Silver Shortage of April, 2013
(In Rounds and Eagles!)
Silver Stock Report
by Jason Hommel, April 28th, 2013
We at www.jhmint.com have investor silver available, 10 oz. bars, and 100 oz. bars, and we can order more.
Rounds and Silver Eagles are sold out, and occasionally it has been difficult to source them, on and off, so far this year.
Prices over spot are changing up to 5% per day, and silver eagles are selling for up to 30-40% over spot on ebay.com.
Investor buying probably remains about where it has been for the past 4 years, at about 100 million oz. of silver per year, but maybe a tiny bit more in recent weeks of course.
Silver Eagles are about half of the silver sold to investors, nationwide.
There is nothing extraordinary about sales figures from the US Mint. They are pace to make about 40 million oz. of Silver Eagles this year, which is a bit more than last year, and about the same as the year before that.
At the link above, you can see that the US mint is making and selling about 3 million US Silver Eagles per month.
At $30/oz., that's $90 million worth of silver per month, which works out to $3 million worth of silver Eagles per day, for the entire US nation.
Please understand that a market so tiny, only $3 million per day, can get sold out quite easily. Let's put that number in context.
The USA runs on paper money. How much? Maybe $18 trillion in the banks, which is $18,000 billion, or $18,000,000 million.
The government continues to spend money that it does not have, and prints money to make up the difference. The amount of newly printed money per year is about $1 trillion, or $1,000,000 million per year.
Divided by 365, that comes out to $2,739 million of new paper money printed every day.
So, you can see how a $3 million per day market can easily get sold out even if the tiniest increases of paper money barely begin to begin a tiny trickle of a tiny flow into it.
Therefore, please understand, please believe the facts presented at the links presented. The silver market is tiny. The silver market will move up in price. By a lot!
Buy silver when you can find it. Because by the time 1% of the people wake up and decide they want silver, the silver price will be about $500/oz., if you can even find any silver to buy! (People often ask me as if they can't believe it, "but who would buy it at $500/oz.?" It's as if they didn't understand the terms of the situation. By the time only 1% of money tries to buy silver, it will be at that price!) And I suspect that due to the amount of money being created, there will be a time when far more than 1% of the population will want silver and gold!
I assume that a maximum of 300 million oz. of silver could be bought by investors, because the rest of the silver market is spoken for by industry. 1% of money in the banks is $180 billion, which, divided by 365, is $493 million per day of potential buying power at the 1% demand level.
$180 billion worth of buying power (at only 1%), buying 300 million oz. of silver, divides and allocates out to 180,000/300 = $600/oz.
So, don't complain if the price of silver isn't moving up fast enough, or languishes for a year or two as prices rise and dip in the meantime while the vast majority remain clue less of the facts. Just quietly sit tight, knowing the facts, and just keep buying all the silver you can find. ALL YOU CAN FIND.
I get many questions on this, the most common is "but why is silver going down if your facts are correct?" Please understand. They are not my facts. Facts remain facts regardless of the source. The source of the facts above are the US Government and the US Mint. And math.
So, let me address a better phrased question, "why is silver going down, if it should be going up, given the facts of the situation?" The answer to this is manipulation.
We live in a world of paper money. For that to be sustained, they need to keep the illusion of the availability and plenteousness of silver alive to keep people in paper money.
The prices you see quoted for "spot" silver, which is the underlying silver prices, is for 5000 oz. of silver, in the least desirable form of silver, in the hardest form of silver to work with, the 1000 oz. bars. And it's not bars really, but "bars in the future" one to three months away, that sets the price for today. In this way, the manipulators don't need to have any silver, nor do they need to deliver any silver, in order to sell excess paper silver, to suppress the price. In fact, they often push for, and are allowed to deliver, cash as a settlement, rather than real silver. Or, they can deliver silver ETF, or exchange traded fund, shares, which cannot be redeemed for silver either. You'd have to sell those shares for cash, and then take your cash to a real silver shop, like ours, instead. At www.jhmint.com of course.
Many ignorant people will say, "if you don't trust the system, then order futures contracts and take delivery!" This statement is ignorant on so many levels, let me begin to explain.
First, as an example, if there are two stores selling cement that you need to pave your driveway, one offering immediate take home now delivery, and the other offering delivery in 1-3 months, and you might not even get the product, but rather, a refund of your cash, where would you shop? I think nearly all rational people would shop where you can get your cement right now.
Second, to continue the example, if there were two hardware stores, one offering "take it home now" terms, and the other is offering "you can have it in three months" terms, and furthermore, the shop offering it in three months has posted that they have sold ten times as much cement as they have in their warehouses, and if they look like they are nearing bankruptcy, why in the world would anyone in their right mind shop at the place offering terms of three months delivery?
See, people don't even shop at the three month delivery place to get silver. They only buy futures to gamble on the price, to try to make more money than if they bought silver directly.
Many other people moan that they will be always able to manipulate silver prices "forever"! Well, no this is not true. If it were true, then silver would remain at 25 cents per ounce, as it was at one point in US History.
Price manipulations tend to fail, and get exposed, at the point that they are not able to make deliveries to the big customers who need silver, and not paper. After all, silver is used by industry. Industry continues to make products that use silver. What if Apple cannot get silver to make Iphones or Ipads? Trust me that a $400 billion company like Apple will make a strong outcry of fraud the likes of which would be heard around the world.
Investors have the capacity to outbid industrial users, and to deprive them of silver.
But big companies with loads of cash like Apple, also have the capacity to stockpile silver, to prevent having to temporarily shut down their factories due to a lack of silver.
So the first major fail to deliver of silver to a big industrial user is likely going to result in a large price spike upwards as industry starts to stockpile.
I'm one of the only writers that will boldly say that all futures contracts are price manipulative, by nature. They are manipulative, because they create excessive illusionary supply. Selling a product on paper, in the future, if it is for the purposes of allowing people to speculate, should not be leaving a price trail and should not be setting the quoted price for the underlying commodity. On the other hand, if an entity had to have 100% of the silver on hand before pledging to deliver it, then it would not be price manipulative, because there could be no excessive sales to push prices down.
Also, the fact that there are limits to how many long contracts can be bought are further evidence of the inherent price manipulative nature of futures contracts.
There is no way to reform futures markets when every trade is inherently fraudulent. They should be eliminated.
The other question I get is, "When will silver make its major move up?" Well, it's been happening for ten years now, since 2003. The average annual gain is about 22% per year. That's better than Warren Buffet's track record, and he's was widely regarded as the best investor of all time. (Except for the last ten years, of course.)
And due to the political situation of excessive government spending in all nations, silver will continue to outperform for the foreseeable future.
Here are a few of my more popular posts from my facebook page recently.
I think the real reason that the Government is buying billions of rounds of ammo, and why they are pushing for gun control & registration, is that they know that the value of the dollar is going to crash, and that there is nothing they can do to stop it. In fact, the economic policies being pushed by the Obama administration seem to be encouraging the crash of the dollar. And as tens of millions of well-armed Americans become impoverished, they fear riots and rebellion on a scale never before seen. This is why it's time to buy silver and gold, to be able to survive.
"What would make me bearish on gold?" asks Currency Wars author Jim Rickards rhetorically. "What would make me want to sell gold?"
"Well," he tells Business Insider, "if the president and the chairman of the Fed came out and said, 'We're going to raise interest rates, we're going to stop quantitative easing -- in fact, we're going to reverse it a little bit -- we're going to cut corporate taxes to zero, we're going to eliminate the capital gains tax, we're going to reduce regulation, and we're going to make America a magnet for savings and investment. We're going to have an investment-driven model, rather than a debt- and consumption-driven model, and we're going to have positive real rates.'
"I would say, 'Great. Sell your gold, or put it to one side, because gold is over.'
"But none of those things is true. Not one of those policies that I just mentioned is on the table.
I, Jason Hommel, would add, government would need to overturn Obamacare, balance the budget, end the wars, close most of the bases overseas, bring our military home, put an end to all patent protections to free up innovation based on previous ideas, deregulate the auto industry so anyone can build the cars they want, deregulate the housing industry so anyone can build the homes they want. Also, end the FDA so people can take any food and drugs they want, abolish fluoride in public water systems and abolish mercury fillings in teeth, and abolish mercury in vaccines and end patents for Monsanto's genetically modified foods, and abolish chemtrails, and hold doctors accountable for the toxic prescriptions they prescribe, so that the people are poisoned less and have more choices to take care of their health. Eliminate the inheritance tax, eliminate the income tax, end the Fed, end welfare, end free emergency room visits, open the borders to all, let businesses and banks that fail go bankrupt, and promote silver and gold ownership as the epitome of the American Dream. Then it will be time to sell silver and gold. But not now. None of those things I mentioned is even possible right now. Maybe some of that might happen in about 10 more years, maybe 20. This gold and silver bull market has a long, long, long way to go, and the reality of gold will punish all who live in fantasy land who continue to think marxist ideas can work.
But all is not lost. There are bright spots in America. The link says it all:
JH MINT & Coin Shop
Minimum telephone order $5000 for free shipping, USA shipping only.
NEW Location in Auburn, CA!
You can also buy silver from my mom at www.momssilvershop.com