Silver Shortage Update: Another Delay From Apmex

Investment Research Dynamics

There has to be a big problem in the financial system coming that the Fed knows about but we can’t see it yet. Why?  The behavior of the Fed and its ECB/BOE cohorts with respect to the paper gold/silver market conveys a sense of terror on their part.

We learned yesterday from an “official” source, Reuters believe it or not (Reuters has furiously been spreading anti-gold propaganda ), that India is on track to import 900-1000 tonnes of gold this year.  This does not take into account smuggled gold which is estimated to be another 25%.   India alone, it seems, will inhale 50% of the amount of gold produced in a year.

Then there’s China…China it’s hard to say for sure.  If you go by Hong Kong exports into China, it only captures a portion of China’s gold demand.  If you go by Shanghai Gold Exchange Withdrawals, China is on track to scoop up over 2000 tonnes of gold this year.

China + India combined are going to import at least 30% more than the total amount of gold produced in a year.  Both India and China are entering their seasonally strongest period of gold buying, which will last through the end of the year.

Then there’s silver.  By all apparent market indications, there is a serious shortage of silver that has developed, at least at the retail level.  Although charlatans from down under who avoided taking economics  in undergrad seem to think the 1000 oz Comex bar market is the bellweather, I would like to see a bona fide independent audit of the inventory reportedly being held in Comex vaults.  Note:  those reports are prepared by the banks – do you trust them?

Premiums on silver products in the U.S. have widened to levels not seen since 2008, when silver eagle premiums approached 100%.  Currently, my “bellweather” indicator is Apmex. The premiums on 500 oz monster boxes have widened today to $3.79 over spot.  This is the lowest premium product and it’s 27% over spot.  If you want to buy just one mint roll of 20, you will have to pay $5.75 over spot, or a 41% premium.

But it’s worse, certain products are not available.  We know 90% bags of coins are not available, although they can be had in onesies and twosies for about $7 over spot.  But a friend of mine ordered a 100 unit gold gram product from Apmex and was notified this morning that there is “a delay in processing” his order.  In the past he said shipment was immediate.  This particular product is minted by Valcombi and is a “tear away” sheet of 100, 1 gram units.  It’s perfect for preppers who seek fungability.  And now there’s a shortage of them…

Base on all the evidence from the physical market – and there’s a lot more evidence of shortages in silver – how do we explain the behavior of the price of gold and in the paper market?   Here’s two graphs of the trading in paper gold and silver – click to enlarge:

GOLD:                                                                                         SILVER:

This type of price action that can only occur by the exertion of an exogenous outside force. In this case it’s the western Central Banks and, specifically, the NY Fed in conjunction with the Treasury’s Working Group on Financial Markets’ Exchange Stabilization Fund.  The decline in the price of gold and silver nearly every night for the past four years seems to occur primarily only in the NY/London paper markets.

Certainly everyone by now knows that the Plunge Protection Team is working overtime to keep the U.S. stock market from collapsing. And it is also exerting at least as much effort, and probably more, in keeping the price of gold and silver from exploding.

For now, the banks are finding enough physical gold and silver to keep the Indians and Chinese happy.   My best guess is that the GLD, SLV, and the Comex and LBMA custodial vaults are being looted for this purpose. The U.S. retail market is another matter – it’s mind over matter: the Fed doesn’t mind and they don’t matter – for now.

But this will become problematic once those sources are tapped. If you think you have bars being kept in the non-bank vaults on Comex (Brinks, CNT, Delaware Depository and Manfra, Tordella) I would suggest paying a personal visit and verify serial numbers. And then leave with your bars in hand.

If you are looking to buy silver from a big U.S. internet-based dealer in order to minimize the premium you pay, I would suggest instead taking your fiat cash and buying from a local dealer. At least you can guarantee that you will have the product in hand when you tender payment. Otherwise you risk seeing this in your email tomorrow:

Thank for your recent order xxxxxxxx. While processing your order, we encountered a short delay. APMEX strives to ship every order as quickly as possible, but in rare cases order processing may take longer than expected. (Apmex)