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Q: When the spot price of a metal goes down but the premium goes up.  Who makes the profit from the increase in the premium?

David Schectman’s Answer:

Our mark up (the retail dealer) remains the same.  Our cost from the wholesaler rises.  When the wholesaler has too much inventory, they lower the premium.  When they don’t have enough inventory, like now with junk bags and other silver items, they raise their bid to attract more inventory and pass the cost on to us – and then on to you.

It is determined by supply and demand and is not arbitrary.  Andy Hoffman has been detailing the rise in the premium on junk silver as the price is falling.  Because of the low (too low) price of silver, fewer people are selling and the wholesalers have to raise their bids to attract inventory so they have product to sell.

That is one of the interesting things that happen when the spot price of gold and silver falls too low.  What good is silver spot at $8 if you have to pay $15 to buy coins and bars – which is exactly what happened in 2008?

Q: Can Obama give away the reserve currency status?

Bill Holter’s Answer:

WOW!  What a fun question!  The answer of course legally no he can’t.  Now “practically,” that’s another story altogether.  I suppose he could come out on national TV and tell the world “we don’t have any gold left and we sold everyone’s gold we were custodian for.”  That would do the trick right?  Or how about if he woke up a 2 AM and decided to nuke the world, would the dollar …or anything else for that matter be the reserve currency?  Or what if he fired Yellen and Jack Lew, then decided not to nominate anyone to replace them. What would happen then?  In my opinion, the man has spent the last 6 years “trying” to give the reserve status away with his actions and the world is near ready to take it from us, one way or another it will come to pass but it will not be the result of one man’s actions.

Q: Of all the coins minted in the US each month, what percent are purchased by US citizens?

Andy Hoffman’s Answer:

Ah, the $64,000 question!

The Mint, like any other retail business, doesn’t release information about its clients – and thus, we can only speculate.  However, it doesn’t take rocket science to realize that since the U.S. bullion business – Miles Franklin included – has seen a significant slowdown during the 2013 and 2014 record years for U.S. Mint sales, that it wasn’t U.S. customers buying them.

Silver Eagles 1986-2014

Without having any “evidence” to support my views, I believe the vast majority of the recent growth has been from international customers – principally from the Eastern Hemisphere, where overall physical PM demand is at or near record highs.  And if the Chinese are the largest buyers, I wouldn’t be a bit surprised – as yet again, the U.S. government hands them the keys to global leadership on a silver platter.