Silver Premiums are About to Evaporate.

cladking

Because silver and gold are going to be coming out of bank and comex warehouses to feed the growing demand all over the world. When the genie gets out of the bottle there is going to be a buying panic.

cladking

There'll be another take down tomorrow or sometime this week probably but this will just increase the premium you must pay for physical.

The shorts are in too deep and will be allowed to default. Nobody will be go to jail no matter how many times he sold the same ounce of silver he didn't own to no matter how many buyers. No regulator will go to jail even if it's shown he directly profited by possible collusion with the banks.

tincup

Interesting prediction... wouldn't be surprised that no one would likely get jail time. That seems to be the accepted norm now--- pay a fine, then go free and enjoy the rest of the profits from the venture.

As to whether any default occurs soon... beats me.

derryb

Difference between spot and physical (the "premium") will not evaporate any time soon. Most likely to go up. High premiums are bad for the COMEX vaults as it makes paper holders want the higher valued physical delivery instead of the typical rollover of the paper contract. COMEX valuts hold less than 10% of what is sold on paper. To prevent an old fashioned run on the bullion vaults look for bullion banks, who set spot with their intertrades on the COMEX, to allow spot to rise to close the premium gap if that gap continues to increase. The silversqueeze2 movement will likely keep physical demand and premiums up.

cladking

@derryb said:
Difference between spot and physical (the "premium") will not evaporate any time soon. Most likely to go up. High premiums are bad for the COMEX vaults as it makes paper holders want the higher valued physical delivery instead of the typical rollover of the paper contract. COMEX valuts hold less than 10% of what is sold on paper. To prevent an old fashioned run on the bullion vaults look for bullion banks, who set spot with their intertrades on the COMEX, to allow spot to rise to close the premium gap if that gap continues to increase. The silversqueeze2 movement will likely keep physical demand and premiums up.

My understanding is that investment demand is still quite puny compared to industrial demand. Any flow out of the system to investors is going to spook industrial buyers who need metal to keep their factories open. At the current time these buyers can't compete with investors who are paying a lot more. There will be metal flowing out of the mine to factory stream. Since so much metal owned by investors is a sham this could put even more pressure on price as the ponzi schemes collapse.

I could be wrong but this is the way I read it and is a fitting end to decades of illegality that has destroyed millions and millions of ounces of silver. The corruption will laid bare and could even rattle the bond market if the government allows these crooks to profit further.

Check out Ted Butler's latest at silverseek. Certainly when you're living in the Twilight Zone it's hard to be sure how anything will turn out.

derryb

It really doesn't matter where demand for physical comes from, it is the total demand for real silver that drives physical prices. As premiums rise you can bet the COMEX bullion banks are puckering for the reason I posted earlier. What will break the COMEX's hold on physical prices (their spot price, the basis of physical price) will be premiums so high that paper buyers will create a demand on COMEX vaults that cannot be met. The only way to remedy this pickle is to acquire more vault silver (they did this with last year's record demand by lowering their standard of acceptable silver sources) or allow spot to rise with physical prices.

While industrial buyers do procure physical metal on the futures exchange it is the seven or eight large bullion banks who really set the spot price (illegally as has been shown numerous times). Industrial buyers are really at the mercy of the manipulators at the COMEX and the speculators who smell blood.

MsMorrisine

perhaps the dislocation between 1oz silver and 1000 oz silver it the machinery to manufacture more singles.

derryb

fabrication costs/quality have a major affect on premium.

thefinn

Futures can be settled in cash. It is written into the contracts. No need to deliver.

MsMorrisine

so, perhaps silver flows freely

it flows freely to the 1oz manufacturers, but the manufacturers can't mint fast enough.

Baley

Everyone who takes delivery of physical silver immediately has physical silver for sale by them (or their heirs/designates) someday.
It takes strong hands indeed to HODL 😉