I was finally able to spend some time today talking with precious metals dealer, Tom Cloud this morning. Tom Cloud, like all precious metals dealers, has been busier this past week than in the last 30-40 years. The response I’ve seen by many of these dealers, they haven’t seen anything like this in the past.
Tom told me that business has been so busy, the office was still returning calls and processing orders until late in the evening. He says, there is now a long line of people, in the queue, waiting to purchase precious metals when they become available…. especially silver bullion. According to Tom, 75% of the volume buying is in silver bullion while 25% is for gold:
This ratio is probably true for most precious metals dealers due to the larger silver paper price sell-off versus gold. Silver is down 31% from just a few weeks ago, while gold is only down 13%. Thus, precious metals investors are taking advantage of the much lower silver price to stock up silver bullion. Unfortunately, available silver bullion dealer stocks have been wiped out, and broker-wholesalers are now severely backlogged.
Tom also told me that during the past week, there’s been an enormous surge in BRAND NEW FIRST-TIME BUYERS of precious metals. These are likely individuals who have friends and family that have spoken to them about precious metals in the past. But now, with the rapid disintegration of the economic and financial system, many are finally PULLING THE TRIGGER to purchase physical gold and silver.
I emailed Tom’s associate Dan, this morning about their prices OVER SPOT for various silver bullion. I wanted to get an idea of what their clients were paying for silver bullion coins, rounds, and junk silver. Dan replied with these following prices OVER SPOT as of this morning, March 19th:
I looked at some of the larger online precious metals dealers and saw that some of their prices were higher than what Dan posted this morning. However, we can see just how high the JUNK SILVER price is now above spot… $6.85!! Tom told me that Junk Silver was only 20 cents over spot about three weeks ago. How quickly things change.
Junk Silver refers to pre-1965 U.S. silver Dimes, Quarters and Half Dollars.
As for Silver Eagles and Maples, Cloud Hard Assets are selling them for $17.75 based upon a $12.15 spot price. Of course, any Silver Eagles and Maples are going to take weeks or a month-plus to receive the product. And, if the global contagion continues to impact the financial markets negatively, increased silver bullion demand will make the BACKLOG period even longer… possibly 2-3+ months. Although, some dealers may not provide any quotes for bullion products if availability extends more than two months.
Tom also shared that he can still acquire gold bullion from his brokers, but there aren’t any silver bullion stocks available… only at much longer wait times. If you have any questions about precious metals or bullion prices, you can contact Tom or Dan here at the following page: Precious Metals Investing: Cloud Hard Assets
Will The Precious Metals Market Get Even More Crazier In the Future?
One of the questions I get asked the most recently is… What will happen with the precious metals in the future?
The best way for me to reply to that depends on how much this “Global Contagion” impacts the economic and financial markets in the next 2-4 months. There are many different opinions on the spread of the virus and how it will affect the global economy and financial system. Even if the pandemic comes under control in the next 1-2 months, I believe the DAMAGE to the Supply Chain, Small-Large Businesses, Employees, Credit Markets, etc. will only continue to get worse into the Q2 2020.
According to the Reuters article, JP Morgan economist says U.S. GDP could drop 14% in second-quarter:
SAN FRANCISCO (Reuters) – The U.S. economy could shrink 14% next quarter, a JP Morgan economist said on Wednesday, one of the most dire calls yet on the potential hit to the United States from the coronavirus epidemic.
A drop of that size would be steeper than in the fourth quarter of 2008 – the worst of the Great Recession – when the economy shrank 8.4%.
Thus, JP Morgan is forecasting that U.S. GDP Growth would fall 14% in Q2 2020, nearly double the 8.4% for Q4 2008. Now, think about this for a minute. During the 2008-2009 financial crisis, U.S. GDP growth fell 8.4% in Q4 2008, but the Dow Jones Index was already down 43% from its 2007 highs. Currently, the Dow Jones Index is only down 32% from its high. So, if JP Morgan is forecasting that U.S. GDP Growth will fall 14% in Q2 2020, that would suggest the Dow Jones Index has at least another 15-20% more to fall.
But, what if U.S. GDP Growth falls even further in Q2 2020… to say, 18-20%?? Do you see how UGLY things could get? Also, during the Great Depression in 1932, the annual decline of GDP was 12.9%. The United States could be heading towards a serious ECONOMIC DEPRESSION.
If we see that much damage to the U.S. economy and financial system, the demand for precious metals will surge even higher. This means the current backlog will only get worse, likely propelling prices higher.
On the subject matter that there is no SHORTAGE of 1,000 oz Silver Bars, that might be true. I imagine the demand for silver via industrial fabrication and jewelry has dropped considerably. So… yes, likely surpluses are coming from the large wholesale-refining silver market that supplies the entire silver market. BUT… if the situation continues to deteriorate in the global markets, demand for 1,000 oz bars will likely be the NEXT STEP for Larger Investors, Hedge Funds and Institutions.
I will be putting out a NEW VIDEO shortly on the precious metals on my SRSrocco Report Youtube Channel
If you are new to the SRSrocco Report, please consider subscribing to my: SRSrocco Report Youtube Channel.
DISCLAIMER: SRSrocco Report provides intelligent, well-researched information to those with interest in the economy and asset values. Neither SRSrocco Report nor any of its owners, officers, directors, employees, subsidiaries, affiliates, licensors, service and content providers, producers or agents provide financial advisement services. Neither do we work miracles. We provide our content and opinions to readers only so that they may make informed decisions on all types of assets. Under no circumstances should you interpret opinions which SRSrocco Report or Steve St. Angelo offers on this or any other website as financial advice.
Check back for new articles and updates at the SRSrocco Report. You can also follow us on Twitter and Youtube below:
Obviously G & S for reasons we know.
Surprised them when I ordered a platinum eagle yesterday.
Try finding ungraded almost anywhere. And if you do look at premiums over spot on that.
Disappearingculture,
Platinum is certainly below its COST OF PRODUCTION. Similar to mining Gold, Platinum has a very high cost of production. However, due to the rapid decline in the oil-energy prices, mining production costs will fall. But, still… I still believe Platinum is selling below its COST OF PRODUCTION.
steve
Steve, how can you cite the biggest world financial institutions? They do not have a good track record regarding market predictions. I believe they are in the know but not necassarily want to reveal what they know. Rather, they intend to take advantage of small investors scaring them into selling the dip.
indignado,
AS A FORM OF REFERENCE. That’s all. Most of the market is looking at these large institutional analysts for guidance.
steve
Platinum is a GREAT way to get into the leveraged physical precious metals and diversify out of Silver with REAL supply shortage potential as well as wealth density. Good buy.
Dan quoted you those prices above spot…but they can’t get it right now to sell (I don’t think).
Disappearingculture,
I will chat with Dan tomorrow morning to see the availability. But Tom told me that they can still get stock, but it will take time.
steve
Steve, I assume the 75% / 25% is in % $s spent, not % weight, right? When the tide in the paper silver pit will turn, (fizz) silver will have a phenomenal run to say the least.
CHX13,
Yes, I believe it’s the DOLLAR amount of Silver vs. Gold.
steve
Simply put, the VALUE of silver is what one would be willing to PAY. The “paper” price is disconnected compared to the price you have to pay for physical PMs.
Show me ANYONE willing to sell for even CLOSE to the current silver spot price and I would literally be willing to back up a truck in order to get physical silver. Hell, I would be willing to travel most anywhere to make such a transaction.
If you currently own ANY physical PMs, consider yourselves very lucky. What you own is far more valuable than any of the paper prices currently being circulated.
Unless you have a short squeeze in finances, hold on and keep the faith. The current scramble in the PM markets is a very temporary thing. ALL physical PM holders have something of TRUE value – regardless of what the “paper” markets would suggest. YOU own something of true value that time would otherwise suggest.
Keep stacking and don’t lose the faith!
I believe that there is no shortage of physical silver but of silver coins and small bars.
I will change my mind when the premium of 1000 ounce silver bars exceeds 5 dollars per ounce.
The premium was 30 cents in 2009.
JLS,
Where do you track the price on 1,000 ounce bars, that sells them to the public?
I knew that in 2009 because I bought large silver bars from kitco. I drove to new York to pick up. Not sure now. maybe call kitco and ask.
JLS,
I don’t think people realize just how BAD this global contagion will be. While there isn’t a shortage of 1,000 oz silver bars, as industrial and jewelry demand has likely declined considerably, I see that changing as HEDGE FUNDS, INSTITUTIONS, and LARGE BUYERS start acquiring these large bars as BONDS and FINANCIAL ASSETS become even more problematic.
steve
And doesn’t the U.S. Mint & other mints buy 1,000 ounce bars for making coins & smaller bars & rounds?
They have to resupply
Disappearingculture,
No, the Mints do not buy 1,000 bars. They only by SILVER BLANKS in certain specifications. The U.S. Mint purchases SILVER BLANKS from several refiners-suppliers. Then they take those SILVER BLANKS and mint their Coins.
steve
Ok but the companies that make silver blanks can (and probably do) buy .999 1,000 ounce bars…one step away.
Sprott’s silver fund would be one such place, but I don’t follow its prices. If one owns enough of its shares you could redeem your (*quite heavy*) silver bar.
JLS,
I agree that SOME Silver could be had with a hefty premium. Premium Silver (ASE’s & Maple Leaf Silver coins) tend to command the highest prices (buying & selling).
Excellent point about value & price!
I walked in the lcs today, bought a beautiful roll of 25 Canadian owls from 2015 for $18 each…and walked out the door.
Those coins had been sitting/hidden in the back of one of his safes since then.
There was a short roll of 22 Canadian Silver Eagles from then that were right beside the owls. Next week perhaps if they are still there.
Business there has been brisk since the first big dow(n) day. Much, much slower today.
US Silver Eagles were $22 ea…nearly 10 bucks over spot.
If any of you had any Rhodium, I hope you sold it last week.
Tanked to $2500 from $11500
That’s crazy
$2k this morn. Another $500…IMO, it is not even that important.
Interesting interview with Jim Rickards over at Kitco. Way worth a listen and I have always had issues with him being an elitist.
Frankly, he seems a bit more honest, open and real in this interview. About 25 minutes. He shares some very interesting info which I will leave for your viewing pleasure.
Here in Aust the story is the same regarding silver price. Upon seeing the huge knockdown in silver price, I jumped on to some bullion sites and wanted to buy some… saw the buy back price drop to the floor but the selling price remained pretty much unchanged.
So silver is cheap. A pathetic, useless metal for crazy people. But you can’t buy any (virtually) even at the old high price.
Rob,
Be patient… in time, Gold and Silver will be worth a great deal more than the market realizes. Paper Money and most financial assets are heading for REAL TROUBLE.
steve
Junk is $10 over spot at sdbullion right now. Wow.
With all due respect to Mr. Cloud (yes, I’m a long time stacker as well)….
I just had to post this…
Steve YOU CALLED IT!!!
First $0.99 cent GALLON GAS in US!
https://www.facebook.com/foxnashville/photos/a.10150258659942290/10158170505757290/?type=3
https://www.facebook.com/foxnashville/photos/a.10150258659942290/10158170505757290/?type=3&theater
Thanks Steve. Your chat with Tom provides another confirmation that the current paper silver prices are nothing, but contemptible lies.
For decades, these criminals did every corrupt act so as to prevent development of a honest silver price discovery mechanism by the markets. Which, in my opinion, is one of the major causes of today’s ticking gigantic H-bomb, which they call “global economy”.
Ag/Au mining ratio: 8/1, investible above ground bullion ratio: probably 1/1. Yet the GSR: 124. Ignomious.
And this is for a metal, which is considered by some to be even more important than oil, industrially. Something used up at 2.1 tons per hour. And which is as beautiful as gold.
Sure, the END is near, and is going to be catastrophic.
Can industrial silver be moved to investment silver if industrial demand goes down which I would think it will for a while. How would this effect the supply? How long could the industrial metal be swapped if so?
Plata pura,
The world as we know it over. The high-tech industry and Renewable Energy are DONE as growth sectors. Industrial silver demand will continue to fall, and will jewelry demand. However, so will Global Silver Mine supply, likely considerably.
The REAL FOCUS is on how much physical silver there’s really available.
steve
I had purchased 1000 ounce bars from Monex in 2016 around $.50 over spot to include delivery.
The sales rep actually tried to dissuade me from taking delivery, and it took several weeks to receive it including one that either was an issue or had to get sourced from the United Kingdom.
That being said, I do recommend Monex other than doing Atlas or Leveraged Trades.
* Disclaimer is that this might be the endgame, so things might not workout even with reputable dealers like Monex.
Kitco’s US Warehouse was in HSBC in New York City. Not sure now.
Steve,
Really interested in an oil update from you, you’re the oil man!
Down to $20 today….that’s insane.
Billy Lone Bear,
Coming out in 2 hours.
steve
Silver will likely continue a sideways or downward trend for the next few months. The price is not controlled by the physical markets. The miners are partially to blame because they agree to sell their PMs based on the make-believe paper market prices.
While I own PMs, I am more bullish on Bitcoin. The next halving is less than 2 months away and at that time it will have nearly the exact stock to flow ratio as gold. And 4 years later it will halve again. With all the money printing that is about to happen, those fiat dollars need to flow somewhere. Bitcoin will be shown to be censorship resistant unlike any other form of currency or medium of exchange. YouTube demonitizes those it doesn’t agree with, Patreon closes accounts of truth talkers, and good luck traveling with any large amount of fiat or gold (civil asset forfeiture).
SD,
I read your opinions. Come back in 2 months and let’s see what happens to GOLD-SILVER vs. Bitcoin.
steve
Confirmed.
March 20th current spot prices:
Gold: $1,483.20 (kitco)
Silver: $12.42 (kitco)
Bitcoin: $6,144 (Coinbase)
SD,
To be fair… let’s also include the PHYSICAL BULLION PRICES. We may be quite surprised at how they behave over the next two months.
steve
Alright. Prices from JM Bullion, assuming a 100 oz quantity order.
AGE: $1,585.13
Gold bullion 1 oz bar: $1,530.13
ASE: $17.80
Silver bullion 1 oz bar: $15.10
The real question though isn’t what the mints are selling for, it is what they are buying back for. If I buy 100 ounces of silver at $15.10 per ounce while spot is $12.42, and that same mint offers to buy back my silver at “spot” or “spot minus 50 cents” then it doesn’t really matter what price they are selling for, only the price I’m able to unload at. The nice thing about bitcoin is the spread is nothing. There is only a trading fee because I’m not exchanging with a bullion dealer, but another individual seller (some would simply call that a free market), and I’m just paying the trading fee to the match-maker. And of course shipping costs with bitcoin are near zero, and near instant, compared to PMs.
1 oz silver bar at Klagenfurt Austria official dealer oegussa (even for a large quantity): they were asking 30 Euro a piece and willing to pay 11 Euro for it!!!!!
About 5 years ago there was a website realpriceofgold.com that showed the difference between real prices and paper priced. This website has disappeared. Pity, users could upload physical prices. Didthesystemcollapse stopped working and is down now.
Looks like someone doesn’t want us to see what is happening.
houtskool,
If you watched the video I explained part of the reason for the decline in the PAPER PRICE of silver as due to the collapse in Industrial-Jewelry-Silverware demand. In 2019, those three-sectors accounted for 824 Moz vs 178 Moz for Physical Silver Investment.
steve