When The Global Silver Shortage Arrives… It Will Be Too Late

If you are waiting for a signal that a global wholesale silver shortage has begun, it will likely be too late to acquire physical metal.  Why?  Because it has never happened before.  So, when the world bond and stock markets finally collapse under a mountain of paper, leverage and debt, we will witness one hell of a GLOBAL RUN ON SILVER. 

When this occurs, individuals running to their local coin shop or calling a precious metal dealer on the phone requesting to “get sum silver”, will find out there are hundreds of poor slobs waiting in line before them.   Now, when I say “poor slobs”, I am not being derogatory here.  I am just using a term suitable for the masses by the banking elite.

Investors need to realize, this will be nothing like the 1979-1980 time-period when Americans stood in line to purchase silver as the price surged to $50.  We must remember, this huge silver buying frenzy was mainly focused in the U.S. and a few western countries.  Furthermore, most Americans had very little debt in 1980, and the total U.S. Retirement Market was only worth $1 trillion compared to $25 trillion today.

Orthodox Analysis Will Not Prepare You For What’s Coming

If we look at the chart below, we can see the failure of Wall Street and the Main Stream Media (MSM) to warn investors of the impending disaster in 2008.  In less than a year’s time, the U.S. suffered a collapse of the housing market, financial institutions and investment banks:

Collapse Charts SRSrocco

The once proud AIG – American Insurance Group, saw its stock price fall from a high of $1,155 (chart figure above is incorrect) in 2007, to a low of $25 in 2008.  Citigroup’s stock went from a high of $551 in 2007, to a low of $30 in 2008.  Even though Citigroup’s stock has gone up a bit lately, its current price of $55 is still 10 times less than its high reached in 2007.

You see, this was a market that went rotten virtually overnight.  Here’s another chart showing the same kind of slaughter:

BearStearnsSoldFor2Bucks

As the chart describes, 98.81% of Bear Stearns value was lost due to bad bets that were leveraged via borrowing.  Did the markets learn anything from this mistake?  Of course not.  Companies are still borrowing money at near zero interest rates to buy back their stocks while the major banks are leveraged up to their eyeballs with massive derivatives exposure

So, this next financial and market collapse will make investors beg for 2008-2009 all over again. 

Retail Shortages Are Tremors For The Upcoming Global Silver Earthquake

In a recent article, Silver Doctors:  Wholesale Silver Shortage… Confirmed, it was stated that shortages were occurring in the retail and wholesale market:

•The Exclusive Distributor for the leading private mint 100 oz Silver bars in the US advised SDBullion on Thursday that the mint had been scheduled (and promised) to deliver 10,000 100 oz Silver Bars on Wednesday (1 million oz of a single private mint product), but was only able to deliver a little over 3,000 bars.

•The Royal Canadian Mint reportedly did not release a single 1 oz Silver Maple to any of the Authorized Purchasers SDBullion spoke to this week.
This comes on the heels of a severe issue with the Royal Canadian Mint’s production of 10 oz Silver bars.

New orders for Sunshine Mint 1 oz Rounds are shipping to dealers/distributors on a 9 WEEK DELAY! Nearly the end of October!!!

•The 3rd largest US wholesaler/distributor of precious metals with 21 warehouses usually stocked to the rafters with bullion advised SDBullion they have been CLEANED OUT.

Many readers responded to this article by saying a “Wholesale shortage only occurs when it takes place in the 1,000 oz silver bar market.”  Bron Suchecki from the Perth Mint also responded with the following remarks in an article, Coin Shortage FAQs: Telling A Real Shortage From A Capacity Shortage:

Shortages of retail forms of gold and silver, which are anything less than 400oz gold bars or 1000oz silver bars, does not necessarily tell us about whether there is a real shortage/price disconnect in the wider precious metals markets. Retail shortages to-date have reflected a shortage in production capacity, rather than a shortage of wholesale gold or silver.

How can I tell if it is a real shortage, or just a production capacity shortage?

A real gold bank run will manifest itself in the wholesale markets for 400oz gold bars or 1000oz silver bars, so to identify a real physical-paper disconnect occurring you need to look at the premium above spot for 400 oz or 1000 oz bars.

Let me start off by saying, “I agree with Bron that a chronic wholesale shortage will occur in the larger 1,000 oz bar market.”  Bron goes into detail in the article describing how retail bar and coin products may be in short supply, but investors can still purchase 1,000 oz silver bars on the wholesale market without delay.

However, when the shortage makes itself shown in the wholesale 1,000 oz bar market, IT WILL BE TOO LATE FOLKS.  This is the problem.  And this is where I may differ with Bron on the present silver market situation.  While Bron and many others who say, “We need to see a shortage of 1,000 oz silver bars for a real shortage to occur,” unfortunately, this is a signal that tells us the SHIP HAS ALREADY SUNK.

Investors need to realize the market has suffered several retail silver shortages since 2008.  You need to understand that these were “Tremors” for the massive earthquake to come.  Who wants to wait for an earthquake to get prepared??  Folks, these huge spikes in retail (and minor wholesale) demand are blinking red lights and sirens going off warning of the major global silver run in the future.

Silver Has The Highest Concentration Of Short Positions vs Days of Production Than Any Other Commodity

This chart says it all.  According to the data found on Sharelynx.com, the top eight traders (COT Report) held a concentrated short position equaling 181 days of global silver production.  Compare this to platinum at 119 days, palladium at 95 days, gold at 65 days, copper at 10 days and oil at a paltry 3 days:

Short Concentration vs Days of Produciton

Basically, the top eight traders are short half a year’s worth of world silver mine supply.  That’s a great deal of leverage by these traders as the world enters into the next financial collapse.  I would imagine this leverage just might add serious fuel to the rising paper price of silver, as these traders experience one of the greatest silver short-squeezes in history.

Future Global Physical Silver Investment Demand Will Overwhelm The Market

There still seems to be a great deal of misinformation about the silver market.  Unless you are an individual who has followed and invested in silver for many years, most people have no clue about what is really going on.  I had one reader make a comment recently that, “Physical silver bar and coin demand was only a small component of the overall market.”  Of course, I begged to differ.

If we look at the chart below, we can see just how much physical silver investment demand increased since 2007…. the year before the U.S. Banking system actually died (nothing but Zombies today):

Estimated Global Silver Bar & Coin Demand2

Prior to the collapse of the U.S. Housing Market and Investment Banking System, total global silver bar and coin demand was only 51.2 million oz (Moz).  These figures are from the Silver Institute (based on data from Thomson Reuters GFMS).  However, in 2014, that figure nearly quadrupled to 196 Moz.  

In 2007, silver bar and coin demand represented only 5% of global silver supply, but in 2014 this increased to nearly 20%.  Thus, global silver bar and coin demand was the largest growth sector of the entire silver market…. by far. 

Now, the next two bars in the chart (on the right side) represent my estimation of a doubling and quadrupling of 2014 silver bar and coin demand.  There is no way of knowing, but estimates state that only 1% of the market (or less), purchase silver.  If we figure that there are roughly 7 billion people in the world, 1% would be about 70 million investors.  Which means, these 70 million investors bought an average of 2.8 ounces of silver bar and coin in 2014 (196 Moz divided by 70 million people = 2.8 oz). 

Of course this isn’t correct, as many investors are purchasing 100’s & 1,000’s of ounces of silver at a pop.  Okay, for kicks and giggles, let’s just say half of the people in the world might be investors.  So, 1% of 3.5 billion is 35 million, netting an average 5.6 oz for each investor (based on 196 Moz purchased in 2014).  Again, this is way too low of an average.  It just goes to show that physical silver buying is by a small fraction of the market.

If we assume this small fraction of buyers quadrupled their purchases of silver after the collapse of the U.S. Investment Banking System and Housing Market (51.2 Moz in 2007 to 196 Moz in 2014), just a doubling of the 2014 silver bar and coin figure would represent an annual increase to 392 Moz.  Which means, just waking up another 1% of investors to purchase silver would increase global silver bar and coin demand to nearly 400 Moz.  This would consume nearly 40% of total world silver supply.

Now, what would happen if we had a quadrupling of silver investment demand, as we did from 2007 to 2014?  It would push global silver bar and coin demand to 784 Moz., accounting for more than three-quarters of world silver supply.  Of course this would never happen as there just isn’t that much available silver in the market.

Let me explain.  While the world holds approximately 1.8 billion ounces of silver in “Identifiable Above-Ground Silver Inventories”,only a small part of this amount would be available for the market.  The majority of this silver is held in Custodian vault stocks (923 Moz) and ETF’s (503 Moz), with the remainder held in Exchanges, Governments and Industry.  These figures are from the 2015 World Silver Survey, based on year-end 2014.

Investors need to realize, the silver held in Custodian vault stocks and ETF’s will not be available for sale when the Global Silver Run takes place.  Institutions, large entities and individuals who have invested in silver that is stored in Custodian vault stocks or in ETF’s will not want to liquidate their metal.  Well, maybe a small fraction, but who would sell one of their best performing physical assets?

So, where would this supply come from to satisfy a doubling (392 Moz) or a quadrupling (784 Moz) of physical silver investment demand?  Well, the Future Exchanges is probably one of the most liquid places to acquire metal.  According to data from Sharelynx.com and the CME Group, there is only 178.8 Moz of silver held at the world’s exchanges.  Now, these are the only exchanges that provide public data on silver inventories.

Global Futures Exchanges Silver Stocks

As of yesterday, the three Futures Exchanges held 178.8 Moz.  The COMEX held the most at 171 Moz, followed by the SHFE – Shanghai Futures Exchange with 7.6 Moz, and the TOCOM in Japan with a lousy 156,249 oz.

However, the COMEX stores its silver into two categories….  115.2 Moz in the Eligible inventories and 55.8 Moz in the Registered category.  We must remember, the Registered category is the only silver ready for delivery into the market.  Eligible silver can become registered and deliverable if the owner of the silver declares it salable at some price.

How many investors who have their silver stored at the COMEX in the Eligible category will offer up their metal during a GLOBAL RUN ON SILVER?  I would imagine very few.  That being said, even if we assumed that all of the 178.8 Moz of silver held at the exchanges was available for the market, it wouldn’t even be enough to for fill for the doubling of the 2014 demand of 196 Moz. 

So, I believe when we finally see a mad rush into physical silver on a global scale, it would be quite difficult for the market to supply 392 Moz (doubling of 2014 demand) of physical bar and coin demand.  Which means a quadrupling to 784 Moz would virtually impossible.

This huge increase in physical metal demand would cause severe stress on the market which would push the price of silver to levels thought unimaginable. 

Investors Don’t Want 1,000 oz Silver Parking Lot Bumper Sized Bars

Except for a few individuals, most investors want to purchase smaller silver bar and coins.  Even wealthy investors rather own either 100 oz bars or smaller coins such as Monster boxes of Silver Eagles, Maples or Philharmonics.  Who wants to haul around a 1,000 oz parking lot bumper sized silver bar that weighs 65 lbs? 

So, when extremely wealthy individuals or mom and pop investors want to acquire silver, they are going to call up a dealer and order standard investment bars and coins.  So, it makes sense that these retail silver products will show shortages first.  When I talk to some of these larger dealers, they have clients purchasing 6 & 7 figure single orders of gold and or silver.  These investors aren’t buying 1,000 oz bars of silver, but rather the 100 oz bars (or smaller denomination) coins and rounds.

If we are already seeing a backlog of weeks or months for some retail silver products, when the shortage finally makes its way into the 1,000 oz bar market, it will be too late.  So, trying to determine the difference between a “Product Shortage” and a “Global Wholesale Shortage” will become meaningless when the latter arrives.

Trying To Time The Market To Purchase Silver, May Be One Hell Of A Lousy Investment Strategy

I want to conclude this article by saying, “If you are trying to time the market to purchase silver, you may be making one hell of a lousy investment strategy.”  Again, the coming Global Run On Silver will occur quite suddenly.  There may be no time to prepare and place an order that will likely be filled.

Now, I am not saying this current retail (and minor wholesale) shortage is the making of the BIG ONE.  However, watching the carnage taking place in broader stock markets may give us a clue that the great RESET is coming sooner than later.  If you take a look at the charts at the top of this article, you will see just how fast the values of these stocks imploded.  Bear Stearns went from a $96 stock to $2 in just 13 trading days.

I believe this is how the next Global Financial and Economic Collapse will occur.  Because the amount of leverage is so much more extreme today than it was in 2008, we are going to see market volatility like we have never seen before.

Lastly, there is no way to predict how the future unfolds in this highly leveraged debt based financial system.  Some analysts may say articles stating of a current “Silver Shortage” are guilty of propagating HYPE.  I don’t see it has hype, but rather as valuable information describing what is taking place in the physical silver investment market. 

Whoever heard of a large shortages of retail silver jewelry or silverware?  Investors need to wake up to important information that is right in front of them.  Again, I believe the retail silver shortages we have experienced in the market since 2008 are warning signs for the big event to come in the future.

Analysts waiting for the “Big Global Wholesale Silver Shortage”, may turn out to be correct in their prediction.   Unfortunately, this will likely occur at the same time the silver market experiences surging investment demand, with little or no available supply.

If you haven’t checked out THE SILVER CHART REPORT, there’s a great deal of information on the Silver Industry & Market not found in any single publication on the internet.  There is one chart in this report (Chart #19) that I can guarantee that 99.9% of precious metal investors haven’t seen before.  

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115 Comments on "When The Global Silver Shortage Arrives… It Will Be Too Late"

  1. Thanks for the heads up Steve, carnage in the markets lately as we approach September….

    Do you have an estimate on when you’ll be releasing your Silver Miners Report?

  2. A psychic told me in 1993 that silver would be worth more than gold. A week before we bought a 3 acre wooded lot
    In a new subdivision. Realitors first name was Edward. We signed a contract and put down a deposit of $500. During
    The reading she said I don’t know what this means but I see both of you in woods, I see you looking at some papers , I see the name Edward and $500. At that point I was certain that she had real psychic ability. So I asked her if silver and gold would go way up in price. She said yes, and silver will be worth more than gold. My daughter went to see her about one month later. She told her her husband would get a patent. We thought she missed that one. She got divorced about 10 years later. Got married to another man and about 3 years later he received a patent.

  3. I just wanted to tell what a great piece of work you produced today–everyone should read it and then re-read it until it actually sinks in and they understand—NOBODY is buying 1k oz bars at the investment level—not enough to matter.

    Spoke with two different LCD’s today and both said the exact same thing–difficult to get product and what they can get has very high premiums that are going to increase.

    I hope people stop stacking so that I am able to load up on the cheap with all I can find!!!

    DON’T LISTEN TO STEVE!!!! Plenty of silver as far as the eye can see!!!

    • Lots of silver on ebay. My coin shop has plenty too. I guess there is a shortage though? Check Apmex, Bay Precious Metals, MCM Coin Mart. Plenty of silver to go around. Hmmmm.

  4. fabulous analysis as always, Steve.
    I might suggest that the quadrupling of the physical demand since the GFC is indicative of market participants waking up to the imbalances keeping paper prices suppressed
    remembering that those who are ‘awake’ may still have only a fraction of their equity exposure in precious metals, their capacity to add to a short squeeze with conviction will catapault the price when dumb money new convert momo chasers sense the opportunity

  5. Steve – your site is a must read for those interested in honest information and reasoned, rational thought.

    Thanks
    Chris

  6. But look at how the markets tanked today, yet silver still lost value despite the fact that gold went up. It is looking like silver is not going to be a safe haven or a “go to” asset in any financial panic going forward. It very well could be that 2011 was the last chance to get out at a price approaching 50 dollars.

    • JTM,

      You should post with your name set as “Scarecrow” from the Wizard of Oz from now on…..

    • JTM, I wouldn’t worry about this….Silver and Gold always change lead. The last time Gold and Silver rallied, Silver lead Gold! Just look at the correlation from 2011 to todays prices, Silver is also money! I wouldn’t worry that Silver won’t catch up, and quickly when the time comes. 😉

    • As Steve’s chart above points out silver is the most manipulated metal or commodity [if one wants to lump it in with the pure commodities]. When silver’s price breaks it will break hard. Before that there will probably be a bigger separation between paper/electronic price and physical price.

      The Comex price could be $15 but the physical price will separate from that by an increasing margin. But even on the COMEX paper/electronic prices can’t be help down forever. The underlying fundamental is [eventually] supply versus demand.

      • Again, not to beat a dead horse, but we had another extremely volatile day in the markets and silver lost ground dipping under 15 bucks. Doesn’t look good for the narrative of safe haven….

  7. Walter is a troll who lost his a$$ on silver…

  8. Steve, you are correct that a shortage of retail coins and bars is almost inevitable. Premiums will go very high. But what would this do to the price of silver? Industrial demand is still the overwhelming force. How many locked out retail investors will be buying silver that would otherwise have been used industrially? Probably not too many. Will the producers of bars and coins be able to ramp up their operations quickly to absorb more physical silver and thus create a silver shortage and not just a coin and bar shortAGE. Probably not.

    In summary, retail demand does not move the price of silver. Sadly, that is how it works. This dynamic can change but it won’t happen quickly. You need a long term, ramped up demand in retail for that change to happen. And it is hapoening slowly. Retail demand continues to consume a larger percent of the silver in the world.

    Mike

    • Mike,

      LOL…. did you read the article??

      steve

      • Yes. You do a good job at compiling data and I am appreciative of the time you put into it. As you pointed out, there have been several retail silver shortages as the price has fallen from $48 to $15. Demand for retail silver has risen during that time. You also point out that more retail demand will eventually create a real wholesale silver shortage.

        Silver looks like a good bet right now, but the data shows that enough retail investor demand to clean out the shelves at apmex doesn’t make the price go higher. All the gold bugs are setting off their usual alarms about hard to obtain coins and bars in the last few weeks. I’m simply saying it isn’t relevant until the production of coins and bars is much higher than it is now. We are getting there but we aren’t there yet, so looking at spikes in bar and coin demand is…. A bit like Groundhog Day.

        Mike

        • Im struggling to comprehend your concerns about the ratio of investment to industrial use demand.
          The charts show the drawdowns in physical inventory – and when you compare this to the sentiment charts of investors views of silver (remaining at absolute rock bottom), its an inconceivably bullish setup. Imagine the inventory depletion if investment volume picks up to just ‘neutral’ sentiment

          • Investment demand for coins and bars cannot reduce total available above ground silver inventories significantly at current production levels of coins and bars. What has happened in years past when demand for coins and bars spike is that retailers run out. New coins and bars cannot be created immediately in sufficient quantity to fill the near term demand. Significantly ramping up coin and bar PRODUCTION is what we need to see to get the price moving. That requires average and steady demand for these products at a rate higher than what we have seen. It is increasing, but not enough to ramp production sufficiently to move price higher. And if you have doubts, then just look at how the price has dropped from $48 to $15 amid multiple coin and bar demand spikes that clean out the retailers.

            Silver is a tempting investment at these prices. And yes, availability of coins and bars may dry up, but you have to realize price can continue to fall. And it has. We saw this at extreme levels at the end of 2008 and beginning of 2009. Investor demand sent premiums way up for months, yet the price didn’t move during that time.

            Financial derivatives of silver are what has been moving the price for years. So when gold bugs act like chicken little because they cannot find pre-1965 coins for a few weeks, it just makes us all look like idiots. Investor demand must be sustained at much higher levels continuously before investor demand will move the price.

            Mike

          • Mike,

            There is one major flaw with your analysis. Who says investors won’t buy 1,000 bars in mass when the financial situation really hits the crapper?

            While it is true that most of the normal physical silver investment buying is with 100 oz bars and less, there will come a time when institutions, wealthy investors and hedge funds will buy 1,000 oz bars. There is no problem with bottlenecks or need to ramp up production of retail silver bullion products once investments moves into the 1,000 bar market.

            And… I see this as being inevitable.

            steve

          • Steve, when have physical silver investors ever bought 1,000 oz bars in large quantities? It has never happened (other than the Hunt brothers). Certainly it can happen. And I may very well be at the front of the line. But betting on an event that has never happened is risky analysis of how things work IMHO.

            Mike

          • Mike,

            Onw more time. Did you read the article? The worldwide financial collapse that’s coming… hasn’t happened before either…. LOL

            steve

          • Steve, a worldwide financial collapse has happened a number of times in history. Many, many people throughout history have made the mistake of thinking THEY were about to experience an epic, first ever world event. It’s human nature to mistakenly think we are living during a very unique time in history.

            Right now is an interesting time in history. That’s as dramatic as it gets.

            Mike

          • @Mike “Steve, when have physical silver investors ever bought 1,000 oz bars in large quantities?”

            Who do you think is buying the ounces in these ETFs/funds/online services?

            Sprott – 49,057,441 oz
            GoldMoney – 27,037,190 oz
            BullionVault – 16,931,750 oz
            BMG Bullion – 4,036,173 oz
            Canadian Mint – 2,759,181 oz

            These are mostly retail buyers, they don’t have to buy 1000oz directly and bury them in their backyards to be a force.

            Look, I work for a mint and I’d love you to buy coins, which is generally a good idea, but when the premiums get bid up why pay effectively 20% of metal value when you can buy the above funds at close to spot?

        • Bron, Those are paper derivatives of silver. I do appreciate the differences in their legal structures compared to GLD or SLV, but if you tell your broker to buy those things you sure as heck are not buying 1,000 ounce bars. You are buying a claim on 1,000 ounce bars.

          We will get there. It requires SUSTAINED demand at the retail level significantly higher than what we see today. However, retail demand is far greater than it was in 2007, so we are getting there. Not fast enough for my taste. Nothing dramatic. But it’s happening.

          Mike

          • James Cougan | August 24, 2015 at 2:17 pm |

            Exponential growth has these things… it all begins with a sustained growth that might look quite slow… Until it goes bananas!

      • Why if Silver is in a shortage, silver is in contango?

        Why not backwardation? Spreads indicate weak silver prices. How else to explain a five year decline in prices.

        • John Chew,

          There’s a difference between retail shortages and wholesale shortages. However, it really won’t matter in the end. Waiting for the signal that the Dollar died, or silver and gold are in serious backwardation won’t be good clues to get into the metals. It will be too late.

          GOD HATH A SENSE OF HUMOR…..

          stee

    • “it isn’t relevant until the production of coins and bars is much higher than it is now. We are getting there but we aren’t there yet”

      outside of silver being declared as official money, could coinage demand actually rise to a level sufficient to change the price? such an event necessarily would involve tremendous economic and financial stress – in such an environment how would people pay for silver?

  9. Nicely laid out and the main point is that retail silver does seems to be running into shortages. The point should be made that this really cannot be a productive capacity issue. How about comparing 2015 “demand” with last year. So called demand is being held back by the failure of minters to supply to that demand isn’t it? But are minters producing more coins and rounds than last year or is it about the same or less? It would seem strange that all the minters are running into productive capacity issues at exactly the same time. If the timings were different that would explain things. I feel it is unlikely that they all chose the same limit to their productive capacity.

    Are there any current months where “demand” i.e. coins/rounds/ bars sold are less than in say 2013? If so that seems a giveaway that silver supply is the issue. The other alternative is the minter chose to reduce productive capacity in a high demand market. Not likely!

    It should be noted that I have read a couple of posts recently showing that demand (for delivery) is moving onto the comex with big purchases of physical being made there. That has to be a serious sign of shortage as buyers of physical normally keep away from the comex. This suggests there is little elsewhere and the comex doesn’t stock much in any event. This suggests the shortages are going to be outed by honest buyers of physical metal at the comex and the conclusion to the silver story is almost upon us.

  10. Good article, thanks for sharing. I believe Gold and Silver will be the last men standing. Gold will be folks “Ace in the Hole” the silver will be used just like we use fiat, both metals being the only “Real” money. Happy Days, Enjoy the weekend everyone.

  11. I have only one strong objection to the points made in the article: those big silver bars are not as heavy as they seem. They were the last available silver items in the shop in 2008 when the sky was falling and silver was in single digits. Years later the same shop stopped offering them as a retail item, as now they prefer to keep them to themselves and run an unallocated depository.

  12. I keep reading about all of these “shortages”, but……..as anyone can EASILY see, there are TONS of Silver flooding market. Just look at APMEX, MONARCH, SCOTTSDALE, and of course Ebay. In addition, some of these dealers are offering “Specials” at .99 cents over spot. I dunno. Looks like this article is all about HYPE to get peeps to buy more silver…………maybe they are getting a “Kick Back” from a dealer…………

    • Perhaps you are getting a “Kick Back” for posting this opinion? What you communicates ignores the key points made in this article.

  13. Last week I purchased 100 .999 rounds from apmex at approx. $2.50 over spot. delivered immediately Plenty more available from more than a dozen good sized dealers. Guess they have not heard about the shortage.

  14. On Ebay there are only 26 silver coins for sale, there use to be 10’s of thounds..

    Just 4 or 5 silver dimes == No roll at all. Scrap silver has about 14 listing —

    It’s getting scarce out there.

  15. Good article

    I noticed that Perth Mint article. It’s all good for discussion and taking into consideration as people need to ensure they aren’t being impulsive or reactionary but are making considered decisions

    They raise a good point is saying there is a bottleneck at the Blanking stage. You make some good counterarguments.

    For my part I do mix up what I buy, even including some 1/10 oz pieces. This makes sense as in any scenario where Silver does indeed shoot to the proverbial Moon, I will keep my 100oz bars and only drip feed smaller coins back onto the market

    You also raise a good point about timing. It’s best to understand physical metal as an insurance policy and not as some kind of “investment class”. Also good to adopt a strategy of buying in the present but staggering it, so the dips and lows smooth themselves out

    Timing the Market is for investing in PM stocks.

    I like this website, basically the Charts speak for themselves. Enjoyed the Silver Chart Report too

  16. I suppose if the same 200 million ounces of silver are bought and sold back and forth on eBay it would appear that there isn’t a shortage.

  17. It’s more important imo the silver that is in the pipeline than what is on the shelf. What is available for sale will dry up quickly or premiums will increase if sellers / dealers know supply will be reduced.

  18. Larry Galearis | August 22, 2015 at 3:02 pm | Reply

    According to Ted Butler, the usual suspect bullion banks on the COMEX are taking delivery. I wonder if this last ditch suppression effort is also a last ditch effort to acquire enough metal to dump in a measured (leveraged) way to thwart a price rise. JPM (for example) wouldn’t consider its profit from buying of metal anything more than pocket change ($5b), but if the metal was important to use (dare I say in the end) to protect the fiat currency system (where from the bank’s perspective the real profit and POWER lies), then the banks accumulating ammunition metal would make sense for that scenario. And yes, that implies they see a run coming on the metal too…..

    I am only a guarded fan of Ted Butler- even as I give him a lot of credit for teaching about manipulation in silver markets – but the continued focus on a simple (minded?) profit motive for the banks in rigging the silver market seems, well, short sighted (excuse the pun). The profit motive does not, IMO, serve the public well if (when?) they dwell on fiat profit dreams of selling into a gathering hyperinflation. There is a basic and huge misunderstanding of the asset value of this metal (and gold) during a monetary crisis and most of the silver owners, I fear, do not understand that selling a tangible into a hyperinflation for profit is pure delusion. The banks would know this better than most. If JPM is the agent for the FED (as I believe), it will consider its profit in paper as profit, but only as a secondary interest to its primary role to protect the dollar.
    FWIW,
    Galearis

  19. Larry Galearis | August 22, 2015 at 3:14 pm | Reply

    And one more thing.

    The theme of this piece is absolutely correct. 1000 ounce bars will be in low demand over their lack of liquidity until the more liquid sizes become less available. That’s a no brainer. I remember years ago when Jason Hommel recommended buying them and sending them to a refiner to be made into smaller bars. Jason never understood about “COMEX/LBMA “good delivery bars”, and given that if any respect would be given to the list of recognized good bar refiners, serious buyers of bars might be suspicious of “no name” product being flogged. He could be right.

    But illiquid sizes or not, rising prices and demand might rise in unison in such a shortage. That is the underlying message. When the currencies collapse there will be a lot of it chasing the high end of tangible assets like silver and gold. Large bars will have buyers, no doubt. Size and whether on the “good bar” list will likely be secondary considerations.
    Best,

    G.

    L.

    • Actually 1000oz bars are the most liquid as they are accepted by all players in the wholesale market, if they weren’t they why do ETFs and funds like Sprott hold them?

  20. You guy’s go ahead and talk, I’ll buy.

  21. i believe the bitcoin was ushered into mainstream media by the elite to divert attention/money from silver/gold.

    billions of dollars went into hardware that mines stupid bitcoin.

    just imagine this money has gone into silver coins instead!

    • Bitcoins are currently valued at about $3.25 billion. That’s about 3 months of silver mine supply if the calculation in my head is correct.

      Is that what you were imagining?

      Mike

  22. The BOTTOM LINE IS THIS-In 1979, Silvr was trading for $1 less than today (SAME PRICE AS 2 weeks AGO). The HUGE DIFFERENCE…. We had infintesimal debt, OVER 3.5Bn Ounces of ABOVE GROUND SILVER, and the USD was 35 years way from being replaced. We currently have a fractured Treasury Bond market as evidenced by Reverse Repos, Inability to Deliver Treasuries, and Masssive UST’s being sent back to the US as the world is rapidly increasing efforts to de-dollarize! We have a QE system which hasn’t stopped, it’s just been exported to complying Countries (Belgium Bulge is well known, but there’s also Luxembourg, Ireland, Cayman Islands, and Switzerland covering up our QE.) As Steve presciently points out, this is SO unlike 1980 in SO MANY WAYS and what we’ve done with 6+ years of ZIRP around the world is the underpinning behind the current ineluctable depression we WILL FACE GLOBALLY. With the USD’s artificial stregnth TODAY due to massive QE programs in Japan and Euro (which those 2 countries acount for over 70% of the weighting of the USDollar and is why it skyrockeet from 80-99 on the US DOLLAR INDEX over the last 14 months, is a gift to buyers because with a strong dollar means CHEAP GOLD and SILVER prices. The US is the only country on Earth that Gold and Silver is not UP nominally this fiscal year! And b/c Silver is self consumable, and we’ve gone through those 3.5Bn above ground ounces 10 years ago back in 2005, the Miners, who provide this stuff, have been forced to HIGH GRADE, meaning they are using the highest grade ore just to keep AISC from being $24-$25/oz. They had no choice as the cost to produce has been 20% or MORE than the market faux paper spot price because the price has been @15-$16 for 17 months, since April of 2013 both Gold and Silver were CRUSHED on April 12 and a year later, in Spring 2014-Summer 2014, Silver smashed to $15. This resulted in coerced High Grading means that there are fewer ounces produced annually, and HSBC (the perpetrator and the JP Morgan of England-well-Barclays too, so bad analogy-but those 3/6 Bullion banks were responsible for naked shorting to such an extent that recently, their cumulative SHORT position of Ag was OVER 1Bn oz (202,000+ contracts short*5000oz per contract=OVER1Bn oz of paper, made out of thin air SILVER) admitted at the beginning of the year there would be an 8% shortage, and I believe that number will be more like 12%-somewhere between 66-100M ounce DEFICIT!!! Now with more and more Mines halting production and others not spending on exploration, and with so few bonanza grade mines left, silver will be prohibitively expensive to mine if nominal price doesn’t go to $30 quickly!! In 1979, the situation could NOT HAVE BEEN MORE DIFFERENT, w/ respect to high grade silver deposits, Geopolitically, and the worldwide trashing of ALL FIAT currencies HAD NOT TAKEN PLACE!! The epople who don’t see this and Silver’s potential at these prices, in physical form (given each ounce has 141 OWNERS) due to the machinations of the naked shorting of the bullion banks, and it’s VERY TELLING that JP Morgan is now COMPLETELY OUT OF managing derivatives as a Bullion Bank and will give Citibank 85% of the business of suppressing gold and silver prices while JP MOrgan is taking 97% control of All REAL COmmodities…. I believe Citibank is just the next Lehman being set up to execute as JP Morgan is now LONG Gold and Silver and has recently bought 9.3 metric tons of Gold, and Goldman Sachs, who claims Gold is falling to $700, just bought 10 metric tons of Gold. So JPM buys about 285,000,000 oz and Goldman buys 333M oz of Gold and they are position themselves for a plummeting dollar and a skyrocketing gold and silver will outperform gold explosion by at least 4:1, so Silver is where to be. Anyone who doesn’t GET THIS is a mooncalf, or REFUSES TO LISTEN TO LOGIC, or has a stake in the current FIAT system i.e. Central Bankers and the B.I.S.!

  23. Cash is king.Everything else is falling like a stone.Miner stocks total sell out.

  24. Silver is no bid up at all :

    https://monetary-metals.com/the-exquisite-market-setup-23-aug-2015/

    There is no shortgage except maybe in coin production for joe dix pack.

    Silver is a strong sell and is crashing with oil and copper. Period.

  25. LOl!Silver loses more than the Dax.And this investment should be the save hafen.
    Everywhere crises.And this after years of strongest money burning.

    Now I’am excited what the PM-Lobby told us.Maybe next week we get the short squeeze.

  26. you guys talk as if “demand” consists entirely of investors and hoarders. what about manufacturing? that seems to be a much greater source of silver consumption. if manufacturing demand craters, won’t that decline overwhelm any increase in demand for silver as money and drive prices down considerably?

  27. A bloodbath in the minerstocks i never saw before.

    • Only 4% loss today, we saw much worse in the past.

      What is different is worldwide perception of the PBOC : they are losing all of their remaining credibility.

      I hope that the chinese communist party (everything but “communist”) will hung to a rope in the near future : china officials have forgotten that when you want to “rule the world” you must impress and after an insult like the IMF rebuttal and maybe shanghai port explosion, you have to show what you have something between legs and not making an 3% yuan devaluation as the ultimate weapon ! China is a complete joke, they will be completely destoyed by 2020…

  28. The investors took the money out of the stock market and escape into cash and bonds.

  29. I hope I’am not a bad guy.But i would lough when Draghi and Yellen leads the sheeps to the save hafen bonds and a short time later the slaughter will come.

    In this crazy financial market everything is possible.But then the game is over.

    • First the biggest players have to safegard their wealth. If fiat currencies are to fail, the riches investors will wihdraw their mony from the market first.

      • Chinese leaders have rencently shown that they will not rule the world because they have no balls.

        What a joke the PBOC is, hopefully they will with the chinese not at all communist party will be hung at the end of a rope by their own people.

        Shame on chinese oligarchy, unable to fight !

  30. Odd to see so many anti-silver comments on a PM blog.

    • It should not be viewed as “anti” or faithful. It is what it is. Deflationary pressures are intense right now. Don’t expect price deflation at your favorite shopping center, however. 🙂

      Mike

      • I don’t think I’ve ever seen true price deflation in my lifetime. The Dollar has lost 90% of its value just in my 40 plus years on this Earth. The trend is your friend and the Dollar will do what all currencies have done before it. Its obvious to me that the markets create the illusion of low value for Gold and Silver. According to the market Silver is almost a throw away metal. In reality Silver is a miracle metal that is consumed by industry, used as jewelry, and hoarded as a store of wealth that is expensive to mine and replace. It takes a lot of energy to mine and process silver into bullion. Today’s market is a controlled con job. Good luck sustaining the con. The world is wising up and the con will soon be unraveling.

  31. Hi Steve,

    A few comments on your article first, then some comments on comments:

    First, I would take the figures from GFMS Thomson Reuters with a large grain of salt. They have put out numbers for a lot of years, are generally acknowledged as a reliable source by people in the industry, BUT:

    You can’t see the data that goes into the summary numbers they publish. With the level of corruption, prevarication, mis-direction and propaganda that goes on in the world today anything that cannot be independently audited has to fall into the hearsay category, perhaps with a 10% credibility at most. One example that comes to mind would be Indian demand. How is GFMS treating this? Indian silver imports have skyrocketed this year but was the tonnage increase put into the industrial or investment category? Ditto for what is going on in the Chinese market. The attitude of “Trust me, I’m the expert here” just does not fly with me anymore. My attitude is “Trust only comes with verification”.

    Second point on your piece is I agree that local coin shops/bullion dealers will need to run out of product first as a precondition to any physical shortage developing. And, as you point out, the second step of wholesalers/main exchanges running out or limiting product would be too late to do anything more but enjoy any position one currently has because you’re not going to be increasing it. Like flipping a light switch does not mean the light slowly goes out, it just goes out (and at the speed of light too).

    Further to this point, if I were running a suppression scheme I’d be tempted to choke off supply to the first step so the second step would be delayed as long as possible. To that point when government mints cannot meet production of popular one ounce coins to match demand I smell a rat. The technology required to make one ounce blanks is not either capital intensive or difficult. Heat a bar of silver till it melts, pour into die, let cool and ship to mint is a process that has been around for a long time. And it is not hard to do. The final step at the mint is even easier: put blank into a die and smack it to form the coin. This entire process is nowhere near as complex as putting a car together, could be easily automated, and based on the profit per coin for an American Eagle, any businessman would gladly take over the operation and run it to meet any demand imaginable. As long as one could get silver that is.

    Instead, the mint (I’ll just pick on the US mint in this case), makes a habit of suspending production for long periods due to supply constraints of blanks or need to change over production dies. Picture yourself running this operation. Exactly how long would you tolerate a supply base that couldn’t heat metal, then pour a disk to a specific size and weight to whatever quantity you wanted? Frankly, at these profit margins I would be taking that business in-house, eliminate the middleman and make my own blanks.

    Shutting down for model change over of replacing a die and putting it back into the press better take a portion of one shift. Swapping a die in a press is just a little harder than changing a light bulb. If it is more complex and time consuming than that the press was designed wrong. Go to any auto parts supplier to see how it is done properly and then copy the process.

    So supply constraints of blanks and lengthy change over times for dies are excuses to limit silver usage for the retail customer (first step) and so put off triggering 1000 ounce bar shortages (second step). This has to be a policy decision by the government, not a valid constraint by the physical universe. Also, this argument generally applies to the West. I’m not sure what goes on in the East (India, China, Russia).

    One final comment regarding comments on retail demand (which appear to be US oriented). There currently are about 45 million folks on food stamps. Pretty sure going to the coin shop to buy silver is not on their to do list. The increase in waiters and bartenders is about equal to the manufacturing jobs lost over the last 5-6 years. Pretty sure those “service workers” also aren’t going to the coin shops. And all those discouraged workers that do not appear in the unemployment stats, they aren’t spending money at coin shops either. Fewer and fewer Americans have free disposable income after paying the bills. The coin shop buyer base is under relentless pressure as the middle class keeps shrinking. Plus many potential customers still think paper metal is just as good as real metal and with the convenience factor that they do not need to handle it.

    Further, the number of US people who know the difference between money and currency is very low. It isn’t taught in the schools today (by design). Most Americans are ignorant on the subject and don’t know they are ignorant on the subject. Which is why coin shops are a niche business. Maybe, but only maybe, when a currency reset occurs this might change. And that may just be a forced education as it will be the East calling the tune and refocusing attention on what money truly is.

    Thanks again, Steve, for all the work you do.

  32. Yesterday the miner stocks again lose 10%.Many explorer stocks have lost 90% from the level 2011.
    When this stocks are falling you can be shure that silver and gold is falling too.
    We have a total deflationary enviroment.And then the high mining output.

    For me the most worse investment i ever did.Both the hardware and the stocks.
    In this enviroment everyone needs liquidity.Cash is king.

    Yesterday we had the prove.The stock market was falling and instead of an controverse reaction silver and minerstocks where even more falling then normal stocks.
    What about the next crash?Then you can buy silver for 13 Dollar.

    • “When this stocks are falling you can be shure that silver and gold is falling too.
      We have a total deflationary enviroment.And then the high mining output.”

      If you look at a 30 day chart of gold it isn’t falling lately.

      A deflationary market isn’t the reason for prices staying down on PM’s. ONLY manipulation is at play here. The underlying massive physical demand is keeping gold up. Silver is a smaller market that is more easily manipulated, and it is the most manipulated metal. Steve posted a chart in a recent article that shows that. When massive demand hits [it has started] that will hold the price up. But since the PM market manipulators are so determined to make G & S not look like a viable alternative to stocks or holding cash, don’t expect either metal to go up on the COMEX. Not until demand of either completely overwhelms physical supply. Some people seem to believe supply of a finite physical element is limitless. They are delusional.

      “In this enviroment everyone needs liquidity.Cash is king.”

      Cash from major economic nations [dollar, euro] is the most stable asset now. That won’t last as digital or paper currency is not a long term store of value.

  33. Most of the 170 000 tons of gold are already here.It only changes the owner.
    It is not possible to owerhelm physical supply.Only paper is changing.When the big banks don’t want to increase the gold price then it won’t happen.You can wait another 5 years.

    • There is some recycled and existing gold changing hands, and of course newly refined gold entering the market. Supply IS being overwhelmed by demand, that is well documented, and it is a continuing trend. Saying it isn’t possible to overwhelm physical supply with demand makes no sense. It happened big time around 2008.

      The big bank manipulating forces are holding the prices down but ultimately they can’t do that forever. The newly refined and re-purchased gold is going into ever-stronger hands that won’t be selling. This is not a declining gold price downward from $1,900 an ounce that makes weak hands let go of it. Gold has been remarkably stable even with blatant manipulation.

      • The manipulation will continue for much much longer.

        Nothing expected from the PBOC clowns…

        • The manipulation will continue for as long as they can. This is all-out desperation like zero interest rates and QE. The only thing I know that can stop it is real physical supply shortage. This is coming in G and S. These are non-renewable elements that are in finite recoverable supply. They will become unobtainable at a paper price that most consider affordable.

  34. Hey Steve, what do you think about/see happening with palladium? It’s been getting absolutely hammered this year, down 33% so far and looks like it’s going lower fast.

    • Matt,

      While some analysts think the platinum and palladium metals are good precious metal investments, I am not one of them. Of course, these two metals could revalue higher during a collapse in fiat money, but they are more industrial metals than gold and silver… especially palladium.

      So, I think it’s wise to stick with 3,000+ years worth of monetary history of gold and silver.

      steve

      • For now silver is taken down with commodities and stocks…

        Gold/silver ratio on the verge to break 80 probably to 100 within 6 months.

  35. Premiums at the bullion retailers are edging higher again. It costs money to hold inventory, so I suspect that they have models, heuristics, and intuition regarding the benefits of having extra metal during times like this compared to the cost of holding it when you don’t need it. It would actually be odd if there were not shortages and premium spikes.

    Maybe this is best framed for the silver faithful as this: Bullion dealers keep inventory razor thin because the cost of carry is high in a low margin business. When the poop hits the fan there won’t be any for you. 🙂

    Mike

  36. NYSE ARCA GOLD BUGS INDEX (^HUI) -NYSE
    111,17 – 5,04(4,34%) 25. Aug. 22:05

    Do you want the total crash?Yes!
    I only hope that the miner are soon broken.The output is much to high.

    • Unfortuntaely miners will survive many years at 1000/14 with no reduction output.

      What would be good is a HUI at 50.

      Ditto for silver, not enough physical buying : we need more than half billion ounces a year investment minimum in order to counter comex selling.

      • There isn’t even close to an extra half billion ounces of silver available annually. That kind of additional demand would send silver prices to the moon. Mine supply would have to increase 50%, and that sure ain’t happening anytime soon.

        Mike

        • No moon, we need major shortgage (1000 ounces bar) in order to prevent comex complete silver annihiliation : another 3% loss today with supports broken.

          Silver is going to single digits.

          • No one can know what the manipulated price will be, but the lower it goes the more physical price will break from paper/contract price.

            Ultimately physical suppl/demand will set the price. Those that manipulate price can’t let G & S published prices [spot] look appealing to investors who are disenchanted with stocks and also fearful of bonds and other purchases.

            If physical price drops lower I expect Asians will buy that much more, and there are limits to what is physically available.

          • David,

            Relying on poor asian slobs is delusional : they have been out from history for centuries and will remain : finance and technology (mostly military) are the only real gold of the ultimate evolution of capitalism.

            BRICS are unable to provide any paradigm shift, only western trend followers.
            Comex will be destroyed when western money masters will have decide to do so.

            Look at the PBOC clowns, they are speaking for themselves : they do not succeed to copy correctly the western fraud !

      • “Unfortuntaely miners will survive many years at 1000/14 with no reduction output.”

        I’ll bet my degree in Geology you are dead wrong on that.

  37. In gold this is not true.Most miners can survive with 850-900 Dollar,
    at his oil prices.Then you can imagine what else is possible.
    Even at this point it’s possible to fall another 20% in gold.

    • We need total annihilation of all comodities sector with BHP, RIO, VALE and so on bankrupt.
      We need all time real lows in all commodities.

  38. The silver lobby told us a lot of nonsense.Each day you can see it.

  39. Silver just hit 14.19 the lowest it has ever been in 5 years, it is either time to average down or to continue feeding the bear. Who will be right no one knows … enjoy the roller coaster.

    • 14.1 now

      we are in deep shit… no end in sight. no physical silver shortgage so a new downtrend is certain.

      • No silver shortage in your world. In my country it is virtually impossible to go to a shop and get Philarmonikers.

        I never can. I have very little money and I’m always trying to get one or two coins, and I never can.

        The cheapest is always unavailable. I don’t know of any other business in which getting their cheapest product is virtually impossible.

      • Furthermore, my dealer told me I can get Philarmonikers If I reserve them.

        This, in my house, is called scarcity. It’s like going to a supermarket before customers rush in in which there is no cheap beer.

        Have you ever had to reserver the cheapest beer to your local supermarket?

    • The currency controllers in the way of the Fed , Wall Street , D.C. , and Central wankers ~ er Bankers are clearly in the control of the phony paper prices for gold and silver. They will continue to mask the true value for the physical which has nothing to do with figures coming from the Comex right now.
      Physical holders know this and smile while prices are dropping . Only to go get some more for that infamous day when the paper world of finance gets a 2X4 whacked upside their heads all at once. That day is coming as sure as the market tanked recently with tremors for the BIG one. Buy on !!!

      • The day is coming : nevermind we will all be dead well below that day…

        • Zobi,

          I see you are a new poster to the site. Enjoying publishing your bearish comments? I tried emailing you, but of course the email you listed to post comments on this site isn’t real. I find that quite interesting.

          Anyhow, you’re more than welcome to continue wasting your time publishing absolutely worthless comments. However, if you think you are being cute doing so without providing your real email address… then you do so with false pretenses.

          Just another DIME A DOZEN LOSER.

          steve

          • Paid troll Steve. The paper system is under severe pressure as we know. And as we saw the last days!

            What we see is the manipulated paper price in oil, stocks, FX, and yes, in silver and gold. Everything is upside down, even Zobi’s comments.

        • Zobi,

          “The day is coming : nevermind we will all be dead well below that day…”

          You must have plans on dying relatively soon. Please stick around at least for a couple years.

  40. Maybe the guy with the bear avathar will explain it to you.Once he named me a troll.

  41. I’ll be happy and buy silver with every penny I have once the totally impicilic silver miners FINALLY throw in the towel and just stop producing. What a bunch of morons. Worse businessmen ever.

    • No they are just taking shareholders money which is their primary business…

      • Zobi,

        Heads up. Because you aren’t adding any real information to the site whether positive or negative, your comments are going into the spam filter. If you want to include some sort of information instead of spam like comments, your comments will continue to go into the spam filter.

        It’s your call

        steve

  42. So I am very green to the metals market. I have slowly started to purchase some silver. Nothing huge. My question to the experienced metal guru’s is with the extra funds I have sitting in the bank for savings am I better off buying metal with it? Am I better off pulling it out of the bank and keep it under my mattress? Or do I just let things continue to play there course? I don’t know if something could happen to our banks like it did in Greece where we cannot access all of our money. I do feel there are some definite scare tactics going on with some of the metal retailers. I also see how silver has gone down lower but the retailer continues to raise the premium. Seems to me that if the silver lowers the premium would lower to keep the profit margin the same. Only thing I can think is if they are raising premiums while silver is low they are doing scare tactics to make us believe the supply is low and demand high. Well that or they are actually telling the truth. Lol

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