-- Posted 3 September, 2008 | | Discuss This Article - Comments:
(No Silver on Tuesday)
Silver Stock Report
For the last two weeks, I've asked my readers to go to their local coin shop on Tuesday, September 2, at 2PM. In sum, for those who acted, they were alone. Most shops were out of silver, or nearly out. Dealers want you to pay up front for silver that may take 5 weeks or more for delivery.
No customers. No silver. Those who deny the silver shortage, are increasingly now recognizing the retail shortage, and say that it's record demand that's doing it. Nonsense. Investor demand for silver could not be lower. No lines. No huge demand. The U.S. Mint produced over 500 million ounces of silver in U.S. coinage in 1964. Today, they can barely produce on pace to make 20 million silver Eagles, without horrible shortages developing. That's not a "manufacturing" problem; it's a supply problem. But still, the mints can't supply the market. Why not?
The silver market is broken. COMEX broke it. The CFTC broke it. The Federal Reserve broke it. The paper dollar broke it. Hedged refineries and dealers broke it. The broken trust broke it. Lack of knowledge about usury and promises not being the same as real silver broke it.
The spot market, the over the counter market, is transforming itself into the futures market that it depended upon. If you try to buy silver at "spot", it's like buying a futures contract for delivery in 1 to 2 months all over again!
We now need a new silver market, where people cannot sell silver that they don't have. We need a new spot market to help discover the real price of silver. Although ebay right now is the best free market indication of a real price that there is, it is bad for silver because of the 10-15% fees, which restrict volumes. Surely a new market will emerge where people can only sell what they have, and can be proven to be able to be delivered, where real silver will sell at increasing premiums.
A dollar used to be defined as a certain amount of silver, about .76 of an ounce of it in a real silver dollar. In 1968, a few years after the U.S. Mint stopped making silver coinage, they continued to let people exchange silver certificates for real silver. It became very profitable for people to buy up the silver certificates and present them for delivery of silver that was being sold at below market prices. Eventually, .76 of an ounce of silver, a real silver dollar, was sold at increasing premiums to a paper dollar.
Same thing is happening now.
Real silver is selling at increasing premiums to the paper price of COMEX silver that you can't get. If you can get it, then you will be able to increasingly sell it at a premium, and make a quick profit if you can find silver priced at COMEX prices. Manipulated silver prices are a great advantage if you can buy cheap silver, and sell it at real free market prices, as some dealers have begun to do, expecially with Silver Eagles.
Here are the reports from my readers, all from today:
Twos-day visit to local coin shop
Well, I went to my local coin shop (fairly large) in a North Carolina at 2pm. Sad to say, no one else was there courtesy of silverstockreport.
Quoted me $19000 for 1000 silver eagles!! I told them about Apmex.com at only $2 over spot, but they wouldn't budge.
Seems like some of the dealers must be milking this market.
Twos-day visit to local coin shop
Report from North Alabama on Twos-day:
Went to the local coin shop (oldest and largest in the area AFAIK). Local coin shop had several customers selling a few odd coins each for cash. I didn't notice anyone else there from JH newsletter readership.
Proprietor had no bullion for sale at current prices. He is sitting on a few Engelhard 100 oz bars that he purchased between $17 and $19 per oz. He said there are no sellers, that selling has dried up recently. He cannot sell silver bullion to me until someone sells it to him first. He won't sell what he doesn't have.
I believe he would sell his few Engelhard's to me for around $18 - $19/oz.
Conclusions: (1) spot price does not equal physical price, and (2) a retail shortage exists in North Alabama at the current spot price
I took a guy from work with me as a "neutral third party" to see if he agreed that there was a shortage, and also to introduce and educate him about the situation in silver markets. He agrees with the conclusions.
Tuesday at 2pm Results
Went to the Onlygold.com shop in Phoenix, AZ. Do not get tripped up by the name. These guys do a fair amount of silver dealing as well. This shop is owned by a guy named Richard Smith. Richard has slammed the notion that there is a silver shortage and has also picked on Chris Powell of GATA as well. Here are the two articles that I was referring to:http://onlygold.com/Articles/ayr_2008/Remember_Gata.asphttp://onlygold.com/Articles/ayr_2008/Daddy_What_Was_Silver.asp
I guess we can debate on how negative these articles are against the metals. The reason that I bring up this subject is because of what I found in the shop. I walked into the shop and I did not meet anyone from the Hommel camp. I have gone to this shop and only this shop for about 5 years now. I have never been turned away due to them being out of silver. I briefly went over with one of the employees tallying how much silver they had in stock. The stock at that time was as follows:
< 50 Silver Austrian Philharmonics +2.50 over spot for 20+ order
< 50 American Silver Eagles +3.25 over spot
5 100oz. JM/Engelhard bars (did not check how much premium over spot)
1 100oz. Generic Silver bar (did not check how much premium over spot)
No Generic Rounds or 10oz. bars (which I have never seen before)
(it would not surprise me if all of this inventory was cleared out by tomorrow)
The only reason that I went was due to the Tuesday at 2pm so I only brought $500 with me so that I could buy whatever I could but his inventory was more of my concern than anything else. I ended up buying 32 Austrian Philharmonics for 15.60 (13.10 + 2.50.) The employee that I talked to said that it was getting drastically harder to acquire the metal.
I just found it laughable that an insignificant $500 took out 5% of his inventory. No sir, there is no shortage
What I Learned During My Summer Vacation while Visiting Two Coin Shops
Being a silver enthusiast since 1978 I took your advice and decided to visit not one but two coin shops in my local area on September 2nd. I was very curious to see what kind of knowledge the owners, personnel, and customers had regarding the silver market.
American Coin/Hur Jewelers in Orem, Utah
Around 12:30 pm I entered American Coin. Only one customer, an older man, was in the shop. He was selling some semi-precious gems. So I know he was not a reader of the Silver Stock Report.
The owner asked me what I wanted and I told him I was interested in buying some 100 oz silver bullion bars, some US Silver Eagles, or bags of junk silver. I was told that he did not have any in stock and it would be several weeks before he could get me any. If I wished to purchase some I would need to pay for it in advance. (Where did I hear that from?)
I asked him why there was such a long wait. He mentioned that the silver market was being controlled by paper silver and they were controlling the delivery so it was very hard to get the silver quickly.
I change the direction of the conversation by stating that of the 43 billion ounces of silver ever mined in the world, only one to two billion, at the very most, was still in existence. The rest was used in the manufacturing processes and are basically unrecoverable. And of the 5 to 6 billion ounces of gold ever mined, at least 95 percent was still in existence. I received no real comments on those figures, with the exception that I erroneously said million instead of billion, but quickly corrected myself.
I asked the owner what silver was used for and he replied photography, jewelry, and a couple of other uses, and that was about it. I gave him a list of the applications that silver is used in the industrial world, which I got from one of Ted Butler’s newsletters some years ago and asked him if this had any impact on the supply of silver. He looked at it and replied, “That has nothing to do with the price of silver. As I told you the silver market is controlled by the paper sellers. With the government and outside sources controlling the precious metals there nothing you or I can do.”
I asked him if he understood the law of Supply and Demand. He replied, “What does that have to do with paper silver?”
Additional dialog was passed for a few minutes. At some point I mentioned that the price of silver was in March, that of $21+ and that it was now approximately $13. The gentleman who was selling his semi-precious gems left the store rather abruptly. While he was gone I tried to emphasize the fact if buyers of silver set the bid price substantially higher they would find more people would be willing to sell their silver.
A few minutes later the older gentleman came in with a fist full of silver dollars to sell. Apparently hearing the price of $13 (and not the $21) got him all excited. At that point the salesman just looked at me as if he wanted to say, “Why raise my bid price when people are throwing silver at me.”
At that point I left my list of silver applications with him and he politely put it aside.
I left the store thinking, “He totally understands why silver prices are low, but he, like most other Americans, AIN’T GOTS A CLUE or even a low level of understanding of Supply and Demand.”
Rust Coin and Gift Shop in Orem, Utah
Around 1:10 pm I entered Rust Coin and Gift Shop. There were four customers with various salespersons. I asked in a noticeable voice, “Does anyone here know Jason Hommel?” Everyone shook their head in the negative.
A lady salesperson asked me what I wanted and I told him I was interested in buying some 100 oz silver bullion bars, some US Silver Eagles, or bags of junk silver. I was told that they did not have any in stock and it would be several weeks before he could get me any. (Gosh, that sounded familiar! I wanted to ask her if she ever worked for American Coin, Ted Butler, or Jason Hommel, but forced myself not to.) Again, if I wished to purchase some, I would need to pay for it in advance. (Was I hearing another echo?)
I asked her why there was such a long wait. She mentioned that the silver market was being controlled by paper silver and the government stockpile and at this time it was very hard to get the silver delivered. (I thought, “Is there a conspiracy going on with the independent coin dealers”, but again I again refrained from saying anything.) I did mention that the US Government ran out of silver in 2006. She flatly told me that I was WRONG, WRONG, WRONG! (Can’t argue with ignorance!)
With another copy of Ted Butlers list of silver applications, I mentioned that of the 43 billion ounces of silver ever mined in the world, only one to two billion at the most was still in existence. And of the 5 to 6 billion ounces of gold ever mined, at least 95 percent was still in existence. I received no real comments on those figures. Just the look of deer caught in my head lights at night.
I went into my typical diatribe that I have used since 2000 in trying to expose the potential of the silver investment to see if anyone understood the law of Supply and Demand. She replied, “What does that have to do with paper silver? The price of silver is controlled by the government.” (More echoes!) Again I told them the US Government ran out of silver back in 2006 and had to make all of the Silver Eagles since then by buying silver on the open market. I also mentioned that the US Mint stopped making Silver Eagles for the remainder of this year. No one said anything.
At this time I got the interest of the other customers in the shop. Unfortunately this was going to be a battle that I needed to fight by my lonesome. I had control of the conversation and everyone else was on the defensive for the current price of silver. Here I am trying to convince everyone that silver is in a buying opportunity of a lifetime, less the 1990s through 2003 period of time and they were fighting with me! “It just dropped from $21 to $13. Does that flash any warning signs?”
One of the customers tried to tell me that the best time to buy silver was in 1983 when it was at $49 an ounce. I was speechless and asked, what does that have to do with the price of silver today? I looked at him and told that was not a good buying opportunity and that he was off by three years on his price. He told me that I did not know what he was talking about. Mind you, I am not a betting person. I do not like to make wagers, but I took $100 out of my wallet and told him to put some money where his mouth wa. He would not take my bet.
At this point I was asked to leave. Apparently I was causing a commotion and I can see why. I felt like a Muslim preaching to Christians in the Coliseum. There was no way I was going to save their lives. They had everything under control and knew more than I did.
One young man left the store with me wanting to know more. I spent about ten minutes outside discussing the potential of a silver price explosion, the law of supply and demand, the uses for silver, and that silver was going to go ballistic.
He said something on the order of, “I think I understand some of what you are saying, but I am not sure what it is. I think that I will go in and buy some silver.” He then went into the store.
Just as he was going in the store, the guy who claimed 1983 was the high point of silver was coming out. I quickly took the $100 out of my wallet again and told him, “If you are that cock sure that silver was $49 in 1983, this will be the easiest $100 you will ever make. In fact I’ll give you the actual month and year. January of 1980!”
He got in his car not saying a word and drove off.
I stood there in the parking lot thinking, “Except for the youngman whom I talked to outside the coin shop, no one seemed to have the slightest clue of basic economics, how the Free Market System works, AND THE FACT THAT THE US GOVERNMENT HAD NO SILVER!!! But like the salesman at American Coin, they AIN’T GOTS A CLUE or even a low level of understanding of Supply and Demand, but I repeat myself.
I got in my car and thought to myself, “Well that is just more bullet of proof that I can place in my bandoleer of evidence that the American people are nothing but Myopic Pollyannas Ostrich-People with No Common Sense (MPO-PNCS) about the basics of economics, let alone what silver offers to us today.
I have been buying silver since 1978 and have not sold one ounce of it since. What is so hard to understand about a deficit usage of an essential manufacturing resource that is being used up faster than can be mined, refined, and delivered?
I guess some people are just too stupid to want to be rich, which is why there are so many poor people in the world and so few rich. As Dung Chow Ping once said something like, “It is honorable to be rich” and so goes the Chinese economy That is ALSO why the US and China are passing each other on the same street going in different directions.
I've just returned home from visiting my favourite Metro Vancouver coin
After withdrawing cash from my bank, I arrived at the coin shop at 2 p.m.,
(there was a man and a couple in the store at the time). After circulating
around the collector and numismatic displays, I approached the gentleman
behind the counter, from whom I've bought gold and silver in the past (we know
Up front, I asked him how much silver bullion and/or coins he had for sale --
he responded "none". No silver maple leafs, I asked? Nope, nothing ... and
the waiting list is about a month, because the Royal Canadian mint can't keep
up with the demand.
How about bullion, I asked? Same story -- we're back-ordered for about the
same amount of time. He then surprised me by saying that his company is
thinking of producing its own silver bullion, because of the demand!
I then asked him why the demand is so great for silver coins and bullion, when
the spot price keeps dropping? Without hesitating, he said "manipulation".
When asked if he had any gold maple leaf coins, he reponded "only a few one
ounce". He then said he was sold out of the one-quarter and one-tenth ounce
gold maple leaf coins, because there's more interest in smaller denominations.
The dealer said if I wanted to join the long list of people waiting for silver
maple leafs, I could. He said today's order price for a one-ounce maple leaf
silver coin is $17.79 -- based on today's silver spot price of $13.05.
I asked him if he had heard of the Bangkok coin dealer, who recently sold
7,000 ounces of gold in one day ... he said Asians love to buy gold and
Jason, I gave him the list of three websites that you provided in your
article ... he thanked me, and said he would look into them. Another couple
arrived, just as I was leaving the store.
Will be interesting if all other reports coming to you today share the same
story: no silver for sale!!
have you heard anything how things went across all the coin shops
I picked up (2) 100 oz bars...1461 each....
and the coin shop had plenty on sale...
Bob in Michigan
Well, the three shops that I visited today had no silver and they all said that delivery was 2 weeks out.
They all stated they were not sure if I would receive the silver at all.
All three shops stated that they are experiencing a shortage of silver….
Where can I go to purchase silver?
On my visit to the local coin shop today at 2pm, I noted that I was the only one there buying silver. I was onsite about 5 min prior to 2pm and stayed to about 2:15pm. I just thought you'd want some feedback. I was hoping to find other people there buying silver but no luck.
I also noted that the dealer stated he has "plenty" of silver. I only buy 1oz. rounds and he stated he had plenty. Last time (2 weeks ago) I asked him and he said he had over 1500 rounds. At the time I bought 100. I'll just keep visiting him every other week and buy my portion.
I really enjoy your article and hope you keep up the good work! I tell everyone I can about your site.
Well I went down to the local coin shop here in Green Bay and nobody else
showed up. You might be interested to know that the guy had no silver bars
of any kind, not even a 10 oz. He had one 1 Oz bullion coin and a box of
This kind of reminds me of that character on the old Popeye cartoons, Wimpy, who was always broke, who always said, "I'll gladly pay you Tuesday, for a hamburger today."
Well, it's Tuesday, and it looks like many dealers who rely on silver shipments in the future, are going broke.
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-- Posted 3 September, 2008 | | Discuss This Article - Comments:
Last Three Articles by Jason Hommel, Silver Stock Report