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Old 18.05.2020, 23:57
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Silver physical metal spreads

maybe someone with better knowledge can explain this to me

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So if I go to the bank and buy 1kg of silver ask price is 637CHF + 8% VAT = 687CHF

Why is the bid-ask spread so huge if I were to sell it straight back to the bank the bid price is 522CHF so I will already take a hit of -24%!!

is this correct?, selling it on ricardo or finding a direct buyer for example will surely get a better price..What is driving the spreads here?..
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Old 19.05.2020, 06:25
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Re: Silver physical metal spreads

Our son, who deals in silver coins and bars says the silver price has gone haywire. Spot price is down, but supply is down and the coins are appreciating nicely
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Old 19.05.2020, 09:57
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Re: Silver physical metal spreads

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maybe someone with better knowledge can explain this to me

Attachment 139451

So if I go to the bank and buy 1kg of silver ask price is 637CHF + 8% VAT = 687CHF

Why is the bid-ask spread so huge if I were to sell it straight back to the bank the bid price is 522CHF so I will already take a hit of -24%!!

is this correct?, selling it on ricardo or finding a direct buyer for example will surely get a better price..What is driving the spreads here?..

1 kg of silver is a problem. You could say it costs nothing to store it at home, but what would be the cost to store 500 kg of silver? You need a safe place to store it and pay people to look after it: storage costs.
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Old 19.05.2020, 10:15
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Re: Silver physical metal spreads

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maybe someone with better knowledge can explain this to me

Attachment 139451

So if I go to the bank and buy 1kg of silver ask price is 637CHF + 8% VAT = 687CHF

Why is the bid-ask spread so huge if I were to sell it straight back to the bank the bid price is 522CHF so I will already take a hit of -24%!!

is this correct?, selling it on ricardo or finding a direct buyer for example will surely get a better price..What is driving the spreads here?..
For metals right now, price volatility is an issue. An entity like a bank needs to have a safety factor in their spread to protect them against losses due to large price swings.

Administrative costs are also a factor. Authenticity, purity, security etc. Many people are happy to pay a premium for that. Especially dealing in large quantities.

On a larger conceptual level you can consider the spread the cost of getting into and out of an asset. Not everything has equal liquidity and not all buyers sellers have the same efficiencies. This also leads to wider spreads.

Last edited by Rjellsch; 19.05.2020 at 10:27.
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Old 19.05.2020, 10:32
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Re: Silver physical metal spreads

Spot price is now CHF585.54 / 1000 gr so that's quite a spread, plus the VAT.
Would be cheaper to buy a Silver ETF or silver certificate through a broker or bank and the spreads will be much less and you won't pay the VAT, but watch the commissions!
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