all

play13:17

intents and purposes is all you really

play13:19

need to know um and the industrial side

play13:22

of the market you've got the miners who

play13:25

pull the metal out of the ground the

play13:26

refiners should get it to the point in

play13:27

which you can put it on the major

play13:28

Exchange and a th000 ounz bar form in

play13:30

silver or 400 oun good delivery bars in

play13:33

Gold the different exchanges across the

play13:35

world the major ones are KX UK Shanghai

play13:38

Dubai you've got the Indian one Etc and

play13:41

then it goes to large Market

play13:42

participants who can afford to buy a

play13:43

thousand ounce bar or five th000 ounce

play13:46

bars on a contract or one 400 ounce gold

play13:48

bar

play13:50

or or four 100 ounce comx contracts

play13:54

equaling a gold bar if you're going to

play13:55

take delivery and the retail markets

play13:57

it's a bit different it goes Miners and

play13:58

refin ERS but then it generally goes to

play14:00

the mints the wholesalers the retailers

play14:03

and then the retail buyers both large

play14:04

and small so it could be wealthy people

play14:06

buying at a retail level or it could be

play14:07

just buying one ounce at a time uh the

play14:10

top Market is characterized by th ounz

play14:12

silver bars and 400 ounce gold bars it's

play14:14

more than dustrial side where they're

play14:16

taking big amounts and the retail

play14:18

markets characterized by thousands of

play14:19

different products from bars to rounds

play14:21

to government coins to Collectibles to

play14:23

customized products by thousands of

play14:25

private and public mints by the way all

play14:27

of that data in the bottom Market is not

play14:29

made available to the derivative market

play14:30

so they have no idea what it is so they

play14:33

have no clue what you're buying and

play14:34

selling therefore for spot price does

play14:36

not represent fiscal supply and demand

play14:39

it can't they don't know what it should

play14:41

be moving on some basic toos the

play14:44

industrial Market deals with not yet

play14:46

refined products from the mines which

play14:48

could be a concentrate which is sort of

play14:49

like a mud which has gold and silver in

play14:51

it or Dory bars which is usually

play14:53

combination of gold silver maybe some

play14:54

other types of metals that need a little

play14:56

bit further refinement before they get

play14:58

to the finished stage where you get the

play14:59

large size bars which also trade on the

play15:01

industrial markets especially if you're

play15:03

going to go to The Exchange like comx or

play15:06

London or those types of things the

play15:08

retail Market takes the bulk Metals uh

play15:10

either melts them down or partitions

play15:12

them and mints them into thousands of

play15:14

different products with different

play15:15

markups and in different supplies for

play15:17

different localities why because you

play15:18

have a bunch of you have thousands of

play15:20

mints really across the country that

play15:22

supply and they don't always have to

play15:24

ship all the way around the us all the

play15:26

time they have a lot of local customers

play15:27

so this is where begin to see as we go

play15:30

through the distribution pipeline the

play15:32

further you get to the retail customer

play15:34

the more the market becomes regionalized

play15:36

or localized and has very little to do

play15:39

with that one big Market that determines

play15:40

spot prices in the US and in the

play15:43

UK the spot pric is essentially more

play15:45

related to the industrial Market not the

play15:47

retail market and again it's not a heavy

play15:50

delivery Market if you go back up to the

play15:51

slide we had before off of the comx from

play15:53

CME Group was only 0.39% of deliveries

play15:56

for today and some days it could be zero

play15:59

well that paper Market has very little

play16:02

data with regards to physical deliveries

play16:04

in the retail Market because most of

play16:05

those trades are private and you're not

play16:07

going to know what they are and the

play16:08

further you get down to where uh you

play16:10

guys are buying the product those guys

play16:12

that are trading the paper up top have

play16:14

no clue what you're buying or what

play16:15

you're buying at the paper Traders don't

play16:17

know what products will be produced once

play16:19

the metals leave the refiners or in what

play16:20

amount not all of which goes through

play16:22

comx markets in any case there are

play16:24

alternative ways to get the metals you

play16:25

can buy straight from the mines there's

play16:27

the resale Market uh there there's all

play16:29

sorts of ways and all of those feed into

play16:32

what the prices and premiums will be a

play16:34

lot of that really doesn't go through

play16:35

the comx or the UK Market some of it

play16:37

does some of it doesn't but in any case

play16:39

all that trading data and that pricing

play16:40

data never flows back up to the trader

play16:42

so again spot price is not

play16:44

representative of supply and demand I

play16:45

think we proved that point a bunch of

play16:47

times but I wanted to emphasize it

play16:49

retail selling back to the supply chain

play16:51

also feeds the refiners and wholesalers

play16:53

who resell many of the products that

play16:55

never cross the industrial markets a

play16:56

second time and that data is largely

play16:58

privately held and the U paper Market

play17:01

Traders and the industrial Market will

play17:03

have no clue what's going on they may

play17:05

have some high level numbers about the

play17:06

overall amount of scrap and gold and

play17:08

silver but they don't get a lot of that

play17:10

pricing data there's a lot of data that

play17:12

they're never going to see that occurs

play17:14

down at the retail

play17:15

level all right now on to retail

play17:18

premiums what are retail premiums retail

play17:20

premiums basically are the price you pay

play17:21

above or below spot spot again being a

play17:24

paper derivative price but when you

play17:25

actually buy a product there's some sort

play17:27

of Premium what is that premium

play17:29

Encompass we're going to go through that

play17:30

on this slide they're calculated on a

play17:32

rolling basis from millions of different

play17:35

distribution points with little to no

play17:37

public data available to anyone they're

play17:40

affected by we retail which is you

play17:42

watching the show remember Supply demand

play17:45

whose demand you're a big part of that

play17:47

equation not all demand for the for the

play17:50

metal is retail some of it's industrial

play17:52

wholesale that kind of thing but you're

play17:54

a huge part when you buy you affect the

play17:56

prices of things up and down based on

play17:58

what what you're buying either from

play18:01

online or at your local coin dealer or

play18:02

from your friend or wherever you're

play18:04

getting it also uh it's affected by the

play18:06

supply of each product and the

play18:08

opportunity cost of providing them by

play18:10

the wholesalers and retailers because

play18:11

wholesalers and retailers can buy stuff

play18:13

and not sell it and sit on it and that

play18:15

will affect their carrying costs and

play18:17

other costs and their liquidity and

play18:18

things like that in addition in the

play18:20

supply chain at each step of the way

play18:22

each per each person or entity has the

play18:24

following cost of warehousing

play18:26

distribution Insurance rent util ities

play18:29

administrative meaning people and people

play18:30

in process by the way computer systems

play18:33

things like that paper anything that you

play18:35

would use compliance because there are

play18:38

compliance laws along the way anti-er

play18:39

laundering know your customer uh some

play18:42

people have like PCI compliance of these

play18:43

credit cards and those types of things

play18:45

advertising costs and a host other costs

play18:47

that too long for me to list on this

play18:49

slide it would be you know you know 100

play18:51

pages long when we add it up all the

play18:53

costs well those costs are at every step

play18:55

of the supply chain they have to be

play18:57

added in or that part of the supply goes

play18:59

out of business and you can't get your

play19:00

medal and you got to go figure out a way

play19:01

to dig it up yourself that's just a

play19:03

reality of how the supply chain Works

play19:05

spot price movements for gold and silver

play19:07

are completely independent of final

play19:08

retail demand also affect the profit

play19:10

margins what do I mean well let's say

play19:12

spot price is moving up and down and

play19:13

they don't have the data so they don't

play19:15

know what you're actually paying uh or

play19:17

selling it

play19:18

for and spot price moves up or down

play19:20

based on their betom where they think

play19:22

the market will go in the next three

play19:24

months agnostic of any physical trade

play19:26

either at the industrial or retail level

play19:28

well let's say you know I'm a dealer and

play19:30

I buy something at I I buy an ounce of

play19:32

silver at 26 bucks and spot price goes

play19:34

down to 25 well I've got to pull that

play19:36

from the shelf or guarantee myself a

play19:37

loss so where spot prices move also

play19:40

determines what the premiums are uh at

play19:43

times that where price is really high

play19:44

and then it comes crashing down premiums

play19:46

may have to come down but a lot of

play19:47

Supply may be pulled from the Shelf as

play19:49

well because if they sell it's a

play19:50

guaranteed loss and sometimes big the

play19:52

bigger the business the more price risk

play19:54

they have because they got to pay

play19:56

employees and they got to pay all their

play19:57

costs and if they're really big they

play19:59

have to sell a certain amount of metal

play20:00

no matter what so they may be dumping

play20:02

metal on the market during thin times

play20:04

which brings the overall premiums down

play20:06

which also affects everybody because if

play20:08

you're the smaller guy then all of a

play20:10

sudden you're going to try to match

play20:11

their prices and you're trading at a

play20:12

loss and then it leads into Market

play20:14

problems which we'll get into in the

play20:15

following slides and I'll delineate what

play20:17

that really means as we go further

play20:19

here's an example of the bull market

play20:20

this is a data set from Michael Lynch

play20:22

off of Twitter which I pulled and added

play20:25

a little bit of information to really

play20:26

just clarification and R text

play20:29

but this is during a bull market this is

play20:30

2008 2011 I want to stress this is

play20:33

during a bull market this is during a

play20:34

bull market look at the premiums go up

play20:36

during a bull market but all the rest of

play20:38

the time when we're not in a bull market

play20:40

the typical premium is only 2% 2% is

play20:42

lower than your average grocery store so

play20:45

when you're in the gold and silver

play20:46

market most of the time you're not

play20:48

making a lot of data if you're a

play20:49

wholesaler a dealer a miner a refiner

play20:53

refiners probably make it you know a

play20:55

certain amount on the refining costs but

play20:57

if there's less demand they have less

play20:58

volume that affects them because

play21:00

refineries are extremely expensive and

play21:02

capital intensive to set up so the

play21:03

entire supply chain most of the time is

play21:06

either trading at a loss or trying to

play21:07

break even and survive and about 20% of

play21:09

the time they're actually have pretty

play21:10

good premiums as this slide illustrates

play21:13

um and I'll get further into that as we

play21:14

go further along and it leads to the PTO

play21:17

principle what's the PTO principle well

play21:18

it's a famous principle in business that

play21:21

uh like 20% of your effort leads to 80%

play21:23

of your profits well that also or 80% of

play21:26

your benefit overall whatever that

play21:27

benefit is if you're a nonprofit even

play21:30

20% of your effort leads to 80% of your

play21:32

benefit as a nonprofit that's just sort

play21:34

of something we've realized over time

play21:36

and it's been encapsulated something

play21:37

called the PTO principal PTO was the

play21:39

person that basically put it into uh

play21:42

recognizable form that we all know and

play21:43

that we all learn especially if you go

play21:44

to business school well the wholesale

play21:46

and dealer markets which distribute

play21:48

bullion to the retail customer and

play21:49

determines the final premiums make good

play21:51

money about 20% of the time the other

play21:53

80% of the time they're holding on for

play21:55

deer life and I'm going to show you some

play21:56

data that shows that uh they're in

play21:59

Survival Mode uh during these 80% of

play22:01

time it requires a lot of excess cash to

play22:03

absorb retail selling what do we go

play22:05

through the last four or five months a

play22:06

lot of retail selling I got to the point

play22:07

where I didn't have much money left in

play22:08

my corporate bank account because I was

play22:10

buying so much stuff you know and so you

play22:13

have to have a lot of cash to absorb

play22:14

that or you don't do business and you're

play22:16

not selling it all back out the door so

play22:17

you're sitting there holding it going

play22:18

well what do I do with all this metal do

play22:19

I put it in a vault you know you've got

play22:21

carrying costs insurance cost all that

play22:23

kind of thing to consider it results in

play22:25

losses and consolidation industry which

play22:26

I'll illustrate here in a moment with

play22:28

some examples but not everyone makes it

play22:30

through the lean times and spot prices

play22:33

often affect the results on future

play22:34

survival with little to no guarantee of

play22:36

payback on Metals purchased because spot

play22:38

is determined in a different Market

play22:39

spots determined in the paper Market not

play22:41

the physical market so if it's a lean

play22:43

time and the spot probably moves against

play22:44

you you can go out of business very very

play22:46

easily as any sort of distributor or

play22:49

dealer in this space and it happens all

play22:52

the time in fact we had something called

play22:54

the precious metals winter period those

play22:56

of you familiar with the crypto World

play22:57

know that we just went through crypto

play22:58

winner with the cryptos a lot of the

play23:00

cryptocurrencies including Bitcoin

play23:02

crashed it wasn't great it was horrible

play23:05

you had you know big scandals like FTX

play23:07

and all that kind of stuff you know that

play23:09

happens during a winter period in any

play23:10

Market there's more scandals there's

play23:12

more losses there's more bankruptcies so

play23:14

in gold and silver between 2011 2016

play23:17

bankruptcies and consolidation within

play23:19

the wholesale and Retail markets were

play23:20

very common the profit margins were very

play23:23

low which I'll show you some data on

play23:24

here in a moment resulting in millions

play23:26

of lost dollars consolidation tightens

play23:28

up availability distribution points what

play23:30

that means to you in plain English is

play23:32

there may be less people that can offer

play23:33

you gold and silver or that can buy back

play23:36

your gold and silver at prices that you

play23:38

want to sell at or offer you products at

play23:40

premiums that you want to buy at in

play23:42

other words less choice of raw when we

play23:44

go through these winter periods the risk

play23:47

is that the market will eventually move

play23:48

into an oligopoly or mon monopolistic

play23:50

model and I'm going to show you an

play23:51

example of that here in a moment will

play23:53

result likely in much less democratized

play23:55

premium setting in the retail market and

play23:57

therefore less product choice or choice

play23:59

of Premium rates on each product for you

play24:03

the consumer this also adds fuel to the

play24:05

common retail scams perpetrated on us

play24:07

precious metals consumers some of which

play24:09

I've covered in a previous video and a

play24:11

lot of that is pushing you into higher

play24:12

margin products whether or not you need

play24:14

them or pushing you into some scheme to

play24:17

hold or uh charge additional premium or

play24:21

uh storage fees or whatever the case is

play24:22

and that doesn't mean in all cases those

play24:23

are bad things it's just that if people

play24:26

aren't making money in the space they

play24:27

may try to push you into an area where

play24:29

they can actually make money and whether

play24:30

or not that fits you it may not fit you

play24:32

at that period of time so you may end up

play24:34

paying more for your medals than you

play24:35

realize so the future of the industry I

play24:37

think right now is at a it's it's we're

play24:40

at an inflation Point uh if we don't

play24:44

educate people on premiums and spot

play24:46

prices and get them to where they

play24:48

understand the market a lot better

play24:49

retail is going to be taken advantage of

play24:52

by uh factors in the market and it's not

play24:55

necessarily always done on purpose

play24:57

sometimes it's just

play24:59

a a a a result of what's going on in the

play25:02

market where it's just it it hurts you

play25:04

uh through consolidation or control of

play25:06

prices or ol loopies or that type of

play25:09

thing so very much the future of the

play25:11

industry you know hangs in the balance

play25:13

of what happens the next five to 10

play25:15

years and I'm going to show you some

play25:16

stuff that happened in the past for

play25:17

example bankruptcies are common I just

play25:19

did a random search on a start page

play25:22

which uses Google's API Google data on

play25:25

bankruptcies and I got pages and pages

play25:27

of bankruptcies and I know of some I

play25:29

know inside baseball on quite a few that

play25:32

I happen to know because I've talked to

play25:33

people that were involved in those but

play25:35

if you just go search Google or any of

play25:37

your search engines for bankruptcies uh

play25:40

in the wholesale and dealer space in

play25:41

gold and silver especially during times

play25:44

that have been tough like the last 6 to

play25:45

eight months or 2011 2016 you'll find

play25:48

that there are tons of them tons and

play25:50

tons and tons this is an industry which

play25:52

is so low margin from a percentage

play25:54

standpoint on profit that during the

play25:56

lean times a lot of people go out of

play25:58

business

play25:59

consolidation is common I'm going to

play26:00

give you one example that's publicly

play26:02

available has to do with AAR now we're

play26:04

not in any way shape or form Throwing

play26:06

Shade on AAR congrats to them for

play26:08

picking up what they did and growing and

play26:10

all this good stuff but we're just

play26:11

showing you an example of what has

play26:13

happened uh and aark is just an example

play26:16

here we pull data from so one thing I

play26:18

want you to look at is the bottom of the

play26:19

chart look at the profit margins in 25

play26:22

in 2015 2016 and 2017 the gross profit

play26:25

margin in 2015 for this big company was

play26:28

0 4% how do you survive if you're making

play26:31

0 4% gross margin because you still have

play26:33

to subtract out a bunch of other things

play26:35

including tax expense you can't how do

play26:38

you survive in 2016 if you're only

play26:40

making 0.51 in 2017 045 in 201839 in

play26:45

2019 67 it wasn't until 2020 and all the

play26:49

government shutdowns when you had that

play26:50

raise or that that steep rise in 2020 on

play26:53

demand for gold and silver and Prices

play26:55

rose that they actually started making a

play26:57

decent profit they're a core example of

play26:59

what happens 80% of the time you're not

play27:01

making squat you're probably losing

play27:02

money and only 20% of the time when

play27:05

prices rise and demand Rises and

play27:06

premiums rise can you make any money

play27:07

Amar is a huge uh uh indicator it's a

play27:10

huge Market indicator of exactly what

play27:12

happens but along the way amark was

play27:14

using any money that they had to

play27:16

basically acquire more companies why all

play27:19

of these companies were either going out

play27:20

of business needed help needed financing

play27:23

and Amar had enough money to do it

play27:24

because they were big to begin with this

play27:26

is consolidation this is where a lot lot

play27:28

of outlets that you look at are actually

play27:29

owned by one company what happens if the

play27:32

entire industry does that I'm not saying

play27:33

AAR is causing this but what happens if

play27:36

this happens to all the big players and

play27:37

they absorb all the small fish and you

play27:39

just have four or five players in the

play27:40

market you have an oligopoly situation

play27:42

where you could have some price setting

play27:44

you could have lack of diversity in

play27:46

product portfolios overall for the

play27:48

retail consumer this is not as good good

play27:50

for the big business maybe not quite as

play27:52

good for the retail consumer but there's

play27:54

no choice here because if AAR didn't get

play27:56

involved some of these businesses might

play27:57

have gone out of business or they may

play27:59

have had uh Capital crunches and had to

play28:01

close their doors for a while or sell

play28:03

off inventory to loss lay off people you

play28:05

know this is just what happens during

play28:07

the lean times and this is a a primary

play28:09

case of it and you can see all the data

play28:11

here and all the different companies

play28:12

involved in this to show you that

play28:13

consolidation and bankruptcies are very

play28:15

common during the lean times also that

play28:17

profit margins even for the big players

play28:19

that have tons of product and tons of

play28:22

flow through are extremely lean most of

play28:25

the time this is not a lie this is

play28:26

publicly available data and this is what

play28:29

happens precious metals is not a

play28:30

high-profit margin business despite when

play28:32

you see premium surge on American silver

play28:35

eagles or whatever it is it's only going

play28:37

to do that for a while and it's only on

play28:38

that product and maybe some other

play28:40

products and it doesn't fund healthy

play28:42

businesses most of the time so this is

play28:44

what happened we have PM winner just

play28:45

like the cryptos had crypto winner and

play28:47

it leads to

play28:48

consolidation well what about premiums

play28:50

premiums in reality are a function of

play28:52

Supply that's refiners wholesalers

play28:54

dealers and the secondary Market that

play28:56

could be you or somebody else pushing

play28:57

prod in uh at the time that which you

play29:00

held it and it wasn't available and

play29:02

demand and that's industrial and Retail

play29:03

demand separating industrial retail

play29:05

demand is hard and not something fully

play29:07

respect in spot pricing because all that

play29:09

data doesn't flow back up to them and

play29:11

they're not trading fiscal anyway

play29:12

they're doing the paper trade so spot

play29:15

and retail supply and demand and

play29:17

industrial supply and demand are not

play29:18

interconnected and they're not spot is

play29:20

not a function of those industrial

play29:22

markets are set up privately between big

play29:24

players a lot of times and Retail

play29:25

markets are set up privately between

play29:26

Distributors and buyers for example you

play29:28

now the reason I keep emphasizing you is

play29:31

you guys are about 50% of the equation

play29:33

and when you I mean retail or industrial

play29:35

demand demands 50% of the equation every

play29:37

transaction has supply and demand so the

play29:39

decisions you make uh in your Market

play29:42

affect the premiums you're going to pay

play29:44

the next time you go into that store or

play29:46

that whether or not your store is open

play29:47

or goes Belly Up and what products are

play29:50

able to produce because they're able

play29:51

toit cool new stuff so you are as much a

play29:54

function of the market as the guys

play29:56

delivering the metal and that has to to

play29:58

be taken into account as well and that

play30:00

affects premiums if you guys are buying

play30:01

more guess what premiums go up if all

play30:03

you guys want to buy American silver

play30:04

eagles at the same time guess what

play30:05

premiums go up well that's good for the

play30:07

people that bought before the premiums

play30:08

went up because then they can turn on

play30:09

sell and make a profit or just feel good

play30:11

about what they have what about the guys

play30:13

that bought at the top and they get

play30:14

pissed off when the premiums crash back

play30:16

down when demand crashes back down and

play30:17

they're sitting there with American

play30:18

silver eagles that they bought at $17

play30:21

premium over spot now they can only get

play30:22

five to six when they're selling back or

play30:24

maybe one to two depending on the market

play30:26

so you really have to watch premiums and

play30:28

you have to understand supply and demand

play30:29

but supply and demand is a function of

play30:31

millions of distribution points not comx

play30:34

and not the

play30:36

lbma here's some information on Silver

play30:38

premium history the next few charts I'm

play30:39

going to give you are very data heavy

play30:41

and kind of hard so you may want to

play30:42

pause at certain times to really stare

play30:44

at the charts but this one is for um

play30:47

different weights of silver from monx

play30:49

and bullon star so what we did here

play30:50

actually I didn't do it it was um a

play30:53

friend of mine is in ftech who has a

play30:55

website uh exploring finance. github.io

play30:58

I believe is the website URL exploring

play31:00

finance. github.io you can look at that

play31:03

on Google and find it he's got a bunch

play31:05

of charts on the market I'm just using

play31:06

his charts I didn't compile this but he

play31:08

basically has pulled from um bullan star

play31:11

and monx a bunch of data and he's

play31:13

showing us what you know what the

play31:15

premiums are well you the first thing

play31:16

you want to know is that premiums rise

play31:19

when demand Rises okay demand affects

play31:21

premium supply and demand effect premium

play31:23

but during times of perceived crisis

play31:26

like 2020 when the shut Downs occurred

play31:28

look at the premium Spike across the

play31:31

supply chain for silver and here we're

play31:33

looking at Maple silver 1 oz over 1,000

play31:37

oce 100 bars over 1,000 oce a bunch of

play31:39

different products and the different

play31:41

products get different premiums so why

play31:43

the hell or American silver eagles or

play31:45

Maples or government coins more

play31:47

expensive premium wise than the others

play31:48

because of supply and demand not

play31:50

everybody can afford a 100 ounce bar not

play31:52

everybody wants a generic one or 10 five

play31:54

or 10 ounce bar most people want

play31:56

government coins so those premiums are

play31:57

going to FL more whereas in some of the

play31:59

less liquid products they'll fluctuate

play32:01

less now on the one hand if you buy a

play32:03

lower premium product that's good

play32:05

because you got in it less money but it

play32:06

also means that there's less liquidity

play32:08

for it that's why the premiums are lower

play32:10

so when you go back to sell that it may

play32:11

be harder so the person that called me

play32:13

recently wanted to get rid of the 100

play32:14

ounce bar I said that's not a very

play32:16

liquid Market you're the buyback price

play32:18

on that's going to be lower than it is

play32:19

in other products and I had to educate

play32:21

them as to why there's less demand you

play32:24

know and I'm just as a dealer I'm a

play32:25

function of supply and demand just like

play32:26

anybody else you know I have to keep

play32:28

enough spread to pay the bills keep the

play32:30

lights on not trying to get rich but all

play32:32

dealers are the same way but if you're

play32:34

buying buy and selling 100 ounce bar

play32:35

that Market's less liquid than a 1 ounce

play32:37

generic round or a coin that's just the

play32:39

way that it goes and that explains why

play32:41

there are premium differences in

play32:42

products even in the same market and

play32:44

across different markets within the US

play32:47

here's gold premium history basically

play32:49

the same thing Spike up in 2020 because

play32:51

of you know perceived risk the

play32:52

interesting to know about gold and

play32:54

silers you go through these charts that

play32:55

the premiums have risen since 2020 and

play32:58

they're still higher than they were

play32:59

prior to 2020 even though they may go up

play33:02

or down and even in a relatively weak

play33:04

Market the last six months for retail a

play33:06

bullion the premiums are still higher

play33:08

than they were prior to 2020 why because

play33:10

think about it Supply overall went down

play33:13

because when you know prices were down

play33:15

so long a lot of the mines closed a lot

play33:18

of the the distribution points

play33:20

Wholesales retailers went out of

play33:21

business there was less demand but there

play33:23

was also less Supply because there there

play33:25

wasn't as much mind protection

play33:27

particularly in silver and so those

play33:29

things both affect the premiums so

play33:30

premiums are higher overall both because

play33:32

of the supply in the market but also the

play33:34

demand but you also knows that for

play33:36

different products the premiums are

play33:38

different as well and that's how that

play33:39

market works and again none of this is

play33:41

reflected in the spot price that is set

play33:44

on comx and in the UK that's why

play33:46

premiums fluctuate premiums are the

play33:48

difference between the spot price which

play33:50

has very little to do with physical

play33:51

trading and the actual physical trade

play33:53

That's What premium is it's a measure of

play33:55

the Market's valuation of the m is

play33:58

relative to the spot price which doesn't

play34:00

get all that data and they don't know

play34:01

what you want to buy and sell at here's

play34:04

different gold product premiums for both

play34:06

bullion star and monx and you can see

play34:08

that uh in general the things that are

play34:10

higher premium are going to be things

play34:12

like the government coins the Buffalo

play34:13

the Eagles and the maples and in general

play34:15

the premiums are lower on things that

play34:17

have less demand uh for generic ounces

play34:20

bars and those types of things and both

play34:23

these charts basically point that out so

play34:26

that's why you pay more for American

play34:27

seller regles because you demand them

play34:28

more and also because they're produced

play34:30

they're they're a limited market by the

play34:32

US Mint only one place sells them the US

play34:33

Mint and if they don't produce enough

play34:35

and demand Rises at the same time those

play34:37

premiums blow out and it's not just

play34:39

people gouging you the wholesalers and

play34:41

dealers it's a function of what you guys

play34:43

want versus a function of what we can

play34:45

get in the supply chain in the case of

play34:47

American silver eagles or Canadian maple

play34:48

leafs they're artificially limited by

play34:51

the amount that the mint is going to

play34:52

produce and the mint doesn't always know

play34:53

what you're going to demand so the mint

play34:55

can produce so many and you demand more

play34:56

the price goes up the de the the mint

play34:59

floods the market premiums come down

play35:01

it's just the way that it happens but

play35:03

it's a function of both you the buyer

play35:05

and the mint the producer now the

play35:07

generic coins bars u in larger sizes or

play35:11

smaller sizes tend to have lower premium

play35:13

at all times than the government coins

play35:15

because there are more Outlets that can

play35:16

produce them it's not only authorized by

play35:18

one Outlet there's multiple Outlets you

play35:20

could have a regional Min producing it

play35:22

you could you know have somebody doing a

play35:23

custom pour in their backyard um you

play35:26

know you could have thousands of

play35:27

different people producing those more

play35:28

generic types of things and why the

play35:29

premiums are lower but that also means

play35:31

when you sell back you're probably going

play35:32

to get less premium back that's just the

play35:34

way that that works uh here's the same

play35:36

thing for silver you'll notice in 2020

play35:38

of course premiums blow out and they're

play35:39

higher for every product because of

play35:41

those Supply demand characteristics I

play35:43

talked about

play35:44

before because there's less overall

play35:46

Supply specifically of silver because

play35:48

we're in a shortage between what's mined

play35:50

every year the last four years and what

play35:52

we're using both industrial and Retail

play35:53

wise so silver tends to have more

play35:55

volatile premiums in addition to to be

play35:57

more volatile in spot and so silver is

play36:00

really a highly speculative Market if

play36:01

you're going to trade it short term

play36:03

which is why I don't recommend it in

play36:04

silver gold tends to be more price

play36:06

stable over time because more gold is

play36:07

sitting in coffers and use is used less

play36:10

industrially and there's more profit to

play36:11

the miners and there's more overall

play36:13

Supply relative demand silver is more

play36:15

volatile because um that market there's

play36:19

less Supply relative demand both

play36:20

industrial and Retail and um there are

play36:23

more Market participants so that thing

play36:24

moves around a lot more it's more

play36:25

volatile in terms of premiums and

play36:27

pricing now we did were able to scrape

play36:30

some data for the last 20 years on

play36:31

Silver rounds and you notice again in

play36:33

2020 premiums on everything got

play36:34

expensive including silver rounds

play36:36

because demand and up well Supply went

play36:38

down particularly in silver now in Gold

play36:39

it's less so there's a little bit more

play36:41

stable Supply and gold than silver the

play36:43

last 4 five years but in silver you can

play36:45

really see the the premiums blow out

play36:47

because there's less available Supply

play36:49

relative to overall demand and there's

play36:51

more demand for silver because more

play36:52

people can afford silver and what

play36:53

happened in 2020 the shutdowns shut down

play36:56

in some Mine Supply but also shut down

play36:57

down the economy so you have a little

play36:59

bit less Supply that's now just ramping

play37:00

up it takes years but you also have a

play37:02

lot more demand because of why

play37:04

uncertainty and silver is the poor man's

play37:05

gold what more people can afford so

play37:08

that's why the

play37:09

premiums both as a an overall rate and a

play37:11

percentage rate went up in 2020 on

play37:14

Silver so that's why you're paying more

play37:16

for that so here's some conclusions that

play37:19

we have on premium premiums are

play37:21

sufficient to sustain the overall supply

play37:22

chain from miners to dealers about 20%

play37:25

of the time the parate the principal the

play37:27

the other 8% of the time we're just

play37:28

surviving or losing and we're going

play37:30

through consolidation we're going

play37:31

through winter periods both demand and

play37:33

Supply effects premiums so you can't

play37:35

just blame your dealer you're buying

play37:37

from the dealer you're part of that

play37:38

equation it goes both ways and it also

play37:41

has to do with the supply through the

play37:43

entire supply chain all the way back to

play37:44

the miners and what's available and

play37:46

what's available in the product that you

play37:47

specifically want so both uh industrial

play37:50

and Retail demand affect the supply

play37:52

chain and the supplies it is a a market

play37:55

that's trying to price things and could

play37:57

be a slow moving Market from a supply

play37:59

perspective but a very fast moving

play38:00

Market from a demand perspective so

play38:02

that's why a lot of times the demand

play38:03

changes really fast and the supply

play38:05

doesn't changes fast and it causes a lot

play38:08

of variation in premiums and in rates

play38:11

and that can change depending on the

play38:12

town you're in I'm in Dallas Fort Worth

play38:14

we have a lot of residents we have a lot

play38:16

of um refineries and mints and public

play38:19

Outlets so that it's kind of easier

play38:21

sometimes to get access to stuff so

play38:22

sometimes you get pricing advantages in

play38:24

a big market like this what if you're in

play38:26

a smaller market and it's harder to get

play38:27

product there and there are less people

play38:29

demanding it you may have more price in

play38:31

elasticity meaning prices could

play38:33

fluctuate even more on certain products

play38:35

so there's a very local component to

play38:37

this plus a lot of things are produced

play38:38

locally a lot of mints are local a lot

play38:40

of mints are you know only service

play38:41

Regional and so that supply and demand

play38:44

of various products across different

play38:45

localities is different that's why you

play38:47

can have different rates at different

play38:48

dealers across the country that's why

play38:50

you can have different rates even at the

play38:52

big guys online because it is a very

play38:54

localized and regionalized market and as

play38:57

Jack Squad all to do a spot spots

play38:59

determined in one place in the US in the

play39:01

comx and they're not even getting all

play39:02

this retail data so they don't know you

play39:05

know they just don't know and they don't

play39:06

control it and that's why you'll get

play39:08

premium differences in different shops

play39:10

in different towns and different

play39:11

products that's the way the Market's

play39:13

supposed to work and spot people they

play39:14

say it's a commodity and it should

play39:16

always be the same don't understand the

play39:17

supply chain and they don't understand

play39:20

that paper derivative pricing has very

play39:21

little to do with the physical so spot

play39:23

is not physically derived it's derived

play39:25

by paper and has nothing to do with your

play39:27

regional and local markets period into

play39:30

story and if there's nothing else I want

play39:32

you to get from this presentation it's

play39:33

that is also impossible to predict what

play39:36

demand will be on large time scales you

play39:38

can kind of get an idea through

play39:39

technical charting and understanding of

play39:41

economics and uh those all these factors

play39:43

you can guess at it and maybe you'll

play39:46

have the direction right as to the

play39:47

strength of move of the direction and

play39:49

exact timing it's very difficult and the

play39:51

supply chain is very slow to change

play39:53

that's why sometimes you'll see American

play39:55

cver silver eagles get up to 7 $20 in

play39:58

premium because sometimes the supply

play40:00

chain can't deal with retail demand and

play40:03

that could also be true on the big

play40:04

industrial bar side if you're not having

play40:06

enough Supply put into the chain but all

play40:08

of a sudden Samsung and Apple need a

play40:10

bunch more silver you know or the

play40:12

central banks are buying a bunch more

play40:14

gold it could take years for that Supply

play40:16

to ramp up and so that's going to affect

play40:18

avilability products and premiums as

play40:20

well most wholesalers and dealers cannot

play40:22

afford a hedge on the markets it's too

play40:23

expensive buy a contract for a small guy

play40:25

the big Banks can do it all day long

play40:26

they're worth trillions of dollars

play40:27

but us small guys out here it's too

play40:29

expensive and it's very hard to get a

play40:31

trading account you have have to

play40:32

specialist understands that market to do

play40:33

it and there are sharks in that market

play40:35

and if you're a small guy you can get

play40:36

eaten alive with the way the Sharks play

play40:38

the market so they can't afford to hedge

play40:40

on it one because the the the cost of

play40:42

the contract is prohibited but too

play40:44

because they're most likely goingon to

play40:46

have their lunch eating if they try to

play40:47

get in it anyway so it's very hard to

play40:49

hedge at a local or even a mint level uh

play40:52

your prices unless you're a huge mint

play40:54

like the US Min or somebody like that

play40:55

and you're going to use the banks to do

play40:57

your juding for you premiums on

play40:59

individual retail products are largely

play41:01

determined by retail demand which is

play41:02

hard to predict and sales data is a

play41:04

combination of national which we have

play41:06

some data and local which we have very

play41:07

little data on what's going on so that's

play41:11

why we don't always know the direction

play41:13

of where the premiums are going to go

play41:15

you can kind of look at spot on

play41:17

technical charting and have an idea even

play41:19

though a lot of times you're going to be

play41:20

wrong because unforeseen events happen

play41:22

which affect it but on the retail level

play41:24

for retail products it's very difficult

play41:26

to know what supply and demand is

play41:28

because nobody not everybody's

play41:29

publishing their numbers and that's why

play41:31

you have discrepancies in price quite

play41:33

often all right likely outcomes moving

play41:35

forward of the overall Trends we've seen

play41:37

the last 15 years dating back to the

play41:38

last crisis there is an incentive to

play41:41

move retail customers to higher premium

play41:42

products to enhanced profits during lean

play41:44

times moving you over to higher premium

play41:46

products like American Gold and Silver

play41:47

Eagles American buffalos uh moving from

play41:50

generic products to to government M

play41:53

coinage um um getting into storage if

play41:57

you don't necessarily need it um and

play41:59

it's all an individual Choice as to what

play42:00

you want to do but just be aware when

play42:02

we're in lean times in gold and silver

play42:05

uh the salesman may you know need to

play42:07

make more money and they may offer you

play42:08

these other things it's up to you to

play42:10

understand that market and decide

play42:11

whether you want to get into it there

play42:12

are also incentives to consolidate