The Silver Market And Little Cracks in Confidence
It looks as if the silver market has finally bottomed, as the tarnished price of silver recovered some of its luster over the last two weeks.
The big silver shorts have continued to exit their futures positions, yet there remain some elephants in the market — as evidenced by yesterday's non-economic volatility.
Furthermore, despite various perception related issues, the underlying case for holding physical silver remains as strong as ever, while public confidence in paper currencies trends ever lower.
Retail Demand Rises
Retail demand for silver also continues to surge. A few weeks’ time will reveal the true impact from this recent price dip, as dealers receive new shipments — most of which are already sold out — or not.
A previous piece outlined the sequential moves away from "King Dollar" as a reserve currency that has been observed recently, although this trend has mainly been progressing in the developing world thus far.
From a broad view, the truly unprecedented demand for physical metals leading up to and through the most blatant price rigging operation the commodities market has seen thus far may be a significant tremor of a massive fault line inthe confidence that supports what could well be the largest bubble of them all —that of the value of paper fiat currencies.
Reflated Sentiment Manufactured
The monetary authorities have succeeded for now in reflating sentiment. System sentiment is the perception driving the majority. On the surface, it appears that the housing market has recovered somewhat, the European debt crisis seems contained, and inflation is not a threat. U.S. equity markets are trading at all-time highs once again.
In truth, it requires very little effort to dispel these myths by simply looking just beneath the distorted data points. Nevertheless, a form of plausible deniability exerts a significant barrier to entry for the majority who depend on the maintenance of the status quo.
This manufactured sentiment allows this majority to comfortably dismiss the wide cracks beneath the surface. In fact, such dismissal is often accompanied by anger and hostility that are just more evidence of a political, rather than an economic, achievement.
Bubbles and the Demand Equation
Recall that bubbles have universally gone undetected and unappreciated for quite some time before outright dismissiveness arises as the holes begin to appear and the bubble eventually bursts.
The larger the bubble, the more speculation, fervor and distortions typically arise. The more protracted the bubble, the more desperate the attempts are to cling tightly to the risk mentality.
The precious metals markets are currently witnessing a new dimension in the "other side" of the demand equation for silver, and also for gold to a lesser degree. This is ultimately a reflection of value and represents a natural transition as the market deepens over time.
Despite the decade’s long perceptual distortion and mis-pricing of these intrinsically valuable commodities, savvy investors are finally beginning to see through the shams that are ultimately political events and not reflections of an economic reality.
Mainstream Perception Issues
The mainstream media and those who consume it still tend to have general issues with the ownership of physical silver and gold.They often focus on the fact that the precious metals do not pay any interest rate, nor do they provide investors with a regular dividend.
Of course, these intrinsically valuable metals with a long history of use as hard currencies pay no dividend or interest because they do not need to. A dividend on shares and a rate of interest on paper currency deposits are essentially bribes to encourage investment in those less secure assets.
Another issue commonly brought up is the high premium that physical metal commands relative to paper futures prices, although this situation will probably only get worse over time as metal supplies dwindle.
It is also worthwhile to remember that both dividends and interest happen to be denominated in a persistently devaluing fiat currency with a purchasing power that is being gradually eaten away by the rate of inflation that its central bank insists on maintaining.
What Do You Think? Any thoughts about this? Share it!
Little Silver Market and the Big Box Warehouses
What the precious metals market has seen over the last week in both silver and gold is a worldwide surge in physical demand as prices fell. This is what happens when the management of perception backfires.
It seems poetic justice that a drive by smash-down of precious metal prices would actually trigger the beginning of the last phase of this bull market. Nevertheless, these are exactly the kinds of consequences that occur when a market has been prevented from discovering its true value.
While the market drama seems intense at the moment, the timeline for this convergence can be found using decades as the scale.
Funds, Futures and Central Banks
Although SLV, the big silver exchange traded fund or ETF, has not reported significant investment fund outflow, the big Gold ETF (GLD) has seen major drawdown of shares. This is another indication of a developing split between paper and physical demand for precious metals.
Of course, the other divergence arises between the paper price discovered on the futures market and the retail price for precious metals after premiums and the cost of shipping are added.
All of this is taking place against the backdrop of a worldwide currency war, as currencies devalue in response to enormous sovereign debt burdens and unfathomable future liabilities.
Central banks and their subsidiaries have become ever more powerful and able to infiltrate practically any paper market they choose with little regard to ethics. Furthermore, if the law threatens to obstruct the agenda, it is changed or regulatory authorities are captured.
Wholesale Shortages?
The concern seems not so much whether the underlying physical demand is real, but if wholesale shortages are a reality?
Delays in precious metal deliveries now seem to be commonplace. That, in and of itself, constitutes an effective shortage.
Still, how much of this is due to dealers hanging on to inventory, given that many would be underwater on their positions? Also, perhaps the extent to which premiums can be utilized has some psychological limit?
Distributors and the U.S. Mint
Of course, the small physical precious metals dealer will probably lose money selling their current inventory at post-crash pricing, but they would usually simply replace that inventory at the lower price.
The problem remains that their distributors have four to five week delays — where they could lock in the price, but at the risk of the paper price going lower. The dealer is choosing not to take that risk and now is typically completely out of conventional, non-numismatic Eagles and rounds. They probably have a very low junk silver inventory as well.
This situation arises in conjunction with the U.S. Mint rationing the supply of coins provided to the wholesale distributors. For example, the Mint recently sent out just 15,000 coins of an 115,000 coin order to one distributor. That sure looks like a shortage...
It looks as if the silver market has finally bottomed, as the tarnished price of silver recovered some of its luster over the last two weeks.
The big silver shorts have continued to exit their futures positions, yet there remain some elephants in the market — as evidenced by yesterday's non-economic volatility.
Furthermore, despite various perception related issues, the underlying case for holding physical silver remains as strong as ever, while public confidence in paper currencies trends ever lower.
Retail Demand Rises
Retail demand for silver also continues to surge. A few weeks’ time will reveal the true impact from this recent price dip, as dealers receive new shipments — most of which are already sold out — or not.
A previous piece outlined the sequential moves away from "King Dollar" as a reserve currency that has been observed recently, although this trend has mainly been progressing in the developing world thus far.
From a broad view, the truly unprecedented demand for physical metals leading up to and through the most blatant price rigging operation the commodities market has seen thus far may be a significant tremor of a massive fault line inthe confidence that supports what could well be the largest bubble of them all —that of the value of paper fiat currencies.
Reflated Sentiment Manufactured
The monetary authorities have succeeded for now in reflating sentiment. System sentiment is the perception driving the majority. On the surface, it appears that the housing market has recovered somewhat, the European debt crisis seems contained, and inflation is not a threat. U.S. equity markets are trading at all-time highs once again.
In truth, it requires very little effort to dispel these myths by simply looking just beneath the distorted data points. Nevertheless, a form of plausible deniability exerts a significant barrier to entry for the majority who depend on the maintenance of the status quo.
This manufactured sentiment allows this majority to comfortably dismiss the wide cracks beneath the surface. In fact, such dismissal is often accompanied by anger and hostility that are just more evidence of a political, rather than an economic, achievement.
Bubbles and the Demand Equation
Recall that bubbles have universally gone undetected and unappreciated for quite some time before outright dismissiveness arises as the holes begin to appear and the bubble eventually bursts.
The larger the bubble, the more speculation, fervor and distortions typically arise. The more protracted the bubble, the more desperate the attempts are to cling tightly to the risk mentality.
The precious metals markets are currently witnessing a new dimension in the "other side" of the demand equation for silver, and also for gold to a lesser degree. This is ultimately a reflection of value and represents a natural transition as the market deepens over time.
Despite the decade’s long perceptual distortion and mis-pricing of these intrinsically valuable commodities, savvy investors are finally beginning to see through the shams that are ultimately political events and not reflections of an economic reality.
Mainstream Perception Issues
The mainstream media and those who consume it still tend to have general issues with the ownership of physical silver and gold.They often focus on the fact that the precious metals do not pay any interest rate, nor do they provide investors with a regular dividend.
Of course, these intrinsically valuable metals with a long history of use as hard currencies pay no dividend or interest because they do not need to. A dividend on shares and a rate of interest on paper currency deposits are essentially bribes to encourage investment in those less secure assets.
Another issue commonly brought up is the high premium that physical metal commands relative to paper futures prices, although this situation will probably only get worse over time as metal supplies dwindle.
It is also worthwhile to remember that both dividends and interest happen to be denominated in a persistently devaluing fiat currency with a purchasing power that is being gradually eaten away by the rate of inflation that its central bank insists on maintaining.
What Do You Think? Any thoughts about this? Share it!
Little Silver Market and the Big Box Warehouses
What the precious metals market has seen over the last week in both silver and gold is a worldwide surge in physical demand as prices fell. This is what happens when the management of perception backfires.
It seems poetic justice that a drive by smash-down of precious metal prices would actually trigger the beginning of the last phase of this bull market. Nevertheless, these are exactly the kinds of consequences that occur when a market has been prevented from discovering its true value.
While the market drama seems intense at the moment, the timeline for this convergence can be found using decades as the scale.
Funds, Futures and Central Banks
Although SLV, the big silver exchange traded fund or ETF, has not reported significant investment fund outflow, the big Gold ETF (GLD) has seen major drawdown of shares. This is another indication of a developing split between paper and physical demand for precious metals.
Of course, the other divergence arises between the paper price discovered on the futures market and the retail price for precious metals after premiums and the cost of shipping are added.
All of this is taking place against the backdrop of a worldwide currency war, as currencies devalue in response to enormous sovereign debt burdens and unfathomable future liabilities.
Central banks and their subsidiaries have become ever more powerful and able to infiltrate practically any paper market they choose with little regard to ethics. Furthermore, if the law threatens to obstruct the agenda, it is changed or regulatory authorities are captured.
Wholesale Shortages?
The concern seems not so much whether the underlying physical demand is real, but if wholesale shortages are a reality?
Delays in precious metal deliveries now seem to be commonplace. That, in and of itself, constitutes an effective shortage.
Still, how much of this is due to dealers hanging on to inventory, given that many would be underwater on their positions? Also, perhaps the extent to which premiums can be utilized has some psychological limit?
Distributors and the U.S. Mint
Of course, the small physical precious metals dealer will probably lose money selling their current inventory at post-crash pricing, but they would usually simply replace that inventory at the lower price.
The problem remains that their distributors have four to five week delays — where they could lock in the price, but at the risk of the paper price going lower. The dealer is choosing not to take that risk and now is typically completely out of conventional, non-numismatic Eagles and rounds. They probably have a very low junk silver inventory as well.
This situation arises in conjunction with the U.S. Mint rationing the supply of coins provided to the wholesale distributors. For example, the Mint recently sent out just 15,000 coins of an 115,000 coin order to one distributor. That sure looks like a shortage...
[ http://quotidienne-agora.fr/2013/04/10/craindre-penurie-or-argent/ ]
Hier, nous avons vu que, face à la dévaluation progressive du dollar, la Chine avait favorisé l’investissement dans les métaux précieux – or mais aussi argent – jusqu’à passer d’exportatrice nette à importatrice nette. Autre facteur de demande : le succès de l’argent-papier.
Alors que la demande pour l’argent physique ne cesse d’augmenter, la pénurie de pièces guette.
L’US Mint, qui produit des pièces d’argent, ne peut répondre à la demande
Les ventes de pièces d’argent Silver Eagles de l’US Mint flambent.
En 1996, 3,4 millions de pièces ont été vendues dans l’année contre 14,2 millions en seulement 3 mois en 2013.
De 1998 à 2007, les ventes de Silver Eagles s’établissent en moyenne à 9,5 millions de pièces par an.
En 2008, les ventes doublent, montant à 19,5 millions, puis 28,7 millions en 2009, 34,6 en 2010 et 39,8 en 2011.
En 2012, les ventes ont été limitées à 33,7 du fait de l’épuisement des stocks de l’US Mint contrainte de fermer ses guichets à plusieurs reprises, notamment en décembre.
Pendant ce temps la production minière d’argent aux Etats-Unis a chuté de 1 270 tonnes en 2010, à 1 160 t en 2011 et 1 050 t en 2012.
La densité d’argent dans les minerais a fortement baissé partout dans le monde. Il faut extraire et raffiner plus de tonnes de minerais et donc consommer plus d’énergie pour obtenir la même quantité d’argent.
L’année dernière, les mines américaines n’ont produit que 37 millions d’onces d’argent, dont 33,7 millions ont été vendues sous forme de pièces.
Simultanément, l’argent de la récupération est passé de 1 710 à 1 500 t.
Le rapport USGS montre que les Etats-Unis exportent de l’argent
La très forte demande de livraison d’argent physique sur le marché de Londres, notamment par des hedge funds asiatiques, a imposé aux Américains de mai à août des exportations exceptionnelles d’argent vers Londres, comme on le voit sur ce graphique.
Les Etats-Unis ont-ils dû voler au secours du London Bullion Market Association sur le point de faire défaut, comme le dénonçaient quelques analystes ?
L’offre mondiale d’argent physique n’est pas élastique
Début janvier, Apple annonçait des délais de livraison de 3 à 4 semaines pour ses ordinateurs de dernière génération, alors même que la firme n’en avait pas livré depuis 10 semaines. Des retards dus à une pénurie d’argent-métal en Chine.
[POURQUOI INVESTIR DANS L'OR AUJOURD'HUI ?
L'or est loin d'avoir dit son dernier mot – et pour cause, les Chinois sont en train de donner une nouvelle impulsion au marché aurifère ! Une impulsion aussi spectaculaire qu'inquiétante...
Les révélations que vous êtes sur le point de découvrir devraient vous rassurer au moins sur un point : l'or n'a pas fini de battre des records... Alors, pour tout savoir sur les manoeuvres chinoises et découvrir comment en profiter vous aussi : continuez votre lecture...]
Quelques semaines plus tard, un reportage montrait les stocks d’argent constitués par un consortium automobile allemand, qui voulait éviter le blocage de ses lignes de production à cause d’une pénurie de métal blanc.
Dès le mois d’octobre 2012, Bloomberg publiait l’interview d’un spécialiste chinois de l’argent, qui anticipait une hausse de 10% de la demande chinoise en 2013, alors que celle-ci avait déjà augmenté de 6% à 8% l’année dernière.
L’industrie informatique attend une hausse de 9% de la demande en 2013 et donc un accroissement proportionnel des besoins en argent.
Le marché de l’argent en pénurie chronique depuis 70 ans ne peut pas supporter un tel accroissement de la demande sans une très forte hausse des prix.
Les crises monétaire et bancaire couvent
Il semblerait que certains aient anticipé une aggravation de la crise bancaire et monétaire de mars 2013 en cessant de se contenter de détenir de l’or papier, mais en demandant livraison d’or physique. De fortes ventes ont été constatées sur certains ETF aurifères.
En février 2013, sur le Comex, il y a eu une demande record de 43,26 tonnes d’or à comparer aux 10 tonnes du mois de décembre, qui est théoriquement le mois le plus chaud de l’année pour les demandes de livraison aux Etats-Unis.
Harvey Organ, qui suit quotidiennement les mouvements de métaux précieux du Comex depuis les années 70, n’avait jamais vu une telle demande par le passé. Il rajoutait que le Comex est essentiellement un marché d’or-papier et que, pour que les investisseurs demandent une livraison aux Etats Unis, il fallait que le marché de Londres soit en difficulté et que les entrepôts du LBMA soient vides.
Sur le Comex, le mois de mars n’est pas habituellement un mois de livraison, néanmoins 13 tonnes ont dû y être livrées.
Mercredi 27 mars, l’une de ses sources à Londres du chroniqueur spécialisé Ted Ferguson signalait que, dans la matinée, la plus grosse allocation d’or-physique de l’année et l’un des plus gros tonnages d’argent avaient changé de main sur le LME.
Le même jour sur le Comex, les demandes de livraison le premier jour se sont montées à 41,6 tonnes. Certains acteurs sont en train de ramasser tout ce qu’ils peuvent, avant que la musique ne s’arrête dans ce jeu de chaises musicales. C’est indéniable.
ABN AMRO a prévenu ses clients dans la dernière semaine de mars, qu’à dater du 1er avril, ils pourraient continuer à trader l’or, mais qu’ils ne pourraient plus demander de livraison d’or physique par le biais de la banque.
Est-ce cela qui a provoqué la chute de moitié du volume d’avril sur le Comex ? Pour beaucoup, le piège s’est refermé le 1er avril. Les piégés ont désormais leur trésorerie enfermée dans “le système” et subiront les bail-in successifs imposés par la troïka à chaque crise bancaire, puisque le modèle utilisé à Chypre semble devoir être institutionnalisé dans l’ensemble du monde occidental.
Les autres, dont une partie de la trésorerie sera en or ou argent physique en dehors du système bancaire, seront épargnés...
SILVER Shortage 2013
Did you hear the U.S. Mint just ran out of silver? In mid-January, the Mint suspended sale of the 2013 run of its popular U.S. “Eagles.”
The new silver Eagles sold out fast. They went on sale, and buyers bought everything they could lay hands on. Within days, the shelves at the Mint were stripped bare. It’s not the first time that this has happened.
The Mint quickly announced that it’s obtaining new supplies of silver. It will stamp out more Eagle coins. There will be more to buy, or so they say. And yet… people in the silver markets are squirming — and I’ll tell you more about that, below.
Right now, silver sells for $31.50 per ounce, give or take. That’s if you can find somebody to sell you their silver at that price. If you’re a normal, everyday retail buyer, good luck trying.
Let’s say you want to buy some silver. You call up one of those companies that advertise on the radio and find out that there’s a markup to $40 or more for 1-ounce bullion coins. That’s if they have any to sell to the likes of you. After all, are you a big wheeler-dealer?
If you want the fancy versions of silver coins — “uncirculated” and “proof” specimens — the price is twice (or more) the posting for basic metal.
The bottom line is that silver is hard to get. You have to plan ahead to obtain the metal, and even the U.S. Mint gets its numbers wrong, now and again.
From what I’m seeing — and I’ll explain this, below — one of these days, the Mint might not simply resume sales so quickly. It won’t have the basic metal. And I suspect we’re going to see silver prices move much higher.
The Global Silver Shortage
First, let’s review the global scramble for silver. How much of a problem is it? Well, it’s not just the U.S. Mint that has to worry about supply. Industrial users are in a bind, as well. I mean big, important companies.
Here’s an example. Last summer, I visited a storage vault dug deep into solid rock and buried in the hills north of Zurich, Switzerland. It’s a massive complex, right down the road from a Swiss Army base (and that’s no accident). You can enter this facility only by prior appointment, because the Swiss customs department has to do a background check on you. The Swiss are very thorough, you may have heard.
The vault is constructed with huge steel beams and enclosed by thick, reinforced concrete walls. Accompanied by an armed guard, you have to walk down a long, sloping set of corridors and then take an elevator to get to the deep levels. Heck, it’s like visiting a secure, military command bunker — of which I’ve seen a few in the course of my life’s journey. Finally, after a hike, you arrive at the business end of this facility.
This is no fly-by-night, rent-a-locker storage operation just off the interstate. It’s world-class. It’s a Swiss Fort Knox. In fact, in one zone of the vault, the Vatican keeps its gold. Seriously. As the vault manager told me, “Ja, de pope. He puts his faith in God. But he keeps his gold in Switzerland.”
Don’t laugh too hard. That line about the pope is sort of funny, but there’s a serious point to be made with all the security — physical, political and legal — for precious metals. Storing gold in Switzerland? “Uneasy lies the head that wears a crown,” as Shakespeare wrote in Henry IV, Part II. Today, even the Vatican is worried, evidently.
In another zone of the same complex, a German automaker — a household name whose motorcars are revered across the world — stores industrial quantities of silver, and I mean a LOT of it. Here’s a photo of just a few pallets that belong to the German company.
These pallets cover the floor of a large room and are loaded down with innumerable 22-pound bags (10 kilograms, actually) of .999 fine silver. There’s way more silver than what you see in the photo, but it’s among the few pictures I was allowed to take.
Why does the German company store dozens of pallets of silver in a secure vault deep in the mountains of Switzerland? It’s simple, really. So that the metal is there when the carmaker needs it. As one purchasing manager explained later in my travels, “For some metals, like silver, there’s no such thing as ‘just in time’ delivery anymore.”
In other words, this German company buys silver when it’s available. In fact, the company buys as much as it can acquire. Then it stores and stockpiles the material in a vault in the mountains of Switzerland, right next to the pope’s gold.
The moral of the story is that when you need something, you need it. It has to be there when the time comes. That’s the key to the silver story.
Why Isn’t This “News”?
Are you beginning to suspect that perhaps there’s something going on with silver? Maybe there’s — not to put too fine a point on it — not enough silver to go around?
Exactly. Despite many silver mines across the world and the silver developer wannabes out there raising cash on the stock markets of the world, there’s just not enough physical metal to meet actual demand.
Oh, yes, people trade “paper silver.” But real silver — the kind you put into 22-pound bags — is scarce. It’s scarce enough, at least, for one of the largest German automakers to store its silver in a Swiss vault, next to the pope’s gold.
Then again, does anything about this silver issue strike you as odd? In particular, high demand and scarcity of silver isn’t exactly a news item in the mainstream U.S. media, right? Is the story on ABC News? CBS’ 60 Minutes? MSNBC? Is silver part of any plotlines on NCIS or CSI? Does Jay Leno crack jokes about silver? Nope.
So, asks the skeptic, is this silver scarcity thing a “real” story? Well, sez I, in reply, what would it take to get silver into the news?
For the average U.S. media-absorber — including almost all of the political class who set national spending and monetary policy — the global scarcity of silver may as well be happening on the far side of the moon. Heck, in the U.S., with its low-common-denominator Potemkin media, the silver story may as well not exist.
Since I’m on the topic, I have to wonder what it would take for the U.S. media to pick up the silver story. I suppose Oprah would have to interview Lance Armstrong and Lindsay Lohan about the metal. Jennifer Aniston would have to hit the talk shows, smile demurely and discuss the decline of the dollar. Brad Pitt would have to sit down with Joan Rivers and explain why everyone ought to buy precious metals as part of their fashion statement.
Then the silver story might get some traction. People might begin to care about the monetary and industrial squeeze that’s reflected by the supply and demand issues behind silver.
Until then? The investment field is wide open. You can set yourself up to make some money. With silver prices poised to head higher, now’s the time to find your favorite silver bargains and buy in cheap.
That’s all for now. Thanks for reading.
Byron King
Original article posted on Daily Resource Hunter
Read more: The Silver Shortage Of 2013 http://dailyreckoning.com/the-silver-shortage-of-2013/#ixzz2QFtUfUri