As you may know, most dealers are out of 100 oz. bars, cannot get any, cannot find any.
I believe most major dealers regularly hedge in paper, as a standard business practice, and cannot now find bars from the public to buy, because the public is now buying more than selling. Dealers are getting hit by the disconnect, the premium on physical products, which is not covered by the futures contracts. Dealers who remain sold out, will remain out of business.
Bars are selling at ebay for $1700, over $3.00 over spot, but usually only 1 bar at a time.
Search “100 ounce silver bar” at ebay.com
I expect these 25 silver bars to auction for between $2-4 over spot.
I believe the current shortage of silver in nearly all forms, is not a manufacturing issue, because all of the old dates of eagles, and old bars, are also sold out.
One current rumor is that a large trader placed an order for 50,000 Krugerrands. This vastly increased the premiums for gold coins across the board. This is a $45 million order, which is small change in terms of world finance, but huge in the tiny world of physical gold and silver dealers.
Some people may wonder if I’m selling out. I’m not. These are bars from some of my readers, that I now offer to you. I’ll sell mine, and use the cash to buy these, to insure no default to you, and help insure the highest possible price to the real seller. I will earn a small spread, and I’ll get to test the market to see a depth of bids.
Current market conditions are highly unusual. Physical silver 100 ounce bars are hard to find in large quantity except on ebay.com, yet the price of silver has recently dropped, which seems to contradict all known forms of supply/demand price dynamics. I can only understand it, and explain it, if the futures market is unduly and unfairly impacting the price. Bar price ‘premiums’ over the paper might not last. They might increase. Bidders are expected to know what they are doing.
Further information on current unusual market conditions:
Once-upon-a-time, in ‘never-never’ land, there were two competing silver prices
Aug 27, 2008
Special Got Gold Report – Silver Investors Sucker Punched by Two U.S. Banks
By Gene Arensberg
Eagle Rationing: Where there’s Smoke, there’s Fire
Monday, August 25, 2008
I’m surprised by the following editorial by Mark O’Byrne, who recognizes the shortage of physical silver and gold as something unique. I castigated this man severely a few months ago, for his “faith” in the promises of paper certificates.
Gold Investments Market Update – U.S. and Russian Warships in Black Sea as Tensions Escalate
Mark O`ByrneFont Scale: 25 August 2008
Be very, very careful about ordering silver right now. Demand to know exactly when they can deliver. If they can’t guarantee delivery within a week or your full money back, then consider that they probably don’t have it!
In fact, now might be a good time to meet up other Silver Stock Report readers at YOUR LOCAL COIN SHOP.
Usually, I might visit my local coin shop once a month. Usually, there are 0-2 other people in the shop, at most. Suppose if all buyers during a month show up all at once? Clearly, the shop will be sold out immediately, if it isn’t already. I think that would leave an impression on the owner.
This will serve several purposes:
1. You will find out that you are not alone.
2. You will impress upon your dealer the amount of demand for silver.
3. The coin shop owner will be more confident and more likely to raise his bids to get silver for everyone, so it’s in your own best long term interests to show up.
4. Be sure to tell him about good sources, such as fidelitrade.com, amark.com ($50,000 minimum), wexfordcoin.com ($10,000 minimum) and others where he can buy in bulk, cheaply, if he needs to.
I suggest that everyone visit their favorite local coin shop on September 2, at 2PM. That’s Tuesday after next. (TWO’s-Day) Easy to remember!