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Silver Auctions And Silver News

By: Jason Hommel, Silver Stock Report

-- Posted 16 December, 2008 | | Discuss This Article - Comments: Source:

(And Links)

Silver Stock Report

Silver Bar Auctions at

Closing Tonight at 6pm Pacific Time, 9pm Eastern:

Current Highest Bid as of 1PM | Auction details and link

USD 6,025.00 500 ounces | 5 x 100 oz Silver Engelhard Bar | U.S., by Jason Hommel
USD 6,205.00 500 ounces | 5 x 100 oz Silver Engelhard Bar | U.S., by Jason Hommel
USD 12,020.00 1000 ounces | 10 x 100 oz Silver Engelhard Bar | U.S., by Jason Hommel
USD 11,665.00 1000 ounces | 10 x 100 oz Silver Engelhard Bar | U.S., by Jason Hommel
USD 21,520.00 2000 ounces | 20 x 100 oz Silver Engelhard Bar | U.S., by Jason Hommel

Closing at 6pm Pacific Tomorrow, another set of auctions, for another 5000 ounces of silver, like the ones above.

I've had a few people who want to buy more, on better terms, meaning cheaper, not at auction. That won't happen. If it did, I'd have to charge 5-10% more, to be fair, and nobody wants to pay more!

I like the auction format for several reasons:

1. It's "free market"! Thus, it allows others to compete, and get silver, the free market way.

2. It allows me to sell when I'm ready. I have to ration my sales, as I ramp up. If I sell too much, too soon, and run out, that's no good for me or the market. As you can see, my mom is a more steady seller than I am.

In theory, the auctions are the best way. There are no monopoly-type side agreements "in the dark".

For example, if I sold direct to customers, I could run out, or have less for sale at auction, and thus other people can't bid on that silver, which is not fair to them.

But since they can bid, and if they don't win, they have nobody to complain to, except themselves, if they don't get any silver.

I really appreciate your bids! It's amazing, the last minute activity on some of these. On Wednesday last week, there were 4 people bidding in the last 60 seconds, creating 11 bids! That's very competitive.

Again, I plan to "ramp up" and I'm aiming to sell more than 20,000 oz. per week. Maybe starting this week, or next.

So far, I've been able to continue the "no minimum bid" auction approach, which may lead people to think I'll take any low price. Not so.

If the silver auctions off at below my replacement costs, I'll have to start including a minimum bid, otherwise, I'd go broke.


In other silver news, this headline could be "Nobody in the world dares to risk going short silver, except for JP Morgan!"

US banks hold bulk of Comex gold futures


For silver, it's even more startling. On December 2, as silver closed at $9.57, exactly 2 U.S. banks held a net short positioning of 24,555 contracts. The CFTC reports that as of the same date all traders classed as commercial held a net short positioning of 24,894 contracts. So, the 2 U.S. banks, with one particular Fed member bank probably holding almost all of it, held a sickening 98.64% of all the collective commercial net short positioning on the COMEX, division of NYMEX in New York.

Exactly 2 U.S. banks have practically all the COMEX commercial net short positioning on silver.

Rumor is that the COMEX itself is warning brokers about a squeeze in Dec. gold this month. Interesting.

As for me, I'm not short, and I'm not selling out. After I sell silver, I immediately repurchase 1000 oz. bars in bulk from a wholesale supplier, and then I ship them off to a mint to turn into bars or coins. Not everyone can do that, because both the wholesale suppliers and the mints want to limit the number of people they work with. They each have rather high minimums, like 5000 to 10,000 oz./week.


Some people have asked me about going into the minting business. Here's one for sale for $1 million:

(They did not pay me to list them, and I've not been in contact with them.)


There is yet another place to try to buy and sell silver:

The flettexchange does not yet have much available, only a few 1000 and 100 oz. bars for sale, and the spread is wide, like from $9-12/oz., although that will likely improve with time.


Here's an excellent article:

A Problem with GLD and SLV ETFs

Key Excerpt:

There is economic incentive for the Custodians to loot the ETFs. From page 9 “Under the Custody Agreements, the Custodian is only liable for losses that are the direct result of its own negligence, fraud or willful default in the performance of its duties. Any such liability is further limited, in the case of the Allocated Bullion Account Agreement, to the market value of the gold held in the Trust’s allocated gold account with the Custodian, or the Trust Allocated Account, at the time such negligence, fraud or willful default is discovered by the Custodian”. Not only does the Custodian attempt to disrobe itself of liability but even if it is found liable it tries to assert damages accounted at the time of discovery of the default.


Another excellent article:

Explaining Inverse and Leveraged ETFs

Key Excerpts:

Inverse and Leveraged ETFs lose money over the long term

Leveraged ETFs' efficiency goes down with volatility

There are troubles when the counterparties don't honor their contract. When these parties fail, then the ETF could lose money.

Here is some good information on this, written by Paul Amery.


With all the talk of impending defaults of both the COMEX, and the ETF's, and with the price dip now from $20 to $10, there just couldn't be a better time to buy physical metals.

This weekend, I read the annual report of my major silver wholesaler supplier of 1000 oz. silver bars. They have half a billion worth of physical metal on hand, with only a million or two worth of financial paper assets prone to default, so their potential to default on me is close to zero. And even if they were to default on me, my customers' silver would already be shipped out, and so, if you win my auctions, you will still get your silver, due to my policy of shipping the same day as wires come in.


    Jason Hommel

    -- Posted 16 December, 2008 | | Discuss This Article - Comments:

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