European deflation may affect silver price

I'm not an economist and I'm not an expert on trading in precious metals on the commodity market. But I do buy and sell sterling silver pieces so I watch external market forces that impact my business.

 

A general rule I believe in is that as the rate of inflation grows, the price of precious metals may rise as buyers try to develop a hedge against inflation. Right now in Europe, central bankers and economists are worried about deflation. Even though the United States is in a different financial position from Europe, it is affected by world events.

 

So, to my way of thinking, prices for precious metals will not rise significantly as long as deflation is a worry. Of course, some significant world event like a war could change things but if that does not happen, the world price of silver might be stagnant for a while.

 

Prices of precious metals did bump up a bit this morning in response to actions taken by European central bankers but similar actions in the recent past have not had a huge impact. So, the silver market may just drift sideways more or less until this situation sorts itself out through natural market mechanisms.

 

Here are good summaries of current events related to this topic:

• Europe Struggles to Avoid Deflation's Grip
• Specter of deflation in Europe spooks economists

NOTE: This is the text of an article I wrote for Examiner.com that might be useful to blog readers.

Buying and selling silver flatware: An antique show example

I visited the Scott Antique Market this past weekend. This is a huge show held monthly in Atlanta and I sometimes go because I know I'll see eight or ten dealers in various types of silver. As a result of this visit, I wrote two articles that might be if interest to some.

I interviewed two dealers in silver plate flatware regarding their business:

• Silver plate flatware price: Validation from two dealers

I also looked at the way some dealers are pricing and selling sterling flatware:

• Prices of sterling silver at antique shows: A recent example

If you are thinking about buying or selling silver flatware, one or both of these articles might be of interest.

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Why can't I sell my sterling silver for higher than scrap value?

The wild commodity silver market has triggered many questions to me from blog readers who are thinking about selling their sterling flatware and hollowware pieces. Many have questioned why they could not get a better price. We've been watching sales on eBay lately and it seems that many sellers don't even get the scrap value for their sterling. Here's an article we wrote recently:

• Why can't I sell my sterling for higher than scrap value?

As a reminder, we don't think folks should ever sell their sterling unless they really need the money. In general, the price received will always be disappointing, especially if the seller expected to get somewhere close to retail or close to the prices charged by companies like Replacements, Ltd. We think the value of sterling as a personal family heirloom is much greater that its value on the used market and it should be handed down through generations.

If you must sell, be patient. Get offers from several buyers and try to find the buyer who wants sterling for personal use. Such a buyer often is willing to pay more.

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Silver Price Continues to Soar

I've been wrong many times in my life and this is one of those times. I just did not think the spot price of commodity silver would continue to climb as it has. Aside from one unusual circumstance around 1980, silver has never been this high before. As I'm writing this, it's at $34.25 per Troy ounce, an increase of 108% over the price a year ago of $16.46.

This is all well and good for investors in commodity silver. However, it's having a tragic side effect on sterling flatware and hollowware. It's now often more profitable to sell used pieces to be melted down than to sell them for what they were intended. The result is that there will be a dearth of pieces out there in the market for some discontinued patterns.

What a shame.

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A Process to Sell Silver for Scrap at a Decent Price

We are not big fans of melting beautiful sterling pieces just to recover the silver. But we do realize that there are valid reasons to proceed with this process for some pieces. For example, your garbage desposal may have grabbed a spoon! A problem for the average consumer is finding a buyer who will pay a decent price for the sterling to be melted.

Because of the currently high price of silver, we have decided to offer a service to blog readers who are having a hard time finding such a buyer. We have established a relationship with a local metals refiner who pays us a decent percentage of the value of the recovered silver.

If you would like to have us take your scrap silver to this refiner on your behalf, click on 'Email Silver Jim' in the right column to send us an email. Tell us your name, address, contact number and a brief description of what you have. We'll email you a simple contract, terms and conditions and a description of what to expect from this process.

Click on any picture to see a larger version. By clicking on "Comments/Questions" below, you can see posted comments and add your own questions and comments. Or, you can send us an email by clicking on "Email Silver Jim" in the right column.

Commodity Silver as an Investment

About once a week we receive some variation of the questions, "Is commodity silver a good investment?" and "Where is the price of silver headed?"

Although we track the price of commodity silver because of a general interest, we really do not have enough knowledge about the subject to offer any advice. We did discover this article on Wikipedia that gives some facts on the subject (primarily history): Silver as an Investment.

I do know that owning any precious metal can be cumbersome. If I was going to play in the commodity silver market, I would probably look at buying stock in silver mines or perhaps one of the Exchange Traded Funds (ETF) that focus on owning silver. This comment should not be considered as financial advice. Talk to experts and read everything you can about precious metal investing before jumping in.

Click on any picture to see a larger version. By clicking on "Comments/Questions" below, you can see posted comments and add your own questions and comments. Or, you can send us an email by clicking on "Email Silver Jim" in the right column.

New Links to Current Commodity Silver Price

We receive lots of questions about the market price of pure silver. So, we've added a couple of new features.

Firstly, in the right column of the screen, you will see a small graph containing the current day's pricing of commodity silver. This chart is provided by http://www.kitco.com/.

Secondly, we've added new links to "Our Favorite Links" in the right column of the screen. Clicking on "NYMEX Commodity Silver Prices" will take you to a web page of the New York Mercantile Exchange that displays more information about silver prices. The "Quotes" in the lower right of that screen gives you a snapshot of recent quote activity.

FYI, today, May 29, 2009, the ending price was $15.60 per Troy ounce. That means that the scrap value of a Chantilly place fork in terms of silver content is just under $25.00 today. If you had to sell your fork to a scrap dealer, you could probably get between $13.00 and $15.00 for it.

We also have added a link to a "Precious Metal Calculator". There are several calculators out there but we like this one because of its simplicity. Here are the items to be input:

• Enter the weight in grams
• Select "grams" as the units
• Select ".925 Silver" as the metal
• Enter "-40" in as the markup/discount
• Click "Calculate Value"

The displayed value is a rough idea of what a scrap dealer would be willing to pay you for your sterling.

By clicking on "Comments/Questions" below, you can see posted comments and add your own questions and comments. Or, you can send us an email by clicking on "View My Complete Profile" in the right column.