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Guess who is running low on Silver!

By: Jason Hommel, Silver Stock Report

-- Posted 19 March, 2008 | | Discuss This Article - Comments: Source:

(Several major coin dealers!)

Silver Stock Report

People are not getting silver delivered on time by the NorthWest Territorial Mint.

If this has happened to you, I'd like to hear it so I can tell others, or you can post your complaints the forum, which is tracking info on many dealers:

If you plan to order silver from a dealer far away, you might want to review the "PM Dealer Feedback" link, above.

NorthWest Territorial Mint is listed there, and they have a bad reputation, with 26 people giving them 1 star out of 5.

State sues Auburn gold investment company, Northwest Territorial Mint
Investors didnít get products on time, state says

"The Attorney Generalís Office, the Better Business Bureau and the Federal Trade Commission have received 82 complaints against the company, the state news release said."

Attorney General sues NW Territorial Mint

Response to Attorney General Lawsuit Filed Against Northwest Territorial Mint

Ross Hansen explains:

Northwest Territorial Mint locks its clients in to the current price of metal at the time of purchase or sale.

We then expect those clients who buy from us to remit payment within two business days, or, if selling, to ship within two business days.

In case of buying from us, whence this dispute arises, clients may pay with a personal check, cashierís check, money order, or bank wire.

To protect against bad checks or counterfeit checks, it is our policy to hold these checks ten business days after receipt.

It is our policy to ship our clientsí products within 30 days of check clearance.


Now, let's think about this.  If a bullion company locks in a price on day 1, and the customer then sends a check within 2 business days, and it takes 2 more days for the check to arrive, and then the check is held for 10 days, that's 14 days later that the mint gets the money, to then spend on acquiring the silver in the open market for the customer.

How is that going to work in a rising market?  That may have been a great business practice in a declining market, but in a rising market that could cost a lot.  I don't understand how that business model could work.  A quick look at the 30-day silver chart at kitco shows that silver prices moved from $17 to $21 within 15 days recently. 

On a single $100,000 order, for 5882 ounces of silver at $17, will cost NWT Mint another $4/oz. more 15 days later, at an additional cost, or loss, to NWT Mint of $23,529 to fill the order. 

I would be very nervous if I didn't get my silver from that dealer within 45 days, as the dealer claims they can deliver, because that dealer's business model is one I cannot understand.  Standard investment wisdom is to not buy what you can't understand.

Also, if a typical dealer does $100,000 in volume in a day, over 30 days, that creates a "float" on customer money, of $3,000,000 per month.  If you add in another 30 days because of excuses of "delays from others," then maybe there is a float of about $6 million. 

I would strongly advise NWT Mint to change their business model, to only give out a price indication when customers call initially, and to wait until after good funds arrive to give a price lock, or after checks clear.  At that point, a customer has a "valid account" and can then lock in a price.  That's how I've ordered bullion from my trusted dealers when I know that I'm ordering more than I know they can handle.

NorthWest Territorial Mint is one of the largest private mints in the U.S., and makes the most beautiful coins, so I'd hate to see them go out of business.  At present, you just have to wait about 60 days or more to get them, if you think nothing's wrong with that. 


On Today's Price dip.

People have such a short term focus; why are people asking me why silver dipped today?  I live in Grass Valley, CA, a small town of 30,000 people.  I have no idea why the price dipped today.  More sellers than buyers, I guess, or maybe there was a manipulation on the futures market, thank God, that allows us to buy silver cheaper.  Maybe I ought to send the CFTC regulators a bottle of wine and a fruitbasket with a thank you letter for neglecting their duties, as well as a warning that when it blows up in their face, that I hope they won't lose their heads like the officials did in the French Revolution.  Anyway, the CFTC releases information every Friday so you can check what happened last week, up to Tuesday.

Other rumors:  I've heard that 4 major coin shops on the West Coast of North America were out of 100 oz. bars yesterday; Amark, the largest distributor for Johnson Matthey in the nation, and Tulving, and two dealers in Vancouver.  If you include NWT Mint's delivery delays, that's 5.  Anoter man emails to tells me that a coin shop in Surrecy, BC is sold out of 1 oz. Silver Coins, and that their phones are ringing off the wall for orders and they can't fill orders for lack of silver.

So, I emailed a trusted dealer I know on the East Coast, and he said he could get Johnson Matthey bars from the refinery within a week or two; it takes that long to produce them.  I've ordered from him before, he's good.

It was rather shocking, therefore, to see the silver price go down so much today.  Therefore, I suspect this dip will be very short.

I want to reassure all those who bought silver recently at $21/oz.  I first bought silver at $5.50 in 1999.  I had to wait 4 years until 2003, to see silver lose 25% to $4.15/oz.  Looking back, it's hardly anything to complain about, is it?  So, too, will this current dip, be long forgotten once silver is at $200/oz. or higher. 

Again, the fundamentals:  .007% of investors are buying silver in 2006, which is $1 billion.  By the time 0.1% of money in the banks tries to buy silver within 1 year, the price of silver will be well over $200/oz., in my estimation. 

Here's my projection from 2005 of what will happen to silver prices if they rise 50% per year for 15 years.  (You can't even see silver's rise to $50/oz. on the chart!)

sample coin picture

I hope you can see why it's so important to get your silver from a local coin shop if you can, or to spread out your orders over several dealers to protect yourself in case of a failed delivery.

To get a look at my portfolio, to see where I have my money invested:


Jason Hommel

-- Posted 19 March, 2008 | | Discuss This Article - Comments:

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