Sunday, November 23, 2008

One miner gets it right by selling their own silver bars

I think I mentioned in a earlier post that First Majestic Silver was going to allocate some of its silver production to a mint in order to bring their own branded rounds and bars to the market and capitalize on the discrepancy between paper and physical prices. Now I admit I was not paying very good attention and apparently the product and site was launched some time ago without me noticing, ooops;)

As you can see from the pictures above they are offering a selection of quite attractive proof rounds in 1, 2, 5, and 10 ounce sizes as well as a lower quality "business strike" rounds all made by Northwest Territorial Mint.

At this time the prices are based on $14 dollar silver with $1-3/oz premium on the proof pieces but at least they do have the 1, 2 and 5 ounce sizes in stock Unfortunately I missed out when they hit the market because I probably would have bought the minimum 20 round tube of the business rounds, which are currently sold out. I also think the display set of the 4 sizes of proof rounds would have been worth buying just cause it's pretty.

For the average investor the important products are those marked coming soon, a 5oz, 10oz and 1kilo ingot bar which are popular sizes that are nearly impossible to find. The other plus is they appear to be selling only product they actually have in hand and are not taking orders they will not be able to fill for months, hence the sold out status of several products. This is the kind of honest business practice and I expect from all dealers.

I applaud First Majestic for doing something that everyone else should be jumping on and I hope this prompts others to do the same. Of course current mint capacity may not be up to it but maybe the increased demand will drive some expansion. Even better why not get a bunch of mid tier companies together and creating a minting cooperative. Or why doesn't Silver Wheaton do something value added to the discount silver they buy?

I should note that Pan American has sold rounds and bars at Northwest Territorial Mint for a long time slightly closer to spot prices that these products, however due to market conditions you must wait months for delivery. So it's up to you, how much will you pay to get what you want now, vs. paying for it now and waiting months for delivery. With the instability in the markets I don't like leaving my money with anyone for months at a time with promise of delivery later. The current premium asked on these products is quite fair considering some of the prices I've seen on eBay I would definately buy these.

I hope this is useful to anyone eager enough to pay the premium. If any of my friends or family are reading this, anything offered by Majestic will do just fine for Christmas. One once of silver is worth infinitely more than more sweat shop clothing or a gift card from a company verging on bankruptcy. Of course a grain mill, column still or hobby farm will be accepted willingly as well.

Now that the business rounds are back in stock I've just made a modest purchase, I hope to report a trouble free transaction and delivery. You might also note the 5,10, kilo bars are also available


CHR said...

Yes, an interesting commercial move...

Not sure I understand their thinking when it comes to "proof" anything, in this market situation; other than a small amount for novelty 'first pressing' coins for anyone interested in premium investments.

We will see if their focus is on the high volume side of their offering; business strikes and basic bars, without a 'per oz' premium.

With their price of US$14.00 per oz (for products they aren't able to deliver!) and US Spot at US$10.50 .. delivery/Ins included, that's a reasonable price ... if they can deliver their non-premium goods!

Let's see if they can deliver, ~at that margin~, when they actually have something for sale.

Another URL worth watching, thanks for that!

Anybody know of a site/company that resides, sells and delivers in Canada for CDN$ and proper in-country shipping fees .. to avoid all the in/out of US$ nonsense and customs.



St_Clair said...

Wow, thank you for this post.

Had never seen that company, great idea to see a miner going to the retail market directly.

Their products look very nice. I had the feeling it might have been made by NWTM, (sorry, jumped into their site before completely reading your article).

Nice, hope they will get the lower priced business strike in stock as well

Just bought some Philharmonics from Kitco, but will need to pick them up across the border. Price was lower than the FMS, but shipping and insurance are added on top.

Great blog, you found a new reader. Thank you!

Another Canadian silver bug here. I hang out at the Kitco silver forum all the time.

St_Clair said...

First Majestic webpage is now listing 1 Kilo bars as available to order.

That's a nice size.

Anonymous said...

St Clair

their order system is a little suspect, both I and a friend made a small order, in both cases the confirmation letter never came.

Very pretty rounds but a disfunctional system. I did not follow up because the price fell after I ordered.

St_Clair said...

Oooh - I had the same experience. Filled in the order form about 3 days ago, and no reply with the quote ever came.

Disappointing. Wonder if they are swamped with orders?

Would be possible to call the phone number they list on the page and apply some pressure to see if it works.

Have ordered from the Northwestern Mint and it was a prompt and fast transaction. Now waiting for product shipping, it seems to already have been packed for shipment - 10 days after the web order, very good (specially when they state 'upto 30 days delay for bullion orders')

First Majestic loses our business if their order system is unresponsive. Hard to beat NWTM's price for 100 ounce bars.

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