Premiums rising for physical silver (and gold)

pmbug

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It was just a couple days ago that The Doc @ SilverDoctors posted a note about BullionDirect having problems and wherein he stated:
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While Tyler Durden and others among the PM community immediately began speculating that a significant bullion delivery shortage/issue has developed, SDBullion can confirm that this is NOT the case in the US wholesale market.

While demand has increased exponentially in the past several weeks with both gold and silver near recent lows, and spiked even more dramatically beginning June 27th with speculation that a Greek default was imminent, major mints and distributors are still acquiring and shipping large quantities of bullion in what we would describe as normal with current market conditions.
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Now it appears there is indeed some tightness going on:
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Below is an update of the physical precious metals markets over the past 48 hours:

90% premiums skyrocketed over the weekend after the Greek Referendum vote with availability nearly nill- wholesalers/distributors are now offering 90% silver in volume at up to $3 over spot, and supplies are rapidly vanishing

Just before noon Tuesday, the US Mint advised Authorized Primary Dealers it had SOLD OUT of all Silver Eagle coins, and would be taking no further orders until approximately August, at which point it would begin rationing coins to Authorized Dealers.

Silver Eagle premiums instantly skyrocketed across the market, with premiums rising as high as $3.25 over spot/oz WHOLESALE / IN BULK

Between 4pm EST and 5pm EST on Tuesday 7/7, one of the largest Authorized Dealers sold through 250,000 Silver Eagles and raised premiums .50/oz further!

SDBullion broke all-time sales records Tuesday for order volume as well as total ounces sold- with demand FAR OUTPACING the Nov 5th 2014 bottom for gold and silver which had previously held both records.

Later in the afternoon, premiums began surging on Silver Maples and silver rounds and bars, and Authorized Dealers are advising that a production and premium hike announcement is expected imminently from the Royal Canadian Mint.

Wholesale premiums on many silver rounds and 10 and 100 oz bars HAVE DOUBLED in 48 hours.

SDBullion received a wholesale quote from one of the largest Authorized Dealers Wednesday for nearly $5/oz over spot for 5,000 oz of current year America The Beautiful Coins- a premium spike of over 100% in less than 24 hours!

Tuesday, the Sunshine Mint rounds and bars went from immediately available to production completely sold through August 13th in under 4 hours!

In many cases, physical silver is now MORE EXPENSIVE to acquire (on both a wholesale as well as retail level) after a $1/oz paper smash than it was prior to this week’s trip down the proverbial mine-shaft!

Wednesday the shortage began to spread to GOLD products.

Back dated gold Eagles and Maples are now NON EXISTENT on the US wholesale market.

Current year gold coins are now 2 weeks out at most of the Authorized Dealers. This type of gold shortage did not occur even when gold dipped to $1130 last November.

While spot/paper prices have stabilized today, if any further weakness materializes in the paper futures markets for gold and silver, we are looking at the very real potential of 2008 style physical premiums to acquire precious metals.
...
http://www.silverdoctors.com/physic...g-at-the-potential-of-2008-style-pm-premiums/

Now I wish I had been maintaining that Apmex inventory/premium spreadsheet/thread like I used to do. :paperbag:
 

pmbug

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The situation in the silver market seems to point to the beginning stages of a GLOBAL RUN ON SILVER. I say, “it seems to point to a RUN on silver” due to several indicators I am looking at. This also may force the global silver market to suffer shortages in the future. Why? Well, let’s take a look at these different indicators.

First, ... U.S. silver imports picked up considerably in the first two months of the year. Well, this continued into March as total U.S. silver imports reached a hefty 1,504 metric tons (mt) compared to 1,129 mt during the same period last year:

<chart>

U.S. silver imports are 33% higher than the first quarter of 2014. ...

Secondly, India is importing the MOST SILVER EVER. As I mentioned in another article, INDIAN SILVER IMPORTS: On Track To Smash All Records, India imported a massive 3,000 mt in the first four months of the year. If this trend continues, India will import a whopping 9,000 mt in 2015, surpassing its previous record of 7,000 mt in 2014.
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Third, evidence points to a possible tightness in the physical silver market. In Keith Weiner’s recent article, Silver Market Change Report July 5, 2015, he published the following chart on the Silver Cobasis:



Keith stated the following about the new change in the silver cobasis:
…. However, look at that red cobasis line go. It was a mere 7 basis points last Friday. It ended this week at 100 bps. The cobasis of farther-out contracts also rose proportionally.

Suddenly, the silver market is firm.

We can name two reasons why the cobasis might skyrocket. One is that there is a risk. If your counterparty defaults, then you don’t get your metal back. You may get dollars. The exchange will insist the dollars are equivalent to the metal, but that’s small consolation.

We do not believe this is the main problem now, because it’s not occurring in gold. If the banks were in imminent danger, the gold basis would not be quiescent.

The other possible reason is that there’s a growing shortage of silver. Of course, in order to decarry silver, you have to have the metal. If it’s not available, you can just wistfully watch the rising cobasis.
Basically, Keith believes the rising cobasis (in RED) is a result of a tightness in the silver market. He goes on to say this is the present condition, but that could change in the future.
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Fourth, the recent surge in Silver (and Gold) Eagle buying. ...

Fifth, mine supply falling and Government silver sales… ZILCH. As I stated in my article, World’s Largest Silver Producer Down A Stunning 12%, Mexico’s silver production fell precipitously in April compared to the same month last year. ...

... While Peru’s silver production is higher for the year, another large producer is down considerably. Thus, silver production from the top producers in the first 3-4 months of 2015 is down compared to last year. I will do an update on this in a separate article.

One of the most important factors in the SUPPLY-DEMAND situation for silver has to do with Net Government Silver Sales. This chart is from my new report called THE SILVER CHART REPORT. It is listed as Chart #43 of a total of 48 charts in the report. It is a must read for the new and experienced precious metal investor.

As we can see in the chart, net government silver sales were the highest in 2003 at 88.7 Moz. Net government silver sales accounted for 15% of total mine supply in 2003.



During the following years, net government silver sales continued to decline (except for the spike in 2010) and in 2014 were a big PHAT ZERO. While Russia, China and India were the main sources of net government silver sales, China was by far the largest supplier in the group.

Now, the KEY FACTOR to understand why China stopped selling its government silver stocks into the market is stated in THE SILVER MARKET REPORT. I have to say, I was quite surprised to read the reason China wanted to hold onto to its remaining government silver stocks. If you want to find out why, you have to read the report.
...
More: http://srsroccoreport.com/has-the-g...run-on-silver-begun-shortages-on-the-horizon/
 

ancona

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About four and a half bucks an ounce per Eagle at Apmex for less than twenty. That's some fat premium!
 

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So I did a quick check. Last time I checked the Apmex inventory/premiums was December 2013:
So it's been a month since I last did an update on this. I decided to take look today ...

The following report details the status as of 12/19 @ ~8am:
  • 10 ozt gold bars - 110
  • 1 ozt gold bars - 3146
  • 100 ozt silver bars - 1752
...
As of 7/9 @ ~10:30am:
  • 10 ozt gold bars - 70
  • 1 ozt gold bars - 3054
  • 100 ozt silver bars - 702
Premiums were more or less the same as they were 12/2013. Inventories are down from the last check, but in line with where they were in July 2013. I'm not seeing the tightness mentioned above in Apmex listings (yet?).
 

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Sure seems like that the price adjusted with premiums isn't falling as nearly fast as spot. I guess those fat juicy premiums they are charging with the low prices make it less enticing to buy, at least for me.
 

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The Doc is at it again - sounding the warning bell on rising premiums in the silver market:
... The only time premiums across the board for retail silver products were higher than they are right now was during the 2008 take-down of gold and silver. ...
http://www.silverdoctors.com/fund-m...-doc-retail-silver-supplies-are-disappearing/

That's a pretty bold statement. So, I checked Apmex current offerings for 100oz silver bars and the premiums are still pretty much in line with where they have been for years - around $0.99 / ounce over spot. I didn't check inventory numbers. 90% silver however does seem to have a high premium - $5.99 /ounce over spot.
 

ancona

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Six bucks over is 39.19% premium. I would say that is a healthy premium my friend.
 

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So, The Doc has been warning about tightness in the wholesale markets for retail silver products. Bron Suchecki wrote a piece a while back arguing that such tightness usually indicates bottlenecks in the minting process(es) and are not indicative of real supply issues. Now it looks like we are seeing reports of tightness in the bullion markets that indicate true supply issues (with gold at least):
London's gold market is showing tentative signs of increased demand for bullion from consumers in emerging markets, after the price of the precious metal fell to its lowest level in five years in July.

The cost of borrowing physical gold in London has risen sharply in recent weeks. That has been driven by dealers needing gold to deliver to refineries in Switzerland before it is melted down and sent to places such as India, according to market participants.

The rise "does indicate there is physical tightness in the market for gold for immediate delivery," said Jon Butler, analyst at Mitsubishi. ...
http://gata.org/node/15694
 

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BoE annual report indicates that London gold vaults are losing their gold inventories:
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If the calculations above are correct about the 500,000 Good Delivery bars in the London vaults whittling down to about 130 tonnes of gold that’s not accounted for by ETFs and other known gold holders, and that’s not accounted for by the Bank of England vault holdings, then there is surely very little available and unencumbered gold right now in the London Gold Market.

This would explain however the following very recent information from the Financial Times on 2nd September 2015 when it said:
“The cost of borrowing physical gold in London has risen sharply in recent weeks. That has been driven by dealers needing gold to deliver to refineries in Switzerland before it is melted down and sent to places such as India, according to market participants.”

“‘[The rise] does indicate that there is physical tightness in the market for gold for immediate delivery’, said John Butler, analyst at Mitsubishi.”
And it begs the question, why do the dealers need to borrow, and who are they borrowing from. And if the gold is being borrowed and sent to Swiss refineries, and then shipped onward to India (and China), then when will the gold lenders get their gold back.
More: https://www.bullionstar.com/blogs/r...-vaults-including-the-bank-of-england-vaults/
 

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The Doc interviews the CEO of Sunshine Mint:
  • Power on Current Silver Demand: What we’re seeing is reminiscent of 2009-2011. The surge in demand for ANY PRODUCT is something I haven’t seen…people are clamoring for any product they can get their hands on!
  • Demand Surge STRONGER than 2008-09! Sunshine has TRIPLED capacity since 2007 and its still not enough as the market has exploded!
  • SMI’s CEO Reveals US Mint’s Built Up Reserves of Silver Eagles & Blanks CLEANED OUT in Under Two Weeks
  • Power States Sunshine Has Been Running 24/7 Since 2009, and Reveals SMI’s MASSIVE Estimated Production Numbers for 2015

http://www.silverdoctors.com/silver-shortage-us-mint-silver-eagle-sunshine-mint-tom-power/
 

ancona

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My LCS still has some product, although he has more gold than silver. As for his silver, he has more junk than anything else. The thing is though, he keeps raising his premiums. Folks keep buying the stuff and he keeps on raising his premiums. He says the supply lines are tighter than a ducks ass, and they are getting tighter. He buys whenever he can, and pays whatever he has to. Then, he passes what premiums he has to pay for on to us.
 

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Even checking out comparesilverprices.com premiums on generic silver ~2 bucks/ozt and eagles just over $4/ozt and maple's just under $4/ozt. :eek:
 

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I was just at Apmex. I looked at the prices for ASE's and saw that the CC price for one ASE was 21.30 without shipping, handling, insurance or anything. Just the purchase price. The current bid for silver spot is $14.59, which makes the delta for a credit card purchased American Silver Eagle $6.71. That is a very healthy 45.99%over spot my friends, very healthy indeed.

Now, that comes down significantly if you are buying more than a few eagles, but premiums are still in historic territory, and they don't look to come down any time soon.
 

Jay

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I was just at Apmex. I looked at the prices for ASE's and saw that the CC price for one ASE was 21.30 without shipping, handling, insurance or anything. Just the purchase price. The current bid for silver spot is $14.59, which makes the delta for a credit card purchased American Silver Eagle $6.71. That is a very healthy 45.99%over spot my friends, very healthy indeed.

Now, that comes down significantly if you are buying more than a few eagles, but premiums are still in historic territory, and they don't look to come down any time soon.
based on 35.27 ounces per kilo, this seems to work out to 14.37 an ounce.
http://www.silver.com/1-kilo-rmc-silver-bars/
I may have done the math wrong.....
 

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Following up on post #10, more smoke about the depletion of London's gold inventories:
Just after my colleague Ronan Manly wrote a very extensive article on how much gold is left in London (not much), Petropavlovsk Chairman and Co-Founder Peter Hambro discusses gold at Bloomberg Television. He, like Manly, concludes there is very little physical gold left in London. From Mr Hambro:
My baseline is they [the Chinese] have been buying and the Indian have been buying in enormous quantities. It’s virtually impossible to get physical gold in London to ship to those countries. We get permanent requests from Russia, would we please sell our physical gold to India and China. Because there is no physical, only endless promises. And I really worry that the market, that paper market, could be stamped on and people will say “sorry we’ll have a financial close out”, and it’s all over.
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I’ve also asked BullionStar CEO Torgny Persson in Singapore what he’s currently seeing in the precious metals markets. He replied there are shortages in both the gold and silver market. From Mr Persson:
I just got off the phone with A-Mark which is one of the world’s largest wholesalers. They are reporting that they have no gold and silver at all live available, that they have stopped taking orders for Silver Maples and Silver Philharmonics altogether and that Silver Eagles are available first in the end of November. For Pamp, there is similarly long delivery times for all minted gold bars.

We still have most products in stock because we stocked up as massively as we could in the last weeks but for many products, we are unable to replenish as of now when we run out.

Big squeeze with shortages starting now both on the wholesale/retail level and at the bulk level… Unless the paper price is reverting up, it may not subside this time around and then the paper fiat mess (including paper prices of gold and silver) is in trouble. If it goes to the point of shortages at the bulk level like 1kg gold bars and 1000 oz silver bars, the emperor will stand without clothes.
https://www.bullionstar.com/blogs/k...ly-impossible-to-get-physical-gold-in-london/
 

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IF you think the current $4.00 premium on a CSM is crazy, I looked at the 90% silver dollars which have a current scrap value of $11.29 are demanding $24 for CULL coins! the decent shape ones are $25-$30+ right now. You could buy 11 dimes which would give you just a bit more silver than a silver dollar (~.022ozt) for about $17-$18, or just buy an ASE/CSM for $18-$19. If collector value is a large part of why silver dollars are so high, I just don't see it with the cull coins, as you are paying almost the same price for a cull coin vs. avg circulated coin. I never understand a lot of people. Like I always used to say, the more people I meet, the more I like my dog, and I shot my dog.
 
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