Flute makers rejoice as the price of silver crashes!

[Casey Burns]

I purchase silver from a large jewelry supplier called Rio Grande Supply (see www.riogrande.com). They have Sterling, .999 fine silver, Argentinium silver, Gold Platinum and baser metals. There is always a manufacturing charge and so the silver I just purchased ended up being $57/oz. This was only a few ounces though - the more you buy the less the manufacturing charge. This company is also a great source of tooling. They will also render scrap, giving either 66% the current spot price in cash, or 75% in credit. I usually buy when silver is low, then send in my scrap when silver is high, and take the credit. I then wait until the price drops again to purchase more sheet or wire. Or I use the credit right away and get new tools like the jeweler's files I use for key making, etc. Their catalog is fantastic.

Thus I can order a 30 ounce sheet say for $1000 at $30/oz (plus manufacturing charge), use it up, generating about 15 oz of scrap (this is generated when I form and then turn the rings on the lathe). I'll wait until the scrap price doubles and send it in for credit. Thus, 15oz X $60 X .75 = $675. I can either wait for silver to drop to $15/oz and then get another 30 oz sheet with it, or buy $675 worth of tooling. This way I can absorb some of the price shock of the silver and minimize my costs. And have new tooling to play with!

Its true that the cost of silver is insignificant reallyand what I charge has more to do with the labor involved. But there is an overhead. In order to stay in business and operate efficiently, I need to keep a stock of materials on hand, including wood and silver, which involves a considerable outlay of money. Then it becomes a question of whether or not to spend three or four thousand on blackwood for orders for the next year, or to use that money for some more immediate financial need such as my daughter's tuition payment. Silver has to be on hand and is cheaper purchased in larger quantities so when the price surges, it represents a challenge in terms of purchasing - and the dilemma of purchasing it now (should the prices go up) or later (should the prices go down). It was easier in the days when it stayed below $5.

In terms of investing, don't bother with the jewelry suppliers. Kitco.com is a good place to buy silver, with their "junk silver" bags being perhaps a good investment. Also, smaller quantities usually can be had at a coin shop, or even online on eBay. eBay is a good place to observe - search for "junk silver coins" and look for the ones that actually state "face value" rather than in ounces. Avoid selling silver and gold to these places that say they will buy it such as the ones who advertise on street corners and set up temporary booths at your local mall or community center - in many cases they will buy it at 50% spot or less which is a huge ripoff for you and a huge profit for them when they render it and sell it above spot. The coin dealers and Kitco will stay much closer to the spot price.

Investing in gold and silver is relatively easy in terms of getting the actual material. The tricky part is knowing what the price will do. For that, avoid what they are saying on the popular media (FOX, CNN, etc) and read what they say at places like safehaven.com or financialsense.com . These sites are quite technical and these folks seem to know what they are talking about, especially authors like Jim Willie, Gonzalo Lira and others. These folks were screaming alarm bells about the Housing Bubble as early as 2002 or earlier and their predictions were spot on.

Casey

[benhall.1]

Now that's what I call an informative post!

Thanks Casey.

[Gabriel]

I wish we had such a great supplier of precious metal stocks in Germany...my supplier is the only one I found who sells D profile wire. It's impossible to find such a huge variety of wires, sheet and tubings here...I really like the different design wires. But importing the stuff to Germany is way to expensive I guess...if they even send them abroad.

[Lucas]

I wish we had such a great supplier of precious metal stocks in Germany...my supplier is the only one I found who sells D profile wire. It's impossible to find such a huge variety of wires, sheet and tubings here...I really like the different design wires. But importing the stuff to Germany is way to expensive I guess...if they even send them abroad.

Has anyone in Europe ordered from RioGrande ? Care to share experiences?
I used to order from Liberty Art Works, but they seem to have vanished from the earth ( or just gone broke, I guess)

Gabriel, have you looked at zu Jeddeloh? They have a selection of D profile wire (http://www.zujeddeloh.de/produkte/halbf ... -_161.html).

[Gabriel]

Gabriel, have you looked at zu Jeddeloh? They have a selection of D profile wire (http://www.zujeddeloh.de/produkte/halbf ... -_161.html).

That's my supplier. They recently threw the 40% halfround silver wire out of their product line, only selling off the rest of 2.9x1.2 wire they still have - that means I have to buy the 50% wire, which is basically the same, just heavier => pricier. If they throw out the 50% wire as well there's no supplier of D profile wire left in Germany...at least no one I know of.

[Loren]

Silver didn't "correct", the price was instantly crashed by the Commodity Futures Trading Commission's essentially unprecedented multiple margin hikes which forced highly leveraged buyers to sell. Why would the CFTC do this? Because JP Morgan has been massively short silver for some time, so much so that if silver had gone significantly higher, JP Morgan could completely collapse - meaning another bailout and/or major U.S. financial scandal/crisis. So rather than let happen, the CFTC sacrificed many smaller businesses that were long silver by hiking margins, which likely bankrupted a good 50-100 companies that traded in commodities and bet correctly on silver, but they didn't have the connections that JP Morgan has so they get screwed and big financial business once again gets bailed out on the backs of others.

[Casey Burns]

Well Silver is still more expensive than when I bought that big sheet of it in February at $30.11 spot. I just checked Kitco and its up 5% in the $37s and Gold in the $1500s. We may have just seen the correction soon to be followed by the "Hold On To Your Hats, Folks!" rise above the 1980 peak. We'll know in a few days if this was a V shaped correction. Such corrections have been typical since last year's low at $14.78.

Sigh - I was cleaning out some stuff yesterday, while looking for an old journal where I may have actually written down the date that I turned my first flute some 30 years ago approx, and came across boxes of receipts that I have to keep for 7 years for tax purposes, should we ever get audited. A receipt from Rio Grande was on the top. It was dated 4/29/04, so just 7 years ago. I bought a 30 ounce sheet of silver then. The spot for Gold was $387.50, Silver $5.60.

I bought a 6 X 30 sheet of 16 gauge Sterling for $234.22 plus shipping.

The exact same item at this moment costs $1214 plus shipping, according to Rio Grande's website. That is a 518 % price increase in 7 years, or 74% average a year. That's some inflation rate! And not much to rejoice about!

Casey

[Loren]

http://sgtreport.com/2011/05/today’s-silver-scandal/

[Casey Burns]

Thanks for that link Loren!

One of the reasons silver has been going up is another scandal of manipulation that is now the subject of an investigation and lawsuit involving JP Morgan's manipulation. Once that started the silver to gold ration started to reassert itself.

I am now expecting it and the other commodities to bounce. But if it goes low, I will probably buy more silver.

[Gabriel]

I'm quite happy about the fact that I bought silver yesterday. Price per gram went up by 9 cent overnight and will probably rise further.

[Casey Burns]

Its still slightly higher than the February Spot Price of $30.11. But the pundits at safehaven.com and financialsense.com are saying it might correct as far as the low 20s. That would be excellent in terms of then loading up on enough for at least a year's worth of flute making. I'm not going to rush out and get any yet. In the meantime I am still glad that I bought that sheet at $30.11 as I am using it now on 4 different flute projects.

Long term fundamentals still predict it to go back up. Kind of depends if there is another round of money printing, etc. For now, I think everyone is hoping that the collapse in oil prices results in a drop in gasoline prices at the pump. Don't count on it though. Those taxpayer subsidized oil companies need their mega-profits, along with their tax breaks! Even if it plunges us back into a deep recession (this is I think what is causing the commodities to drop actually).

Casey

[I.D.10-t]

It seems like I have missed my chance to buy high and sell low yet again.
What would Gomez Addam think.



Ahh, ticker tape. Somehow the Tweets are just not the same.

[toughknot]

Plastlc. The future is in plastics.

[Casey Burns]

Yes but Plastic is not real money. But you (and anyone else) are welcome to use it to buy flutes!

[Loren]

http://www.zerohedge.com/article/blame- ... to+zero%29