Severe Gold and Silver Shortages
My regular readers know that I always encourage people to take immediate physical possession of their coins and bullion when they buy them, rather than letting companies store them on your behalf in their "world class vaults." This advice is more true today than ever before, assuming you can even find any physical gold or silver to take delivery of! Market analyst Patrick A. Heller, in an article posted on NumisMaster.com, states that delivery times for physical gold and silver bullion are currently running as long as two to six months for some types, with Krugerrands and British gold Sovereigns being "virtually unobtainable." Heller describes Engelhard and Johnson Matthey silver ingots and generic 1-ounce silver rounds as also being "virtually unobtainable," and he says that dealers aren't even taking orders for these units because they have no idea when to expect delivery. And don't think that just because you make a COMEX spot-price purchase that you can expect delivery next month. Heller cites a Dubai source as stating that COMEX physical bullion deliveries are running several months behind contract date. (COMEX is the Commodity Exchange, the market where bullion is traded.)
Heller's article is a real eye-opener. It begins by giving a succinct and powerful accounting of the U.S. financial crisis at the moment, setting the backdrop for why the bullion market is behaving the way it is. Then he explains the realities that coin and bullion dealers are facing in this unusual market. Heller ends by giving some familiar advice: do not accept paper promises instead of bullion or coins! If you can't take physical delivery right away, be very wary because if things really get bad, that promissory note for X amount of bullion isn't going to buy you any food or gas! I highly recommend reading Heller's article in its entirety.
It has been widely reported that the U.S. Mint hasn't been able to get enough silver and gold for its American Eagle line of bullion coins. Although a few outlandish conspiracy theories made the rounds, the reason seems pretty clear now. This isn't a plot by the Mint to drive up demand, nor is it an attempt by the Mint's vendors to "renegotiate" their contracts. The truth is that, for some reason we don't yet understand, the price of gold and silver bullion is seriously out of sync with supply and demand. Rather than the price of gold rising to deliverable prices, it is still being sold below its real value, causing those who are actually holding it to sit on it rather then let it move. The U.S. Mint was an early victim of this market tactic because it is one of the world's largest buyers of raw bullion. The fact that the U.S. Mint is supposed to secure the bullion from domestic sources makes it even tougher for the Mint. How will this all end? I know one thing for sure - I'm not letting go of any of my little stash of silver, most of which consists of small-module world coins purchased at or below bullion value.
What are your plans for gold and silver bullion and coins in this crazy market? Are you selling or sitting? (I know you're not buying because nothing is for sale, heh.) Share your comments below.
Comments
The biggest rule when things get rough is “Don’t Panic”. This applies to everyday life as well as the economical world. I think most, like myself, are sitting & awaiting a turnaround in the bullion market. I acquired a bit of silver in 07 & this year. For me to sell would require me to take losses I don’t want to take. Pretty basic. I also believe that when the bullion market recovers that it will do so in a big way so I’ll just have to weather the storm, for now.
As with other investments sometimes you just have to sit tight and wait it out.
Thanks…
I always thought the mint got their gold from Fort Knox. What is all that gold for if we aren’t using it?
Hi Dave! That is a good question. I think fort knox is where we store our countrys wealth. It is probably already accounted for as an asset that belongs to someone/thing. Like our oil reserves. It’s there because it belongs to all of us. Otherwise i don’t think, te mint would have to buy on the open market. It’s a guess.
Ey Yankee! What’s new? Time ta sit on da fence now huh! I didn’t think every one else was hanging out there too. It’s getting crowded on the sidelines. Any body know what the 200 hundred day moving average for gold is prognosticating? As Yankee said just recently, the price isn’t reflecting the market is it? Kinda loopy. If any one is hoarding, it’s probably foreigners waiting for the dollar to fall more, so they can sell at a substantial profit. That’s my take on it. Wonder what the Chinese counterfeiters are up to, and how much their salting away? To come back later and give Americans some more black eyes.
coiny
Well, from what I was told, Fort Knox was emptied YEARS AGO. There is no Gold there anymore. After the 007 Movie GOLDFINGER, someone came in and raided the place again and never returned it!
In all honesty, even if we wanted to Collect on our “Silver Certificates”, which by the way States, “Payable to the Bearer on Demand”, I seriously doubt if the U.S. Government would give us the Silver……..
Someone please correct me if I’m wrong….
I seldom get to read comments here, so please feel free to email me at, rwthrush.jr@juno.com. Happy Days are Ahead! If, we can hold on long enough…………….
Robert Jr.
I have been trying to build my silver at the lowest possible price: extracting it from bank coin rolls. This plan has not been very successful, but you can’t beat the price
I am sitting on most of my silver and selling a small amount of gold because I can get huge premiums on old dog coins that I couldn’t sell for a loss last month. I haven’t had any problem finding “new” gold or silver to buy online, but you are right that my local shop isn’t letting any precious metals out the door.
If I remember corrctly, Silver and Gold Certificates were voided in about 1973. So you can’t get the metal anymore, but the certificates are collectibles now for many people.
I love to collect coins. I have more than 5000 coins, if any one interested then plz reply me.
where is my first comment, i have more than 5000 thousand coins any one interested.
I agree with one of the other comments, Hang on to the precious medals a little longer !Things are changing and It will be interesting to see were we a heading! Mix it up with collectibles and bullion.
There’s no mystery why there is a huge dislocation between gold and silver’s price and their supply and demand. Simply put the answer is: paper: futures, options, derivatives and naked short sales. According to one expert, there are over 100 paper transactions involving silver, for every one transaction involving physical silver. It makes no sense to me but our esteemed congressmen and board of trade commissioners see no problem with it – believe me, I’ve asked. Commodity law is clear, paper representations of a commodity are only to be used to help ‘discover’ the true underlying price of the commodity. Seems it’s working in reverse for gold and silver.
Bottom line: buy physical metal on the dips. When the supplies are gone, prices will escalate so rapidly no amount of paper money will be enough to obtain the REAL thing. Don’t be left holding paper silver or gold, of any kind, you’ll never, ever get your metal..>>.. paulb