Gold and Silver Market Mania
Gold and Silver Market Mania
Our hearts and prayers go out to all of those affected by yesterday’s horrific attacks in Boston.
The metals markets have been slammed since last Friday. In two trading days, Gold lost about $200. Thursday, Gold closed around $1550, by Monday night, it had touched $1350. Silver suffered similar losses. Silver was trading around $26 on Friday and dipped to $22 in overnight trading last night.
We have seen severe swings in the gold and silver markets in the past. What I do not recall seeing is what I saw last night. As silver lost 15% in two trading days, I saw several metals dealers double their premium on Silver American Eagles and Silver Maple Leaves. Apmex, who has always been a reputable silver retailer was selling Silver American Eagles at $7 over spot. Even at those levels, they were out of stock for a large portion of the day. Gainsville Coins, another large retailer was out of stock of Silver Maple Leaves.
Silver Doctors stated in an article yesterday that many large wholesalers were completely out of silver bullion. They reported that CNT and Amark are both completely sold out of silver. These two companies are silver wholesalers who supply blank silver rounds to mints. Once the blank rounds are sold to the mint, they are minted into coins or branded rounds.
I wonder if it was this hard to buy tulip bulbs when the great tulip bulb bubble popped in Holland during the 1600’s? I suspect it wasn’t. Simple economics says that price and demand rise and fall together. We are now seeing unprecedented demand in the face of falling prices. Something isn’t quite right. The spot price of silver is tied to paper contracts traded by Wall Street while the hike in premium rates reflects the physical price. Even at premium prices that erase the discount to silver given by the dip, supply is very tight.
Dr. Paul Craig Roberts, the former assistant Treasury Secretary claims that the government is working with the big banks to suppress the price of precious metals. He states that they are doing so in order to prop up confidence in the dollar. I can see why they would want to, but I don’t see the smoking gun that proves that they have. The problem with a conspiracy theory is that it is by nature, difficult to prove. If it is being done, the perpetrators will go to great links to hide their actions. Dr Roberts is not alone in his opinion. GATA, Gold Anti Trust Action commitee has been fighting for years to get access to central banks accounting records that would prove the manipulation theory. You can listen to Dr. Roberts make his case for the metals market manipulation on King World News.
Whether it is a government conspiracy or simply the divergence of the paper and the physical markets, yesterday’s dip proved that silver has hit a bottom when it comes to the price for the physical. Additionally, the low paper price could trigger extended shortages in the physical market. Does any one recall what happened to the price of a 30 round Magpul magazine when you suddenly couldn’t get one? Here’s a hint. They were selling for $12 on Midway, after the run, they were selling for $50 to $100 dollars. What about AR-15’s and ammo? Same story, the prices skyrocketed. I am not saying that will happen with silver, I am simply stating we could see similar conditions.
While they are experiencing delays of an additional 10 to 15 days, JM Bullion is still taking orders for all of their silver products. The Silver Philharmonic is selling for only $3.36 over spot when you buy a tube of 20. That is the cheapest over spot price I have seen on any government issued coin in the past two days. They also have Golden State Mint 1 once silver bars for $1.99 over spot. We may never see another opportunity like this again. All the fundamentals are the same. The Fed is still printing, adding to the supply of dollars. More and more countries are abandoning the dollar for international trade reducing the demand for US dollars. Gold and silver have been used as money since Genesis 13 while the dollar, in its current totally fiat form has only been around since 1971. Who is to say how much longer it will last.
Happy Prepping!
