Here we go again, silver has been trashed to $15! But don’t fear as this “trashing” in my opinion is going to be like Custer’s last stand, let me explain. Just as in past episodes, the artificially suppressed prices have brought out 1,000’s of “Indians” all over the world as buyers of physical metal. I use this analogy of “Indians” because prior to this last 5 years, it was in fact consumers from India (whom are so very price sensitive) who would step up in the physical market to eat up supply if the price dropped.
There were stories out of Germany regarding the public’s consumption of silver this past week which were astounding. There were reports of coin dealers selling out of all silver inventory and even one dealer claiming they did more business Thursday and Friday (a week ago) than they had for average months so far this year. For quite some time now, there have been rumors that the big demand for Silver Eagles has come from Europe. This cannot be confirmed because the U.S. Mint does not disclose its customers but the frenzy in Germany this week does add some credence to the rumors.
Domestically, this past week saw exactly what we have seen no less than four previous times going back to the fall of 2008. Premiums started to rise after the FOMC meeting Wednesday a week and a half ago and rose nearly each and every day since. In fact, even though paper (COMEX) silver was down over $1 between Thurs. and Friday, premiums rose by close to an equal amount …so real silver was still priced about the same as it was 2 days earlier. Fast forward to this past week and premiums rose again on Monday and Tuesday and stories of “sell outs” started to swirl. By Wednesday morning, we found out that premiums jumped again and many products were going “wait list” of 2-3 weeks.
This was confirmed by the U.S. Mint when they announced a suspension of sales. The Mint had a record “non January” month of close to 6 million Silver Eagles followed by nearly 3 million in just the first 3 days of November. Reportedly they sold over 2 million Eagles in less than 2 hours Wednesday morning, they experienced a “run” and suspended sales indefinitely!
Before going any further on the silver topic I want to stop anyone in their tracks who refuse to see that the price of gold and silver are suppressed. Wednesday in the wee hours of the morning at 12:30 AM, someone sold 13,000 COMEX gold contracts which pummeled the price of gold by over $20. In perspective, the size and timing of this is hilarious! 12:30 in the morning? India was on holiday while Japan and China were on lunch breaks …not to mention the outright size. This 1.3 million ounces (40 tons) works out to $1.5 billion dollars or nearly seven days of global production! Who has this amount of gold to sell? Or to even hedge? It is not as if gold is just sloshing around because GOFO lease rates are now more negative than any time in the last 10 years! The gold market was very tight PRIOR to this sale, the sale only made the market tighter and served to clear the shelves. No real seller looking for the “best available price” would sell huge volume like this at THE most illiquid moment in global markets, apologists like Martin Armstrong and Doug Casey might take a stab at explaining this one away? Selling in this manner can have only one result and one purpose alone, affect the price downward …end of story. (The previous was written on Saturday, news out Sunday that UBS will be fined for manipulating gold and silver prices)!!! It is now a fact folks!
So, the financial Rembrandts got what they wanted, they broke silver and gold through their support levels and broke the charts …but did they really? NO! $15 silver you say? Too bad, you can’t have any! You can’t have any because there is none to be had! Please don’t tell me “yes you can” and that you could simply purchase a COMEX contract and demand delivery because they are on the hook for nearly 600 million silver ounces in December while holding an inventory of just over 60 million ounces, close to a 10-1 ratio of “obligation versus ability to perform!”
By the end of the week, there was nearly no “live” silver available. In fact, this was the case by close of business Wednesday. Most all products saw their premiums rise and wait times go out to 3-4 weeks, “indefinitely” in the case of the U.S. Mint. The situation now is like the butcher who has a sign in his window selling filet mignon for $2 per pound …he doesn’t have any and if he did it would be gone in a NY minute. Expanding on this, if it were really true, he was selling prime beef for $2 per pound and ranchers were paid even less, herds would be slaughtered all over the place because a dead cow is better than one that needs feed and water. Think about this in the mining industry, these current prices being offered to mines are not enough for them to sustain business so they will either cut back or go broke which will even further diminish the supply to an already supply starved market!
What I tried to explain to you in the above paragraph is that “low prices will be the cure to low prices.” Low prices have created a literal tsunami of demand and over time will restrict supply, this is why there are now very high premiums, very little product available and if you want any you must pay close to $20 per ounce. This is almost an exact replay of 2008 when the silver price was an artificial $9 and getting real silver at $15 was almost impossible while waiting 4-8 weeks!
Let me add by saying this, “it has to start somewhere,” an explanation is needed. I believe the entire “fiat” episode (which Greenspan has now admitted is inferior to gold) will end with both silver and gold going “no offer”. The physical markets will be swept clean by a systemic “run,” probably sometime soon. We may even see the paper markets go down further and physical pricing get even stronger, we are already seeing sub $16 paper and nearly $20 physical. Paper is only 80% in price of the real metal, this can and I believe will widen much much further. The average person will marvel at the prices of gold and silver but that will not be the real story. I believe the gold and silver markets will be defined by “availability” …or lack of. Ask yourself what will be your mindset when gold and silver prices are breaking out to the upside and there is no availability of product? THIS will define the market. What if COMEX silver was moving to $20 but you couldn’t get any for $30? Or COMEX at $50 and your $100 bill could not entice someone to part with an ounce of silver? When the fiat system does finally collapse which it mathematically will, real metal will go “no offer” for any amount of fiat money. Say I’m crazy if you will but keep in mind that this is exactly what has happened every single time in the past to every single fiat currency throughout all of history. All I am saying is that it has to start from somewhere and lack of availability will be present when it does. Lack of availability is now happening again and I do want to point out a most very basic human nature. When man wants something and is told he cannot have it …he wants it even more!
Let me finish with this, the current episode in my opinion is the start of a global systemic “run.” It is quite curious that the G-20 summit starts this coming week and concludes on the 16th. I believe there are 150 or more countries now that would like to see the end of the dollar as the world’s reserve currency (I plan to write about this tomorrow). Is it a coincidence that we now see the end of QE, a “stronger” dollar versus (other paper) fiats, an obvious paint job on metals, a COMEX delivery period where far more metal is contracted for than exists, a real (Shanghai) exchange which has seen 90% of their vault inventory swept clean …followed by a global meeting of all world leaders? Not to mention a meeting where the President of The United States will arrive in a virtually “castrated” condition after the elections? Has the “paint job” been done in order to “show” dollar strength? I believe yes, I also believe that if I can see it then so can the upper echelons of the rest of the world!
If you have waited to this point to purchase silver or gold, the market told you something this past week. The market has spoken and told you “if you want $15 silver, you can’t have any!” The danger as I wrote above is what will happen when prices are higher and “you can’t have any?” Don’t let this happen to you!
If fact you can have if you have millions (1000 ounces bars) but not much if you are a retail investor.
the question is “how many millions are left?”. COMEX “owes” close to 600 million next month and only have 60 million on hand, what will be left?
I agree, if you want now 100 million ounces at 15 USD it could be quite difficult but for a couple million ounces, I think it is very near comex prices in comex, london or maybe zurich.
my point was “you” personally cannot have $15 silver. For that matter, except for a few scraps right now, you cannot have ANY silver at all.
Another question : at what prices the silver producers are selling ?
I think this is at or below the comex prices so up to now the silver price IS still the paper/comex/lbma prices.
but not you.
Sorry why do you mean by not you ?
“you” personally as I assume you purchase retail. Even if not, what good is a 5,000 ounce bar of silver?
In fact I have no more dry powder so I am out of potential buyers.
However, I am sure that big corporations buying silver for industrial products have absolutely no problem in getting all the silver they need at no more than the comex price.
I have also heard that taking deliveries in comex are quite not “well seen” at comex for examples, I do not know whether it is true.
Another point is that if you want to sell silver, you will never get a price above the comex prices whether it is a coin or some lbma bars.
So, it just mean that as silver is only determined by western paper trading, the physical movements in the world are a derivative in the paper price and that it can lead to shortgage.
I have no idea when this will come but it seems it can last some several more years without any problem, unless BRICS decide enough is enough but with my 2 cents, I think they are not ready yet : look at the BRICS bank, it is only the beginning, they are not ready to crush western bankers.
100% wrong RD, dealers all over the country will pay $2-$3 premium s for Eagle, Maples, junk and any other number of coins.
First of all love your writing and come everyday to read your writing.
I agree 100% with where you think this is heading I like you waiting for the systemic reset that will send gold and silver ‘To the moon’ – it is just a question of time.
The only thing is that we have not yet broken the Cartel’s back and ‘live’ silver is still readily available at these ridiculous prices, i.e. Miles Franklin or many of your competitors, with premiums for generic rounds as low as less than $2. Yes, with some time and continued Eagle shortage the shortage could move to the rounds, though we are not there yet…
All the best,
thanks Guy, VERY LITTLE live silver currently exists for delivery.
It is not done until the fat lady signs.
There is little doubt that retail bullion dealers are having supply issues with silver.
Recently it has been common to see a number of popular silver items out of stock even if temporarily.
The fact remains is that in the bigger picture we will see supplies continue to dwindle as demand increases both for investment and industrial for silver.
As a retail buyer of limited amounts of precious metals I simply look at my holdings as rainy day products.
When the reset happens and it will at least I can sleep well at night knowing that I have an extra cushion of tangible assets close at hand.
The big boys have had their fun. They have pulled the wool over the eyes of many but now the truth is close to surface and the reality of excesses is about to come home for us all.
The world as we know it is on the verge of a major financial event. imho One bigger than we have ever seen and one that will effect almost every financial market on the planet.
What we see happening right now is the positioning before the event.
I think within the next few years we will wake up one morning and the banking system as we know it will be on pause.
When it comes off pause it will be a very different situation.
If you are not concerned then you are not preparing. If you are not preparing then it will be extremely difficult to weather the storm..
A POLAR STORM like you would never imagine could be possible is on the horizon. That is just my opinion.
I bought a few more rounds on Friday. At the end of the day, I’m all about the ounces I own. And even as a small investor, I’ve been able to accumulate a good amount the past few years.
keep on stackin”!
It seems that you have your response from the (in?)famous trader dan about gold manipulation.
His analysis are just a copy from the financial times and others cnbc people : no inflation blah blah, king dollar blah blah, and so on.
What he does not understand is that if no systematic dump have happened gold could be 200/300 higher, not 2500/3000 but that is still a difference from now.
what you are missing is that keeping the price of gold down is a “confidence thing”. Were gold left to trade freely, confidence most likely would have already broken and your “$2,500-$3,000” difference might need a zero added to it in a total breakdown scenario.
In fact, even as a “gold bug”, I understand what dan and other MSM financial western medias say : it seems that the western central banks can monetize any bad debt of the system without triggering any weimar scenario ie money going into the commodities rather than bond market. But with QE, now speculators are making huge gains by buying every bond they can so the money still keeping into the bonds, stocks and so on even if some leaks into gold/silver.
In the past I thought than the western system could collapse from its own weight because there are too much non refundable debt in the west but because of the last years, I think fed, ecb and so on can continue this game for many years. However, the next crisis (1998, 2001, 2008,…) will be a new test of their ability to monetize everything but when you see that USSR has last nearly one century and without oil price slide, they might still be here !
The only thing that dan and his friends totaly dimiss is that some BRICS leaders could decide to launch a new financial architecture which would be a major competitor to the western current financial domination which is in my opinion still very strong (look at the russian ruble, speculators can just destroy it in a few months).
your last paragraph is correct, the rest …”skittles for you”!
In fact, I think that the east will win this monetary/financial/currency war as they have now better fundamentals but only IF and WHEN and HOW they decide to “fight” and not just make currency swap with yuan or trade settlement in non us dollar, or a BRICS bank.
Indeed, if they are just want to do the same that the west has done for the last decades, I do not see how and when they will reign in the pricing of assets such bonds, commodities and so on.
If we look at what the russian central bank is doing, it is exactly the old IMF solutions, the same can be said with shadow banking in China with the PBOC actions.
Of course, this can be just the best solution for them until the “reset” but up to now we cannot be sure at all that something different, more just and finally better is coming from the BRICS team.
All the best.
RD when the metal runs out that’s the end, and the numbers seem to suggest that is soon. I don’t think the brics will be able to set up another ponzi scheme like the west has because this requires trust in fiat currencies by the average man. Trust will be shattered for generations to come.
whatever new currencies arise will by necessity have to have confidence in them, confidence is generated by something real.
This makes sense given that I buy silver (mostly on ebay) and it seems I am always paying about a $5 premium for Eagles. When it went to the low $15s, prices were still over $20 ($105 for 5 eagles)
Ebay is not really a good guage as they are always on the high side.
Good article, yes Armstrong said there is no suppression, the only manipulation is on the way up, go figure. Was wondering your thoughts on something… The gold/silver ratio at around 74oz silver to 1oz of gold. I bought silver in the 30’s and have been trading some gold for silver to lower my cost average of silver. Since I don’t have any money to buy right now it is a way to lower my silver average without spending any money. When the ratio for silver comes up I can get more gold for less silver, hope this makes sense. Since everyone is always saying buy to low to lower your cost average nobody ever talks about ratio nomatter what the price. It might help some who bought higher then where its at now but don’t have the funds to participate.
yes dishman, it is a ratio play and right now greatly favors silver.
Thanks for the reply Bill.
We have been told, that the supply of metal will be out of supply soon but nothing up to now and there is no way to know how luch time it will require from now.
RD yes I know we’ve been through this many times and when it comes to silver I can’t say whether we are close to running out or not, but when it comes to gold, the numbers imported into China and India as reported by Koos Jansen, plus all the other official demand from around the world, exceed official mine supply by around 2000 tons, apparently. Since the Fed only purportedly had 8000 tons that won’t last long. Where else is the other supply coming from, what other central banks? How much do they have? Simple math dictates that this cannot go on for long, especially if the west is still going to retain any gold to base a new currency on. If it goes on too long then we know the central bankers have totally sold out our countries, they are totally treasonous. Plus those numbers are based on official demand which doesn’t even include secret eastern central bank demand. I don’t think Koos’ numbers are wrong, everything seems correct and believable.
When I say it should run out “soon” I mean in a year or two, that time frame, or possibly a week, who knows. But not years down the road, unless they have discovered a magical Atlantis of thousands of tons of gold supply.
yes Mark, simple math equals sound logic.
To the author, how long have you been around pm? I have been around it for over 40 years now. Please tell me ONCE where physical premiums did not rise on the heels of a comex downturn. Its nothing new, its EXPECTED. So, to make a big deal about it this time is silly. If prices remain where they are today physical premiums will drop shortly. Remember just last year when prices dropped to $20? Remember how premiums ballooned then, only to drop over time. There is nothing “new” or “telling” this time with higher that averages either. I would have been SHOCKED if they hadn’t gone up.
Silver has had .50 cent drops in a day many times where the premiums did not budge, how often do the mints run out of silver? SPAM!
Silver 1oz are available in NZ right now at NZD$24, nearly $4 over spot.
in what size?
NZ Silver Fern
Weight:1 Troy oz
Minimum purchase 20 oz
Same dimensions as Eagles, I have both
sorry, when I said “what size?” I was going back to my broker days, it means “how much? or how many” many are for sale.
Your article makes me think what I would do if I were a bullion dealer or owned a coin shop.
The no bid/ you can’t have any situation makes total sense to me. Whats your take on the following….
Isn’t it true, that when that no bid aspect comes into play, most or all the dealers themselves will have anticipated it and pretty much closed shop in order to keep and hold any of the PM inventory they have in order to best position themselves for the re-set?
Leading up to this, is it safe to say the bullion dealers will dramatically increase the premiums when there are far too many buyers and not enough supplies? In other words, this itself will lead to the importance of having that inventory would be much more valuable than selling any of it for any premium paid in fiat currency. So in essense, the bullion dealers change their entire business model from …. selling retail with a premium….. to holding onto their inventory which in turn makes the dealers (who are people themselves) the ultimate PM investors? In fact, they may only become buyers just like those “WE BUY GOLD” signs we saw alot of and still do see some become more common since 2008.
Its a shame that people get so desparate to be able to buy groceries, that they will take old 14k gold chains and get $4.15 for it not realizing the melt value may be $50. Yet they are hungry. This will occur for a while until the sheeple understand that that $4.15 won’t even buy them 1 slice of bread as opposed to a whole loaf of bread.
Since bullion dealers are not sheeple but I would think much know what is happening and even have insights into it just by being in the business… They will surely be the ones to implement the “no bid” on the PM’s by simply holding onto their inventory in order to best position themselves. Some may do this quite early in the process anticipating what is coming.
Thats what i would do if I were a bullion dealer.
To add to this, when a dealer “sells out” I am sure he is not truly sold out, as he has PM’s he himself never plans to send… which in essense isn’t part of his inventory anyway. I just imagine that all the sudden that inventory he would normally sell becomes too valuable to part with at any price.
This all makes total sense to me.
Rich, you have a lot of this backwards, let me explain how dealers work. First, you mean “no offer” not “no bid”. Coin dealers by and large do not hold huge inventories. If they did over the last couple of years then most all would have gone out of business. Typically coin dealers have their own suppliers. When you give us an order, we take the order from you and give it to our supplier, “we” now own the product and along with it the “risk” so we go out and hedge the order in the futures market and make it price neutral. This is also how the big suppliers work, they hedge their inventory. As far as “owners” personal metals, I assure you they do not consider it “inventory”, this metal is off the market and owned because they believe in their own product. As for premiums, they roll up the chain and end up at the client level. The mints can increase premiums as well as the big suppliers and then the dealers themselves, if product is tight then yes, premiums are increased to compensate for scarcity. I hope this helps.
Yes Bill I do not know the business but do understand supply and demand as I work in the demand side reduction part of the energy business.
I guess what I meant was, sure they do not have millions of dollars of inventory just laying around (although I have been in coin shops that seem to), but there may be a time where they will close shop as the inventory they have is too valuable to sell for any cost. This in itself supports the nature of your “no offer” explanation as the dealers will likely be the first seen by the public that will say no more PM’s can be bought?
Also, yes, I understand that owners may have their own inventory that is not for sale, but the nature of your business is that you have an ever changing inventory, and at some point, it will become harder and harder to part with and the very dynamics of you selling may stop… instead you become holders of whatever you can get just like the rest of us but on a greater and more insightful scale. The same might be true of farmers if there is no food available?
Does that make more sense despite my not understanding the exact way bullion dealers work? I mean the hedging aspect and all.
The point is, the very dynamics of the way bullion dealers work could easily change. Is that not the “no offer” aspect you are taking about?
I work in a business where power companies used to have a surplus of generating capacity. So they could sell the extra power on the open market mostly to California and make a “premium” thus keeping their own rate payers rates lower. Yet, now, beause of population growth and regulations making building new generation and distribution absurdly costly, we now pay incentives to help customers use our product (power) more efficiently and cost effectively by installing energy efficient technologies. So the whole dynamics of the industry changed in that we no longer have a surplus and try to off-set the need for more generation by reducing demand. We pay people to use less of our product.
So what will the bullion dealers do when the demand is way over the supply? They cannot get the supply so they will reduce demand by raising premiums until ultimately, they can not part with whatever inventory they happen to have?
And whats really crazy to think about is if there is hyper-inflation, all the sudden people will be combing the land-fills to get the tiny bit of silver out of old stereo’s because they are so desperate to be able to afford a loaf of bread that costs $30-$300-$3000-$3M. Think Zimbabwe. So, all the sudden people will create their own supply in desperation when silver is enough to buy a meal. Weren’t there stories just last 2008 about a string of catalytic converters getting stolen out of cars for the palladium, people getting mugged for the gold of their wedding rings, titanium golf clubs being stolen a few years ago, and people getting their gas stollen out of their parked cars?
it will be anarchy and the govt. knows it, why do you think they have been stockpiling weapons and 2 billion rounds of ammo?
yes Rich, were a tsunami of demand to hit, dealers would then tend to hold on to product, increase premiums or decide not to sell anything they do have in inventory.
Silver, and gold, freely available from 1000oz bars down in Japan Ginza Tanaka and Tokuriki Kinzoku. Also friends in Korea saying the same thing in any size you want. Same thing happened before when everyone was saying you couldn’t get it at such and such a price. You have to expand your horizons to understand the market, it’s not a local phenomenon, it’s all connected and it’s all relevant. $15 silver is freely available if you are not limited in your location…or thinking!
yes, maybe you should let all of the mints who have run out of silver know this?
Armstrong is just Jeff Christian without a jailbird costume.
Bill you wrote a number of articles about how Larry Edelson was wrong when he started to warn people about gold and silver’s decline. Well it turns out YOU were wrong.
The problem with you manipulation cry babies is that you never take any responsibility for your market calls. If gold goes up you pretend to be a genius but when it goes down you cry manipulation. That is how a child acts.
If you know the market is manipulated why do you play it? Do you go to a casino and find the most rigged game and throw your money at it? No! You look for your best odds. Goldbugs claim buying gold is about protecting your purchasing power, well then wouldnt you find the market that has the wind to your back and not a headwind?
This just shows how you are hypocrite and cry baby trying to hawk a product using fear and conspiracies.
Bill you have been wrong and you will stay wrong. I hope it doesnt put your firm out of business but I suspect it will.
the suppression of gold and silver prices are one of the main reasons I write about buying them, they are artificially priced and when the rig ends prices will level out to where they should have been. You in effect are being subsidized at these levels for buying.
Just curious as to which mints have run out of silver.
as I understand it we have been put on 2-4 week delays for Maples, Philharmonics, sold out of all “private mint” products, Sunshine is reported on delays and the U.S. Mint.
Excellent! Thanks for the info Sir.
I don’t know why people are still wanting to sell silver. I went to my local pawn shop that Ialready bought pounds of coins from and they had Eagles and Maples. I was only going to buy one Eagle and one Maple. After hearing the low price I was in panic and bought another Maple. It makes me excited. Precious metal going for so cheap its insane. People selling silver dimes on eBay for $1.50 each. Its a free for all. I get so much satisfaction selling needless junk on eBay and buying silver. Of course on there I only buy 50 cents or smaller coins. I don’t think many of those are faked at least not yet.