(Nadler & O’Byrne Squirm like Worms)
Silver Stock Report
by Jason Hommel, March 31, 2008
My email list could be the cause of the silver shortage we are seeing worldwide. After all, let’s reference this market structure once again.
There was only 50 million ounces of silver demanded by investors in 2006, when my email list was only 20,000. Today, my list is 74,000.
50 million ounces of silver demanded in a year could clean out all the coin shops in the U.S., as I’ve written previously. Or stated another way, 1 million ounces of silver, demanded in a week, could do the same. One million ounces divided by the 74,000 emails on this list = 13 ounces! That means that if everybody reading me takes action, there is only enough silver for each person on my email list to get about 13 ounces of silver, each week.
Since many people want to buy more than that, and since many people are capable of buying more than that, and since many people do buy more than that, I hear many reports of silver shortages.
A large source of 90% silver bags of $1000 face value 1964 coins, reportedly, is at http://fidelitrade.com/
The bags are great because you will rarely find counterfeits. You might find collector coins. The silver is in standard, recognizable form, and is convenient to break into smaller amounts. 90% silver is also cheaper now that it ever has been. Also, 90% silver has a small spread if you want to sell it back, less than 5%.
You can also try looking up silver refiners, or industrial silver suppliers.
This weekend, the Silver COT’s came out, and showed that it was the spec longs that sold 1/5th of their positions, and Commercial shorts covered less than 1/10th of their positions, which explains the major price dip from $20/oz starting on Wednesday, March 19th.
It was thought by Howard Ruff that this was related to margin increases, and “deleveraging” of positions.
Jon Nadler today acknowledged the shortage of some silver products, in his article, “Squeeze THIS”, but floats his foolish opinion that there is no shortage at all, as he writes:
“Aside from short-term, spot shortages of certain small fabricated items, there appears to be no problem. The real holdup is simply a matter of less than adequate supplies of coin blanks from which to mint one-ounce product. Call it poor planning. It has been seen before. Some mints did not figure that buyers would rush out to get their hands on small, high-premium coins at $20 per ounce silver (another sign that prices are possibly topping out). So, where is the squeeze? Only in the arteries of the brains of some very ill-informed casual market observers. Depositories are practically choking on 1,000 ounce silver bars crowding their floor space. It’s amazing what tales some bored people will spin when it comes to markets they do not comprehend.”
Jon Nadler is a blathering fool, and not even a tinfoil hat could help him tune out kitco’s bearish bias and overpriced silver, and tune into reality.
The reality is that a shortage of water is called a drought. Droughts can happen on earth, even though the earth’s surface is two thirds water. There can be a shortage of water for a person on a lifeboat at sea, when there is water, water everywhere, and not a drop to drink. Same with silver, because 1000 ounce bars are not what the public wants, and are as inconvenient for people as sea water.
The reality is that the Western public turned into buyers of silver when gold hit $1000/oz., and thus many investment products of silver at many places ran out; there was a shortage of the kind of silver that normal people buy, not just Maples and Eagles, but 100 oz. bars, 10 oz. bars, 1 ounce rounds, and in many places 90% junk silver was sold out too! That is called, and is, a silver shortage.
It does not mean, and I never said, that there is no silver left on earth. That silver shortage of investment coins and bars has about as much bearing on 1000 oz. bars as droughts have on the ocean. The ocean cannot be used to “disprove” a drought, any more than 1000 oz. bars can be used to disprove a shortage of silver available for investment.
Speaking of reports of abundant silver, I hear there is plenty of silver available in India, but “plenty” is a rather nebulous and relative term, and I don’t know what to make of it unless there are reputable offers of silver specifying the amount, size, product, place, etc. If people in India feel they have plenty of silver and want paper money instead, then let them ship it to U.S. coin shops; there are over 4000 places of business here to choose from, and can be found here: http://find-your-local-coin-shop.com/
Let buyers of Indian silver beware; I’ve heard it’s often smelted into 40% silver or less in various places, and it might not be standardized. The Bible gives good advice, to buy gold “refined in the fire”, (Revelation 3:18) so you know the purity.
Furthermore, depositories are definitely not choking on their 1000 oz. bars! They used to have over ten times as many of them about 20 years ago; as there was about 1500 million ounces in the COMEX depositories, today they are down to about 134,000 thousand ounce bars. They have less than 1/10th what they used to have! They are not choking on 1000 oz. bars, they are running out!
So if the 1000 oz. bars are like the ocean, then the ocean is running dry, too!
We call that “short supply” of silver in monetary terms, given that the Fed can create $350 billion in a week, which is enough to buy 50 million ounces of silver at $20/oz., 350 times over, and is especially concerning to me, given that 91% of the population now thinks that inflation is a problem.
Furthermore, the silver market structure says that about 200 million ounces of silver is recycled. A good portion of that comes from investors selling silver to coin shops, which, in turn, sell to refiners, to make 1000 oz. bars. Now, given that the public stopped selling, and turned buying, and that many coin shops ran out of silver, which we call a shortage, that means there is less supply to the refiners to make 1000 oz. bars, and that there will be fewer of them, too!
Furthermore, this shortage has never been seen before in the last 7 years, not in this bull market, not like this.
Finally, for Jon Nadler to infer that I’m lying, and telling “tales” because I’m bored, just goes to show how lazy and bored he must be; utterly incapable of doing any sort of investigative research, or making phone calls, and not even capable of making a few mouse clicks on links and read web pages of coin dealers that list that they are sold out!
I quoted many sources that showed their inventory levels as “sold out”, ranging from Tulving.com, to CNI numismatics, to APMEX.com, all verifiable on the web, all major dealers, and up to 19 others, as well as quoting people who scoured all the coin shops in entire major cities around the globe and could find nothing. Are all of those web sites and people lying as well? Ridiculous. Jon Nadler, you are a foolish raving lunatic who is selling hot air; you are a perfect match for kitco, who is a seller of Perth Mint certificates and “kitco pool accounts”.
I know many Chrisitans have trouble understanding that kind of talk coming from a me, a Christian man, but they need to read their Bibles more; every book in the New Testament was written because some people in some Church somewhere were acting foolish and needed to be rebuked and corrected, as we are commanded to rebuke those who are wrong.
1 Timothy 5:20 Them that sin rebuke before all, that others also may fear. 2 Timothy 4:2 Preach the word; be instant in season, out of season; reprove, rebuke, exhort with all long suffering and doctrine.
Since some people don’t even know what the word “rebuke” means, here it is:
from 1909 and 5091; TDNT – 2:623,249; v
AV – rebuke 24, charge 4, straightly charge 1; 29
1) to show honour to, to honour 2) to raise the price of 3) to adjudge, award, in the sense of merited penalty 4) to tax with fault, rate,
chide, rebuke, reprove, censure severely 4a) to admonish or charge sharply
And since others don’t know what “reprove” means, here it is:
REPROVE 1651 elegcho
of uncertain affinity; TDNT – 2:473,221; v
AV – reprove 6, rebuke 5, convince 4, tell (one’s) fault 1, convict 1; 17
1) to convict, refute, confute 1a) generally with a suggestion of shame of the person convicted 1b) by conviction to bring to the light, to expose 2) to find fault with, correct 2a) by word 2a1) to reprehend severely, chide, admonish, reprove 2a2) to call to account, show one his fault, demand an explanation 2b) by deed 2b1) to chasten, to punish
So I hope I have shamed Jon into issuing an apology, or at least into silence, but I don’t think we will be so fortunate, which is why I’m not being nice about it. I sincerely think Jon is not merely foolish, but is rather disingeniuis on purpose, writing with a specific anti-silver agenda, because his employers and their employers are probably the ones with brain arteries popping from the silver squeeze. Furthermore, this is not the first time that the pro gold communnity of GATA followers has tried to get Jon’s attention with the facts; so he clearly has an agenda, and his bias is no mistake.
But Jon’s not the only one; there is another that needs to be rebuked.
Late last week, Mark O’Byrne published an article that Kitco did not publish, as it was written by a kitco competitor who is also selling Perth certificates:
Unfounded Allegations Regarding Perth Mint Certificate Program
Since this article was not published by Perth Mint, but only a re-seller, it hardly bears worth commenting on at all, except to poke fun at his lack of refutation of my philosophy and reports that I’ve been bringing to light.
O’Byrne may have faith in government, but I don’t have faith in politicians’ ability to conjure 100 oz. silver bars out of thin air in the current climate of today’s silver shortage.
O’Byrne may have faith in auditors such as “Price Waterhouse Coopers”, but aren’t those the same type of mainline financial auditors who audit such firms as Enron & K-Mart who went bankrupt? Bear Stearns was recently independently audited, too, and it did not save them.
O’Byrne may have faith in AAA ratings, but AAA ratings did not save the AAA rated subprime debt that went bust.
O’Byrne may have faith in a company that has been around since 1899, but that did not stop Barings Bank, which was founded in 1792, from going bankrupt in 1995 due to one rogue trader. See the 1999 movie “Rogue Trader” starring Ewan McGregor.
O’Byrne may have faith in that fact that Western Australia is one of the “wealthiest states”, but that again has no bearing on whether Perth Mint is currently out of silver.
O’Byrne may have faith in the insurance of Lloyds of London, but that has no bearing on whether Perth Mint is currently out of silver.
O’Byrne may have faith in Perth Mint’s relationship with AGR Matthey, Australia’s only major gold refiner, but that has no bearing on whether Perth Mint is currently out of silver. Gold is gold, and silver is silver.
O’Byrne may rightly point out that the Perth Mint has no exposure to the housing crisis, but nobody ever thought or alleged that they might, and that has no bearing on whether Perth Mint is currently out of silver.
Thus, O’Byrne fully makes the case that when someone else holds your silver for you, it must be a matter of faith, like a religion.
No wonder they feel so threatened by somebody like me, who preaches a different faith, a different religion. My religion tells me that I ought to be the responsible wise steward. My religion tells me to tell you to become a wise steward, and take delivery of your silver. My religion tells me to trust in and have faith in God’s provision, more than man’s promises.
My issue with the Perth Mint is one of a philosophical nature. Even if the Perth had 100% or more of all the silver that they need to fully back up everyone’s certificates, and unallocated accounts, and allocated accounts, I simply have a religious and philosophical problem with concentrating wealth in places where it can be more easily stolen by thieves or rogue national governments who may issue confiscation orders in the future. I believe that silver ought to be in the hands of the owners.
As one of my readers put it, “Don’t let anyone hold your money for you, nor let them hold your wife.”
Or as another reader puts it: “If you don’t hold it, you don’t own it.”
Philosophically speaking, if the NorthWest Territorial Mint is engaging in bad business practices by taking 2-5 months (on occasion) to deliver orders, then compared to the Perth Mint that holds your silver indefinitely, the NorthWest Territorial Mint is a saint.
What I have difficulty in understanding is how the Perth Mint, that uses unallocated silver to manufacture silver products that the market needs and requests, can ever run out of silver for their own clients. After all, a Mint ought to be able to turn those “abundant” 1000 oz. bars into whatever their clients need or want, as that’s the entire purpose of the unallocated silver, and the entire purpose of the Mint, so how then can they run out of product, and why would there be multiple reports of people not being able to get what they want? After all, if a Mint begins to run low on 100 oz. bars, they should be able to detect such an impending shortage, and have the ability to make more, long before they run out, I would think, or make them within 24 hours. And if there is a delay to manufacture, I can understand a few day’s delay, but I can’t understand multiple complaints of delivery taking longer than 6 months.
What I do know is that if other customers are complaining, then there is a problem greater than one of philosophy, but maybe a real world problem. The Bible has the solution to how to deal with untrustworthy men; let every matter be established by two or three witnesses.
Here are a few other reports on the Perth Mint that I received last week.
I live in Perth by the way and I visit the mint often.
I rang the mint two days ago regarding the
I asked how much silver they had and the reply was
that they had 60-80 tonnes in the vault with access to
another 475 tonnes elsewhere. Take this as you read
Third regarding the 100oz bars. The chap I was talking
to said that to manufacture 100oz bars was expensive
and time consuming. So the mint had opted for the
larger 1000oz and smaller kilo bars.
Again take this as you read it but that is the info
that was passed on to me.
God bless Jason
While some may find it comforting that Perth has at least 60 tonnes, I say, “Holy Shortage Batman”, because I have 6 tonnes in my own safes, and so 60 tonnes does not sound like a lot to me. It’s only about 2 million ounces. But if they do have 60 tonnes, I find it difficult to imagine that none of that is in the form of 100 oz. bars, although that could be possible.
Furthermore, the expense of making 100 oz. bars cannot be used as an excuse, since that expense is passed on, with profit added, to the customer who buys them and is requesting them, so I really don’t understand that excuse.
As for the “time” excuse, it’s ridiculous, because the silver only needs to be melted once, and the stuff cools within a few hours because silver is a wonderful conductor of heat. Making bars is not a slow cooling process that takes a week or anything crazy like that. The reason silver is money is because it is fungible, and divisible; you can turn bars into coins, or coins into bars. There’s nothing inherantly that difficult about making bars; it’s a multi 1000 year old process that basically involves the application of heat to melt the stuff, which can then be poured into molds.
3/26/2008 10:29 PM
As I live just a short stroll from Perth mint I decided to call them to see if I could drop by later this morning and pick up some silver bullion. The only reason I decided to call first is because I received your email in my inbox first thing this morning explaining that there is a waiting period. I have been going down to the Perth mint randomly over the past three years and each time I could literally turn up unannounced and back up the truck with an over the counter purchase of all the bullion I needed.
Today they told me that they had no silver bullion in stock and that they may be getting some next week. I will call back next week to see if I can get my bullion then.
They encouraged me to come down today anyway, pay for my bullion and then come back and get it whenever it arrives. – Chancers!! I never have and never will be left with just a paper promise of delivery.
Please feel free to use this material as you think fit.
John. Wednesday, 26 March 2008
Dear Mr Ivens
If you would like to purchase silver from us, we have material available for allocation within 10 days, depending on the volume you require. We have had an unusually high level of allocated silver purchases in the past week or so and this has depleted our available silver stocks. I have augmented our refinery allocations with overseas shipments of 1000 oz London Good Delivery bars which will be arriving in due course. Our present level of activity is that high that whilst I will be pleased to transact business with you, I do not have sufficient time to devote to defending unsubstantiated allegations made on the web.
I note there is no need for me to make any allegations, when they confirm it, “purchases in the past week or so – – has depleted our available silver stocks”.
Here is a very interesting story that may go to show the anti-silver bias of the people working at the Perth Mint.
I live in Perth, WA and have dealt with the Perth Mint for approx. 3 years now. Started off in the certificate program but very early on converted to the real thing. They didn’t like it then either!
I had a residual small holding of 2000 oz in the certificate program up until early March 08 and rang up to get it converted to 100 oz bars. Told not possible, but expecting LOTS (my emphasis) in a few weeks if I wanted to wait. They did however have 1000oz bars (as many as I wanted). I was given the exact weight to choose from so I secured one and was given the bar number. I was going away for a week so couldn’t immediately pick it up. Contacted the broker after I got back which was two days before Good Friday. I was told that it would take at least two business days to get somebody to go to the vault and bring it out!?!?
I therefore indicated I would pick it up two days after the Easter break but received a confirming e-mail with the date of April 1. I didn’t notice the date and went in yesterday to pick up the bar. Didn’t get it becauses of the date mix up but while waiting with the broker he ranted and raved about how it was (not said but implied) people like me who were causing the shortage and that there was PLENTY (his emphasis) of silver available. He said that it was the individuals like you who are manipulating the market (didn’t use your name specifically but said some people on the WWW who are clients of the Mint and are not as well informed as they should be before printing the stuff for everyone to read). Now that is an unusual view of the market isn’t it!!!!!
I didn’t bother saying anything during his rant because he clearly had a ‘funny money’ bias and I suspect from where he sits and the amount of silver that comes and goes through their warehouse, they do have a lot of silver.
I tried to buy silver over the counter as well while I was there. Not one single ounce available!!!!!
Given a six week delivery time. I bought some.
Interestingly, the broker during his rant said they had plenty of silver and when I said I just tried to buy some over the counter and there wasn’t any he was surprised.
Two other things. He divulged that they had just sent a large shipment of 1000oz bars to the LBMA. Hmmmmmmm.
Also during his rant he said they were considering stopping the holding or trading of silver in any form!!! Wow, what a drastic move. The heat seemed to be turned up very high. In the same breath he was saying they love to hold silver in the allocated account because they get to charge storage. I bet they do. I would love to charge somebody for holding something that they think I have but I don’t really too! It amazed me how much he said which probably shouldn’t have been said to somebody who is clearly on the other side of the fence.
Any way, sorry to bore you with all the detail but in essesence I have lost all trust and faith that I may have had in the Mint. I never beleived their ‘Government secured’ claim from the start because how can a Government create metal out of thin air.
Love your input to the market and all the best with your personal trading.
This last report is very interesting. A person merely asks the question whether the Perth Mint really has all the physical metal that they need, and reportedly, they are threatened with a lawsuit. The person didn’t even allege anything! Neither have I alleged anything. I’m also just asking questions, stating philosophy, and sharing reports, and this one is interesting.
Back in 2003 James Turk wrote something on the link between GoldCorp and Perth Mint.
I wrote to him to tell a story of my own ‘clash’ with them at an earlier time.
My e-mail to James appears below. Unfortunately I no longer have the original correspondence –
on an old computer.
But this also points to a possible problem with the gold storage.
Hope you are keeping well.
I enjoyed your Q&A on the Perth Mint and have a bit of a story to tell.
A local friend here in SA asked me whether places like the Perth mint
would also lend out their gold as he he had heard a rumour their vaults
were empty. I wrote Bill Murphy and asked whether he had heard anything or
whether any of his Aussie readers would know anything.
Typically Bill, he simply placed my e-mail to him in his Midas letter.
First reaction was from two Aussies, most upset and loaded with
invective that I would even hint at something like that. I replied that
I was simply asking a question after having heard a rumour. Then I
received an e-mail from a guy who threatened me with prosecution for
libel – we have the more strict British libel system here in SA , as also in Aussie
– if I did not publicly retract my ‘slander’. He was from GoldCorp – the
secretary, according to the e-mail footer – (and I now better understand
the link, after your piece) and said;
a. 27 or so other websites had taken up my question at Bill’s and he had to threaten them with legal action to get retractions and apologies posted
b. The Perth Mint is guaranteed by Western Aussie government
c. All the investor’s gold is in place in the vaults
I replied that I had simply asked a question and that Bill M would never
place a retraction or apology. Also that I would defend any legal action.
The next e-mail I receved from him in reply to this came from his home
computer on a Sunday. He stated i.a. ” – that he was informed by PM
management that all the investor gold is intact and can be audited at
any time. etc etc ” He became even more threatening and demanded
immediate apology and ‘ a statement that the slander was completely
unfounded’ or they would see me in court.
While working on a reply, I noticed suddenly that the footer this time
stated that the guy – can’t remember his name – was the Company
Secretary of both GoldCorp and the Perth Mint. So I asked him what was
the reason he did not speak up on behalf of the Mint in his personal
capacity as Secretary, but only quoted “PM management” as if he himself
was a third unrelated party. I can’t remember my exact words, but the
implication I strongly hinted at was that he was trying to retain ‘deniability’ in
his own person in case something blew up in future.
I did not hear from him again.
Which, I think, could be saying much about his certainty that the
quantity of gold in the PM vaults is what it ought to be.
In conclusion, while I can understand the global shortage of coins and 100 ounce bars, I cannot understand the Perth Mint running out of 100 ounce bars or any investable silver products for people when they are supposed to maintain a pool of unallocated silver for the express purpose of being able to convert 1000 ounce bars into investable products on demand.
The Perth Mint ought to come clean, and indicate with a press release two simple facts.
1. How many 100 ounce bars did their customers demand in the last week?
2. How many 100 ounce bars can, and did, the Perth Mint manufacture last week?
Very simple. It should be revealing. It’s possible the Perth Mint’s manufacturing capacity was overwhelmed. It’s also possible that they are out of silver, and don’t have an unallocated pool of metal, but rather, a pool of paper obligations.