• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

There's Another Interesting Situation Playing Out in the Silver Markets

Both the spot price and the price of physical silver have soared in recent days, though the spread between the two has not narrowed but rather widened.
By JONATHAN HELLER
Mar 25, 2020 | 10:30 AM EDT

In case you were curious, Tuesday's 9.4% hope-for-a-stimulus-deal driven uptick in the S&P 500 was the seventh trading day out of the last 12 that the index has risen or fallen at least 5%. That has not happened (seven out of 12) since the fourth quarter of 2008 (specifically, Nov. 12 through Dec. 1 of that year). Four of the days in the current period had moves of 9% or more, which was not the case during the 2008 period I mentioned; most big moves back then were in the 6% range, with one at 8.9%.

One big difference between the aforementioned periods is that the volatility in the fourth quarter of 2008 came after a prolonged, one-year period of market drawdowns that started in October 2007. Investors by that time had experienced a year of falling markets.

The current period came out of the blue, and while it has blindsided investors, they still may be a bit fresher than they were by the fourth quarter of 2008. I, for one, am more hopeful at this point than I was in, say, October 2008.

Elsewhere, silver has gotten a boost over the past week, with the spot price rising 23% through Wednesday morning's $14.62 an ounce. Last week, I wrote about the disconnect between the spot price and physical silver, and while the spot price has risen, so has the price of physical silver.

The spread between the two has not narrowed; indeed, it has widened a bit in the case of "junk silver." A $100 bag of 90% pure silver coins, which contains 71.5 ounces of silver, is now selling for $1,757, or about $24.57 an ounce. That represents a 68% premium to the spot price. Last week, the same bag sold for $1,475, which implied a 63% premium.

Admittedly, I am a bit intrigued by the Sprott Physical Silver Trust PSLV; each share represents 0.3691 ounces of silver. At Tuesday's close of 5.26 per unit, that implies buying silver at $14.25 an ounce, which was below Tuesday's spot price close of $14.44. Interestingly, PSLV is fully backed by and redeemable for physical silver. As of Tuesday, the trust held around 63.786 million ounces.

Unitholders are able to redeem units for physical silver on a monthly basis, but that is subject to minimum requirements. For instance, redemptions are done at the last day of the month and must be for the equivalent of at least 10 London Good Delivery bars (these weigh between 750 and 1100 troy ounces each; that's a lot of silver). The redeemer is also responsible for delivery costs.

Clearly the premium for junk silver is due to the demand for relatively small amounts of silver that investors can hold in their hands. A silver quarter, for instance, contains $2.63 in silver (at the spot price) while a 1000-ounce bar, which is not divisible, is valued at about $14,500.

Theoretically, however, it is an interesting way to get exposure to physical silver at just under the spot price.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller had no positions in the stocks mentioned.

TAGS: Commodities | Indexes | Investing | Stocks | Metals & Mining | Real Money

More from Investing

Nasdaq Reclaims Its Uptrend

Guy Ortmann
Jan 20, 2021 11:00 AM EST

Market psychology and valuation continue to show warning signs.

3M and Mastercard Continue to Trade Sideways

Bruce Kamich
Jan 20, 2021 10:55 AM EST

Both stocks may eventually do better when investors sense that the economy is indeed going to do better.

The Market Trend Is Still Our Friend

James "Rev Shark" DePorre
Jan 20, 2021 10:36 AM EST

The folks that are waiting for the market collapse are going to have to keep waiting.

S&P 500 Has Had a Great 4-Year Run, but Getting There Hasn't Always Been Fun

Jonathan Heller
Jan 20, 2021 10:30 AM EST

The stock index from the start to the end of the Trump presidency has soared, but the level of volatility during certain periods was unsettling.

Cannabis Leader Canopy Growth Can Climb Higher

Bruce Kamich
Jan 20, 2021 9:32 AM EST

Here's how to play CGC.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:07 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/20/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • 11:09 AM EST GARY BERMAN

    Is Copper About to Turn to Rust?

    Below is a very long-term copper chart.  As you...
  • 08:02 AM EST GARY BERMAN

    Tuesday Morning Fibocall for for 1/19/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login