Physical Silver Scarcity: Fact or Fiction

4 replies
  1. tyonker says:

    Hey Keith, don’t forget the mini silver contract of 1000 ounces of silver and 10 ounces of gold. Perhaps there are accounts with the bullion wholesalers or use of the GLD and SLV in shorting?

    I always struggle with all of the anecdotal stories about supply. For example we get statements from the silver retailers that some large entity or other just bought large quantities of precious metals in London. We can never verify these stories. Why does it take seven years for Germany to repatriate it’s gold? We must for the large part take these stories on faith. The institutions that report on precious metal worldwide quantities are vilified for the most part by the retailers. The story that every ounce of physical metal is hypothecated 100 times is repeated over and over. How do we know this? Because Jeff Christian of the Silver Institute said so? I guess that’s the best we have?

    The fact that the actual market supply statistics are so carefully maintained in such an opaque manner argues for the fact that there is skullduggery going on. These guys are bankers and the fractional reserve system is after all their business model.

    It is non the less encouraging to hear the stories about retail dealer supply being limited. I’m pretty sure my local coin shop has a way to hedge puchases and sales, I’ll ask him. Are you aware of any reliable statistics regarding metals quantities in the stocks of the world? I’ll bet JP Morgan knows. In this,regard because of the marginal utility of the precious metals, their prices should be fairly impervious to supply and demand should they not? The fact that they are treated as commodities is in my mind a further impediment which has been thrown up in order to discourage their use as true money.

    To me the thing that has the most potential to hide the true state of the market is in fact the largest and most opaque, which is the precious metals derivative market. Now if someone had some reliable stats regarding that market I feel we could make some informed judgements as to the metals. If someone could give us a reasonable answer as to why the large banks need to hold huge precious metals derivative positions off balance sheet, that would be a boon to the retail precious metal investor.

  2. enduring88 says:

    Hello Keith,
    The main supplier of precious metals in the city I reside does not hold a stock of either Gold or Silver. Customers pay up front and wait for delivery. The wait time used to be two weeks, then it went to four weeks, now it is six weeks. The main reason for this I am informed is not related to availability of supply but the increased orders spreading the delivery time. Australia’s national mint, The Perth Mint has worked at least a number of weekends just to keep up. They have not worked weekends before.

    At the local dealer level what used to be relaxed has become quite frenetic in activity. There are increasing numbers of customers and orders.

    This movement all seems to go back to the ultimate question on when confidence will collapse. Backwardation is a signal for gold. Granted industrial demand for silver would be reducing but the overall supply of silver in the long-term is a risk especially given it is a by-product of other mining. Silver is more accessible to the regular investor and I suspect it has a future as bright as gold.

  3. bullwhip says:

    Hi Keith,
    Nice video, good talk. You mentioned industrial demand is plummeting, yet electronics is not. Cell phones are still selling at quite a clip – Approximately 1 billion smartphones will sell this year and at avg. 0.013 oz silver per handset, that’s 10,000,000 oz of silver that 5 years ago were not being consumed. Does not take tablets, iPads or notebooks into account. So if industrial production is collapsing, the volume could very well be shifting more and more into electronics.
    Danny

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