More Good News for Silver
Deadhorse
Posts: 3,720 ✭
From Silver Stock Report email:
Silvertowne announced they are not taking any new orders.
The NorthWest Territorial mint announced they are not taking any new walk-in orders until they catch up on online orders.
The Perth Mint announced they are not taking any new orders.
The U.S. Mint is no longer selling silver Eagles.
The Sunshine mint, who is a supplier of blanks to the U.S. Mint is backlogged for 5 months.
Who says there isn't a shortage?
These people could easily melt and repour 1000 ounce bars.
Last two paragraphs in the letter:
So, to sum up. The biggest reasons why product dried up, and premiums went so high, is that there was a confluence of several factors:
1. Major new public buying, starting when gold hit $1000, and silver hit $20 earlier in this year.
2. Existing dealers who are teetering on bankruptcy due to the rising market prices, lack of public selling, major increases in public buying, and changes in premiums.
3. Low levels of regular new manufacturing, which was decimated by the former public selling, or "dumping" of real product.
4. Manipulated low prices from futures contract selling that did not provide any new silver to the market, at "below" market prices, which used to come in from public selling.
All of this ought to give confidence to silver buyers today. These are historic low prices for silver, even the premiums. Premiums will not drop below 20% minimum until the public starts dumping, once again, and that probably won't take place until after a major price run up, at the end of this bull market in silver that ought to last about another 15 years. And premiums need to maintain at about 30%, to encourage new manufacturing of new silver products.
Sincerely,
Jason Hommel
Interesting read.
DH
Silvertowne announced they are not taking any new orders.
The NorthWest Territorial mint announced they are not taking any new walk-in orders until they catch up on online orders.
The Perth Mint announced they are not taking any new orders.
The U.S. Mint is no longer selling silver Eagles.
The Sunshine mint, who is a supplier of blanks to the U.S. Mint is backlogged for 5 months.
Who says there isn't a shortage?
These people could easily melt and repour 1000 ounce bars.
Last two paragraphs in the letter:
So, to sum up. The biggest reasons why product dried up, and premiums went so high, is that there was a confluence of several factors:
1. Major new public buying, starting when gold hit $1000, and silver hit $20 earlier in this year.
2. Existing dealers who are teetering on bankruptcy due to the rising market prices, lack of public selling, major increases in public buying, and changes in premiums.
3. Low levels of regular new manufacturing, which was decimated by the former public selling, or "dumping" of real product.
4. Manipulated low prices from futures contract selling that did not provide any new silver to the market, at "below" market prices, which used to come in from public selling.
All of this ought to give confidence to silver buyers today. These are historic low prices for silver, even the premiums. Premiums will not drop below 20% minimum until the public starts dumping, once again, and that probably won't take place until after a major price run up, at the end of this bull market in silver that ought to last about another 15 years. And premiums need to maintain at about 30%, to encourage new manufacturing of new silver products.
Sincerely,
Jason Hommel
Interesting read.
DH
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose."
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
0
Comments
shortage of the metal?
When I bought my Toyota Prius this summer I had to wait 3 months
for it to arrive. The dealership simply stopped taking orders for it
in June and is just now completing all the past orders. Once again they
are prepared to take new orders for next year's model.
Prius were not able to be made fast enough. It was not that the materials
to make them was nonexistant.
two very different things.
a shortage would mean that the companies above were sitting idle
due to a lack of silver.
they are just busy as all heck! they cannot make it fast enough to
fill the demand so you simply have to wait. Pretty simple really
and no need to pull out the term shortage to get people to read your
writing.
<< <i>isn't being backlogged with orders a very different thing then a physical
shortage of the metal?
When I bought my Toyota Prius this summer I had to wait 3 months
for it to arrive. The dealership simply stopped taking orders for it
in June and is just now completing all the past orders. Once again they
are prepared to take new orders for next year's model.
Prius were not able to be made fast enough. It was not that the materials
to make them was nonexistant.
two very different things.
a shortage would mean that the companies above were sitting idle
due to a lack of silver.
they are just busy as all heck! >>
If they were busy as "heck", we wouldn't have these premiums.
If they were busy as "heck", then the wholesalers wouldn't have laid off most of their employees.
There has never been such a backlog across the board like this.
These people would rather make money than wait around.
You are comparing apples to oranges. Confusing production times with availability.
They can melt and pour silver at alarming rates. I remember the late '60s and early '70s and saw those operations in action.
They can churn out rounds by the thousands, but they need the blanks first.
However, they can't when they don't have any.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>3. Low levels of regular new manufacturing, which was decimated by the former public selling, or "dumping" of real product. >>
In other words the fabricators of small size bars and rounds shut down their production lines and laid off workers earlier when everyone was selling their holdings at high prices. They can't just flip a switch and start up production on the fly. So there is a backlog of orders.
<< <i>2. Existing dealers who are teetering on bankruptcy due to the rising market prices, lack of public selling, major increases in public buying, and changes in premiums >>
Holding inventory became very risky, and costly, as prices fell. Some dealers probably did not want to buy new inventory; others became bad credit risks. Either way, orders for new product fell.
No one here has proferred any evidence tying the shortage of fabricated product to a world-wide shortage of the metal per se. Nor has anyone shown what percentage of the world wide production is fabricated into small size bars and rounds.
<< <i>Premiums will not drop below 20% minimum until the public starts dumping, once again, and that probably won't take place until after a major price run up... >>
But if you are paying $15 to $17 for $10 silver, you might barely break even (or lose if you factor in holding costs) if silver prices run back up and trigger a new round of selling.
<< <i>And premiums need to maintain at about 30%, to encourage new manufacturing of new silver products. >>
A 30% premium would be $3 today at $10 spot. But people seem to be paying 50-70% premiums. That means the current premiums are more than enough to get the fabricators to ramp up production, and buyers at these high premiums are at risk at taking a bath when newly fabricated supply hits the market.
CG
<< <i>Toyota Prius >>
<< <i>
<< <i>Toyota Prius >>
48 MPG. Fully loaded. Fun ride. Get behind the wheel.
I laughed to until i did my research and drove one ;-)
---------
and i agree with calgold. the prius example is not that far off.
you do not expect the demand.. thus you cannot make them fast enough. different reasons, same result.
Prius even started going up in price past MSRP.. just like silver is above spot.
what shortage? the stuff is available all over... for the right price.
The US mint has pumped out gold and silver ounces at much higher rates than being asked of them today. Rates as high as 4X higher such as back in 1998. Wouldn't take the mint days or weeks to ramp production back up? It's not as if they shutdown lines and sold equipment.
According to some sources even the 1000 oz bars are starting to dry up. Something here is seriously out of whack as Deadhorse suggests. What, do we think that J6P (ie us!) and the coin shops have finally pulled one over on the silver commericials and shorts after 28 years? Or is there a real shortage? It should be easy to take 1000 oz bars out of circulation and melt them down for 1 oz rounds and bars...assuming they are that easy to get. Yeah, maybe I'll buy the fact that the US Mint can't get finished gold blanks for their process, but not being able to get silver is a stretch and a half. TTown reference a good article on silverseek.com earlier today. It indicated that the demand for gold is running at something like only 2X the demand for silver. A fun stat considering silver is selling for 75X less than gold and is less available for production, not to mention that firms that mine for silver do it through zinc and other base metals whose profitability is way down. Some silver producer's base cost is $16-$20/oz. Better if they bought it out of Comex warehouses for $10 and sold it for $16+.
roadrunner
<< <i>No one here has proferred any evidence tying the shortage of fabricated product to a world-wide shortage of the metal per se. Nor has anyone shown what percentage of the world wide production is fabricated into small size bars and rounds. >>
Investment silver amounts to only 7% of worldwide production.
Industry and medical will always be served before investors.
You could bother to look up worldwide production over the last 20+ years, you will find that it's shrinking and costs are going up to produce it.
You will also find we are using up more than is produced on an annual basis and have done so for over 15 years.
It's very clear that there are some who will never believe we are running out, it's pointless to debate them on the obvious.
Forget the convoluted arguements on why there isn't what there used to be.
Occam's Razor.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>
A 30% premium would be $3 today at $10 spot. But people seem to be paying 50-70% premiums. That means the current premiums are more than enough to get the fabricators to ramp up production, and buyers at these high premiums are at risk at taking a bath when newly fabricated supply hits the market.
CG >>
$17 spot is about the high. It can be found closer to $13-$14 with a little effort. Right now, we can buy Maple leafs at teletradedirect for $13.50. This coin will NEVER be worth less than $8-$9. Even if silver fell to $1 an ounce, the maple leaf is going to be $8 because it has a face of close to $5 an ounce and there would still be a premium over that to avoid it being a one sided bet. So really, if someone invests in silver today wisely the downside risk is very very small compared to the upside.
<< <i>In other words the fabricators of small size bars and rounds shut down their production lines and laid off workers earlier when everyone was selling their holdings at high prices. They can't just flip a switch and start up production on the fly. So there is a backlog of orders.
The US mint has pumped out gold and silver ounces at much higher rates than being asked of them today. Rates as high as 4X higher such as back in 1998. Wouldn't take the mint days or weeks to ramp production back up? It's not as if they shutdown lines and sold equipment.
According to some sources even the 1000 oz bars are starting to dry up. Something here is seriously out of whack as Deadhorse suggests. What, do we think that J6P (ie us!) and the coin shops have finally pulled one over on the silver commericials and shorts after 28 years? Or is there a real shortage? It should be easy to take 1000 oz bars out of circulation and melt them down for 1 oz rounds and bars...assuming they are that easy to get. Yeah, maybe I'll buy the fact that the US Mint can't get finished gold blanks for their process, but not being able to get silver is a stretch and a half. TTown reference a good article on silverseek.com earlier today. It indicated that the demand for gold is running at something like only 2X the demand for silver. A fun stat considering silver is selling for 75X less than gold and is less available for production, not to mention that firms that mine for silver do it through zinc and other base metals whose profitability is way down. Some silver producer's base cost is $16-$20/oz. Better if they bought it out of Comex warehouses for $10 and sold it for $16+.
roadrunner >>
I've been talking about the shortage of 1000 ounce bars for a long time now. Still, the naysayers say they can buy it at 49 cents over the paper/SLV price.
Well, I say put up or shut up. You can't get them at that price and it's unlikely you can get them at any price.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>$17 spot is about the high. It can be found closer to $13-$14 with a little effort. Right now, we can buy Maple leafs at teletradedirect for $13.50. This coin will NEVER be worth less than $8-$9. Even if silver fell to $1 an ounce, the maple leaf is going to be $8 because it has a face of close to $5 an ounce and there would still be a premium over that to avoid it being a one sided bet. So really, if someone invests in silver today wisely the downside risk is very very small compared to the upside. >>
That's exactly how I looked at silver 9-10 years ago and it's been very, very good to me.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Fighting the Fight for 11 Years with the big "C" - Never Ever Give Up!
Member PCGS Open Forum board 2002 - 2006 (closed end of 2006) Current board since 2006 Successful trades with many members, over the past two decades, never a bad deal.
I agree with you. I am buying silver right now in the range of $13-$14, and I will hold it for 5-7-10 years and see what happens. We dont expect silver to be $20 tommorow or even by years end. I know its going to take time. I will buy all I can afford right now and time will tell. If I am wrong, then I will take the loss. I have been wrong before. I will be wrong again. But on this, I am not wrong.
<< <i>isn't being backlogged with orders a very different thing then a physical
shortage of the metal?
When I bought my Toyota Prius this summer I had to wait 3 months
for it to arrive. The dealership simply stopped taking orders for it
in June and is just now completing all the past orders. Once again they
are prepared to take new orders for next year's model.
Prius were not able to be made fast enough. It was not that the materials
to make them was nonexistant.
two very different things.
a shortage would mean that the companies above were sitting idle
due to a lack of silver.
they are just busy as all heck! they cannot make it fast enough to
fill the demand so you simply have to wait. Pretty simple really
and no need to pull out the term shortage to get people to read your
writing. >>
I agree on what you are saying 100%
<< <i>The over looked fact about the silver shortage is the lack of demand of other base metals such as zinc and lead, a lot of silver is a by-product of mining for other metals where mining for the silver by itself would be cost prohibitive. That's where the shortage comes in. >>
It didn't used to be a by-product.
The fact that it is now should tell people that there really is a shortage of readily minable silver.
Morgan dollars didn't come from any by-product.
Neither did our coinage from '64 back.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
if you are paying $15 to $17 for $10 silver, you might barely break even (or lose if you factor in holding costs) if silver prices run back up and trigger a new round of selling.
If you are persuaded that there is manipulation of the paper price taking place, there may not be any good way to determine what the fair market value of silver in 1 oz. pieces ought to be. If the $10 spot price is meaningless (and it obviously is), then the premium reflects the market's interpretation at any given time.
Tulving's premium on a 1,000 oz. bar has gone from 0.49/oz. to 0.79/oz. in the last few days. Silver Eagles have risen to $6.99/oz. over spot, and no other 1 oz. rounds of any sort are even available. So, the 1 oz. rounds at 30% premium are a thing of the past already. The market will always reflect what can be found and re-sold. Right now, that's not much.
I knew it would happen.
<< <i>Deadhorse,
I agree with you. I am buying silver right now in the range of $13-$14, and I will hold it for 5-7-10 years and see what happens. We dont expect silver to be $20 tommorow or even by years end. I know its going to take time. I will buy all I can afford right now and time will tell. If I am wrong, then I will take the loss. I have been wrong before. I will be wrong again. But on this, I am not wrong. >>
I was just wondering where you think silver will be in 5-7-10 years.
Right now you can get 5% in a CD. That $14 invested in a 5% CD is nearly $18 in 5 years, $19.70 in 7 years and $22.80 in 10 years. This return is in a "relatively" safe govt insured investment. And you can get a 5% CD from GS or MS.
Those that I see on Ebay paying $20 per oz will have to see silver go to $25.50, $28 and $32.50 respectively just to attain the "relatively" risk free return of a simple CD.
Knowledge is the enemy of fear
Also wondering why you are paying a $2 premium for ASE's over other foreign govt .9999 silver? Isnt it all the same, or does the implicit full faith and trust of the US Govt come into consideration?
Knowledge is the enemy of fear
<< <i>
<< <i>Deadhorse,
I agree with you. I am buying silver right now in the range of $13-$14, and I will hold it for 5-7-10 years and see what happens. We dont expect silver to be $20 tommorow or even by years end. I know its going to take time. I will buy all I can afford right now and time will tell. If I am wrong, then I will take the loss. I have been wrong before. I will be wrong again. But on this, I am not wrong. >>
I was just wondering where you think silver will be in 5-7-10 years.
Right now you can get 5% in a CD. That $14 invested in a 5% CD is nearly $18 in 5 years, $19.70 in 7 years and $22.80 in 10 years. This return is in a "relatively" safe govt insured investment. And you can get a 5% CD from GS or MS.
Those that I see on Ebay paying $20 per oz will have to see silver go to $25.50, $28 and $32.50 respectively just to attain the "relatively" risk free return of a simple CD. >>
You didn't ask me, but I will chime in. In 5 years we will see silver at least at $40 an ounce. Probably more.
7 years? In the hundred dollar range. A combination of rarity and inflation will have to put it up there.
Refined silver is already more rare than refined gold.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Right now, there is a shortage of silver available at spot + small premium. If I put a full page ad in the NY times: Wanted 1 100z bar .999 silver. Will pay Spot + $1/oz, no one will sell to me. If I change the ad to spot + $5, I'll probably have my phone ring off the hook.
Same as the Prius example. There actually was a shortage because you weren't able to take immediate delivery. If you had to have a Prius that day, you could not have bought one for MSRP. There was a shortage of Prius available for MSRP on that day. However, you could have probably bought one for MSRP + $5000 - $10000). Immediate delivery is key though - obviously there is no premium for waiting 3 months.
If catastrophe strikes tomorrow and the grocery stores are out of food, there will be a shortage of bread at the going rate of $3/loaf. However, if you offer $20/loaf, you'll probably be able to get someone to sell you one.
Not unlike the common refrain we hear about the shortage of American workers willing to do some jobs. Yes, there's a shortage of Americans willing to work produce for $8/hr (especially because there are plenty of alternatives at that rate). There is probably no shortage of Americans willing to work produce at $50/hr.
In fact, nearly all of the silver mined throughout history has been consumed. It is gone forever.
BTW, Illegal aliens are paid around $12 an hour in cash.
Therefore, you will have to pay decidedly more to get Americans to work the same job as they have to pay taxes, or at least file and they will get less in their paycheck due to FICA if nothing else. No shortage of American workers as long as it is a livable wage.
I live in a sactuary city. Illegals can put 5 families in a single home. American citizens are in violation of housing codes and get arrested for far less than the same thing.
It's a sh*tty world out there in many ways.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Tulving's premium on a 1,000 oz. bar has gone from 0.49/oz. to 0.79/oz. in the last few days >>
Tulving may be advertising it, but they can't deliver. Of course, others advertise as well.
Easy to add a few lines to your web site and it gives an impresson of being well connected.
Hans just paid $4 over spot on over 100 100 ounce bars in a public auction.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Dealers also don't like to say they can't deliver something or are out of it. If that means listing "call me" for prices or other such tricks, they'll do it. I mean they can always run down the street to a competitor and use their inventory as "theirs." If you are a seller or a buyer how long will you frequent a dealer who never has stock of what you want? Hence it's market suicide to continually list items as unavailable or to only offer to buy such material at those inaccurate "published" prices. What I felt would be a continuing metal's boom period for coin B&M shops at this point has actually dried up like a desert. These guys were raking in 5 to 6 figures (or more) a week on metals and now it's drying up or entirely gone....all because of paper trading shenanigans and racketeering. Guess you could call the B&M's unintended fallout from the paper trading game.
FWIW the last time you could buy an 1842-0 SD quarter in Good for $200 was probably back in the early 1980's.
roadrunner
<< <i>The over looked fact about the silver shortage is the lack of demand of other base metals such as zinc and lead, a lot of silver is a by-product of mining for other metals where mining for the silver by itself would be cost prohibitive. That's where the shortage comes in. >>
Exactly.
This situation is explosive. I hardly foresaw copper dropping to $1.80 /Lb but
it has and this will have a profound effect of copper mining which will cause
drops of around 50% in silver production.
There was already a silver deficit and there was already a premium for physical.
Add in the potential 800 million ounce demand that will materialize when the
paper markets collapse due to higher prices and this gets downright scary. One
suspects that the ongoing investigation into silver manipulation might be more
a strategy to usher in a new era. Someday this is going to be huge and it's look-
ing increasingly like that day may be at hand.
<< <i> One suspects that the ongoing investigation into silver manipulation might be more
a strategy to usher in a new era. Someday this is going to be huge and it's look-
ing increasingly like that day may be at hand. >>
ya think?
<< <i>
I was just wondering where you think silver will be in 5-7-10 years.
Right now you can get 5% in a CD. That $14 invested in a 5% CD is nearly $18 in 5 years, $19.70 in 7 years and $22.80 in 10 years. This return is in a "relatively" safe govt insured investment. And you can get a 5% CD from GS or MS.
Those that I see on Ebay paying $20 per oz will have to see silver go to $25.50, $28 and $32.50 respectively just to attain the "relatively" risk free return of a simple CD.
>>
I like ASE's, put some sets together. Those are more coins for me, wheras the other silver is because I think it will go up. Also, resell on ASE is higher and they are easier to sell. Of course, Panda would be more than $13, and of course 1996 ASE would be higher, and so on. But I pretty much shot my load for a while on the teletrdae direct deal at $13.25 or so an ounce. Back to buying more next week and then it just depends on what is cheapest.
And a lot of those people paying $20 on Ebay are getting cash back, and they are still paying more than they have to. Even with that high buy price, I could easily see it double to $40 in 5 years, which is 14.4% a year. If they were buying around $13.33, then $40 in 5 years is triple or about 20% a year.
<< <i>my latest Northwest order says 30 days to ship..got an email from them that said they are expanding all areas of their ops including more operators and another minting shift. >>
Your lucky with a 30 day promise, I'm sure they have a large base of regular and prioity customers that will get all they can produce for quite a while. The average "Joe" won't have a chance to buy from them for quite some time.
BTW: In depth information on Silver from the The Silver Institute PDF File.
Fighting the Fight for 11 Years with the big "C" - Never Ever Give Up!
Member PCGS Open Forum board 2002 - 2006 (closed end of 2006) Current board since 2006 Successful trades with many members, over the past two decades, never a bad deal.