Silver shortage?

I've noticed the same. Not to say I haven't over-paid for some things along the way but you have to if you want to win the auction. I'm trying not to help fuel the stupidity though.

Either that or people aren't putting much weight on the recent decline and think it will be very temporary. The market seems fragile right now. I don't think I'd be surprised by anything that happens in the next 6 months. Dive or spike.

 

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The drop few price in silver is not fueled by collector's. But, by Wall Street, they buy the leases on silver and the commodoties futures. If they are jumping out of their higher priced contracts and buying future lower priced contracts, spot will decline. Remember, very few of these corps take delivery of the actual silver, but buy and sell the contracts as they rise and fall in value. It is possible in the hedge fund market to trade silver futures vs. oil futures or dollar futures. Just about anything.
No collector or dealer can influence gold or silver. Everyone is but a drop in the bucket. However, if you were to purchase Dec silver at $15 an oz, that may be large enough to move it a few cents. Just recently, an ETF, Electronic Trading Fund bought a future on $8 billion worth of silver. They hedged in downward and that is what we are seeing.
You can make money on gold or silver going up OR down, just as in stocks, where you can buy or sell puts and calls. If you buy a put and the stock drops, you make money. You buy a put and stock rises you lose money, however it is possible to sell the call or put before delivery date.
It's all very complicated, and although I have an MBA the young Wall Street whizzes, can reveal for the dinosour I am.
Vegas Vic

 

My earlier remark about buying Dec futures that could affect should have included a range of 100,000 or more ounces. I can't type as fast as I think.
Vegas Vic

 

Hey Vic, doesn't precious metals usually decline in price around holiday time? Someone once told me that. Not sure if it's the case.

 

Last time I checked Kitco they were selling one ounce Canadian Silver Maple Leaf coins for $14.55 each. They add a $30 shipping charge plus you have to buy insurance. So unless you want a large quantity it's no better deal than eBay.

 

I'd be very wary of the BIG suppliers right now as well. Make sure they have it on hand and ready to ship. Seems you really have to read the fine print right now.

Seems that Englehard is no longer producing 100 OZ bars.
Seems Johnson Mathey still is but getting delivery of same is WEEKS out.

Like I said read the fine print.

There's an outfit in Ohio (forget the name) that is producing 100 ounce bars. The boss picked one up at the Illinois show last week. It cost him $1300 which was about 55 cents over spot at the time.

He's looking for $2 over spot but silver dropped again.

ANY silver I buy now is "junk silver". At least it's fairly reasonable and we still have a bit flowing in.

Heck right now I'm sitting on some Walkers and Franklins that I paid 12-14X for. I have no plans on selling them at 8X that's for sure.

 

I am certainly not qualified to tell you there is a silver shortage, but I think at this point it is obvious that there is a supply problem. A couple people have mentioned that PM prices in the silver market have been depressed by short selling which has caused the prices to fall beyond what is acceptable in the physical bullion market.

A few short months ago Gold and Silver could be had in nearly any form close to the spot price. Now you can't really buy silver or gold close to spot price even if you deal in bullion. APMEX has admitted they are paying $3+ spot for ASEs.

Look on ebay... silver and gold are actively selling well north of their respected "market" prices.

Personally I have been buying silver in the form of US 90% "junk" silver coins. This is the only thing I can find anywhere near the spot price so it seems this is the best deal for my locale. On the internet however people are paying a premium even for this form of silver.

Once again a supply shortage is does not exactly equate to scarcity so don't let anyone fool you into believing the world is running out of silver; however, there are major supply problems in the bullion market now. The effect can be seen in the spread between spot and what you can buy the metal for. Show me where you can buy gold and silver NOW without ridiculous premiums and I will retract my statements.

 

I would not jump so fast there rzage! As green18 has stated it is a volatile market and the price of silver will jump and fall for the next couple of months. I would wait until after the first of the year before making any moves on buying silver or gold.

 

Read the thread entitled "Silver . . . hold or sell? Lots of good comments there. :eat:

 

The December shortage of gold and silver is a myth. The production of holiday jewelry is just now winding down as they are filling orders and getting it into the distribution network. I do however agree that 90% silver is the best type to hold, as there is a very small premium to pay. I checked Ebay Silver Eagles on a day the market was down last week about $1. Usually they have 300+ listed, but on this day there was less than 30. So the sellers are starting to sit on their hands. Which is good, because we all know that as supply decreases the demand will increase. I've been buying 90% $1000 bags, starting at $14. I'm still buying and will purchase another tomorrow. I believe the market will rebound and I'm cost averaging to reduce my average price. If you buy a bag for $14 an ounce and then a bag for $12 an ounce your average cost becomes $13 an ounce. Many people do this with stocks they believe in and as it drops they increase their holdings lowering their average price.
I believe in Warren Buffet's philosophy. People sell on fear and he buys on other people's fears. If you can't live with a down market, you should invest in something more secure such as tax-free bonds or CDs. Remember that risk and reward are porportional. The greater risk you take the greater the reward CAN be. However, it's easy to loss money that way.
I guess my recommendation would be to only invest what money you can afford to loss. Don't invest your 401K or the kids college fund. I certainly would not sell rare coins to buy bullion. They will always be mining silver and gold, but they'll never mint another 1909S VDB.
Just remember we are just the little guys trying to make a few bucks. The big guys are in the towers on Wall Street and manipulate billions of dollars which aren't theirs and are paid millions of dollars a year to do it. If you think the market will recede further get ahold of one of the gold commodity firms, most are based in Newprt Beach, CA and learn everything you can. They'll send you CDs and an abundance of reading material and decide from that if commodities are best for you. Remember that in the late 80's Hilary Clinton turned $1000 into $100,000. But then again...
Vegas Vic

 

It is a myth that there is an overall shortage of silver, but it is not a myth that there is a supply shortage of investment silver in 1, 10, & 100 ounce bars/rounds.

The US mint had to shore up operations because they could not get planchets. There are other reasons, but this one is documented by the mint.

I think people think of shortage in such broad terms that it causes disputes because of the way people use the word "shortage". The shortage to me would be the availability of new investment grade silver products. Obviously there is existing silver in investment form. Obviosly industrial silver is available.

People don't seem to understand that investment silver makes up a small amount of the overall silver market. IMO people are paying premiums on investment silver because industrial demand is goin up, and nobody really cares about the investment demand enough to satisfy current demand in that segment of the silver market.

JM quit procucing bars??? It costs alot of money to make planchets, bars, rounds. Why go through all the trouble when you can just sell plain old refined industrial silver, and let the CONSUMER needs determine how it is CONSUMED?

The spread between spot price & what you can actually buy investment silver for have grown IMO because there is more demand for new investment silver. It may take a while for this to effect the entire market.

But all the doomsdayers out there are going to cry foul until they realize that they are only a small segment of the market. Silver investment freaks are in their own way "manipulating" their own segment of the market by creating a high level of demand based on fear. That fear may be justified, but nevertheless it exists. The industrials are going to manipulate the market on behalf of the shareholders, consumers, and themselves, and they are going to win everytime because in reality they make up the largest part of the market. DUH

 

When you look at the spot price, keep in mind that this is set by the futures market and represents the price for "paper" silver that is normally settled in cash, not in physical metal. In times like these, the market price for an ASE can become disconnected with the paper price. There is still a lot of silver around if you are a collector looking to buy 1000 or fewer ounces, and the number of silver dollars available for collectors probably doesn't change much from year to year. But almost every year more silver goes into industrial applications than is taken out of the ground and [in my opinion only] this just might be the beginning stages of a physical shortage for the large users. So the premium prices you see on Ebay and internet dealers aren't necessarily greed or stupidity at work. It's just a difference in the paper price for silver and the physical price.

 

The nation's money supply has stopped its steep rate of increase and it's now flat. That's the main reason why commodities are crashing. There are fewer dollars bidding for the same amount of stuff.

Here's a fixed link

 

thats the funniest thing i have heard in a long time. Good one

 

Care to elaborate?

There's also a five-year chart that shows the effect a little clearer:


link

 

First of all COMEX futures contracts are promises for delivery. If you call in those contracts you should be able to take delivery of REAL silver. Saying that the "paper" market does not represent an actual value for physical silver is not entirely true. Although, your statement above is accurate, I just wanted to clarify.

Also silver is traded 24/7 wordlwide in various markets so the COMEX is not the only driving factor of the price.

Physical silver is being bought and sold at COMEX prices. However, investment grade silver is where the real price disconnect appears.

 

Thanks to Spock for the link to that great web site. I'm going to make good use of it. Also I like the Monex graphs that include the 100 and 200 day moving averages of precious metals. A month ago I thought they were behaving normally and we would see an uptick. However, the last week to 10 days have completely thrown any sense I thought I was making of them out the window. They seem to have merged and are heading down at about a 45 degree angle.I got an MBA in Finance many years ago and tomorrow it's off to the library for financial analysis books. The basic patterns I learned in school and through trading are not holding true. Although with the start of Parkinson's, I'll be the first to admit I've probably forgotten what hasn't been used recently. The only stock I hold outright anymore is McDonald's (MCD). That stock is a no brainer. They increase the dividend each year, last year doubling from $.75 to $1.50. At today closing price of $63.20, that is a 2.37% yearly return without any stock price increase. The stock has tripled in value in five years and shows no sign of stopping. The international market continues to be an opening for them and now they are kicking Starbuck's with their premium coffee's. Let's face it, can you afford a $4 cup of coffee with gas at $4 and groceries rising at 20% per year. There is not enough money in the world to turn Burger King into the number one fast food chain.
Anyway, I drifted off the subject and will spend more time on Spock's web site.
Vegas Vic

 

Ok it is going down a bit more in the short term and high in the long term (unless it doesn't).

 

I like your attitude Dan.
Vegas vic

 

What's so funny about Harksaw's research. It seems appropriate and well written to me! He even quoted his source. Maybe I missed the punch line? O well. . .