Wikinvest Wire

What's up with precious metals?

Friday, August 15, 2008

After the price of precious metals has plunged over the last month, with another big leg down last night, and amid a veritable bull market in bear market calls for commodities, with one pundit after another heralding the merciful end to soaring commodity prices now that it has become clear there are worse paper currencies in the world than the U.S. dollar, reports of shortages of physical gold and silver are mounting.

Plunging prices and mounting shortages.

Does that make any sense?

Late yesterday, bullion dealer Apmex reported the following:

We just received word, the US Mint has suspended sales of the 1 oz Gold American Eagles until further notice and are not accepting new orders from precious metals dealers. This is in addition to the shortage of 1 oz Silver American Eagles.

This comes at a time when many investors around the nation are scrambling to locate silver bullion and US gold coins while prices are attractively low. These low prices seem to be one of the driving factors in this recent shortage, as investor demand has dramatically increased.
No more gold coins from the U.S. government. Why would that be?

There have been reported shortages of physical silver for months now along with delivery delays that vary widely from dealer to dealer.

Conditions have improved from what they were a few months back, but, as of late yesterday, there are no 100 ounce silver bars for sale at California Numismatic Investments (where I have made many purchases over the years) and no Silver Eagles in lots of 500.

A few months back, the "Our Sell Price" column in the table below was a clean sweep of "N/A's" and as discussed here some time ago, at this coin dealer, the price for physical silver has been rising steadily versus the spot market.You'd think that, with the price of gold and silver dropping like a rock, there shouldn't be any problem keeping coin dealers supplied with these metals that, in a modern economy such as the one we have today, are more than a novelty than anything else.

Maybe this has something to do with the increasing number of bank failures, government rescues of mammoth financial institutions, and the general sense that there is something very, very wrong with the financial system.

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Anonymous said...

There's nothing to see here folks-- move along

fironzelle said...

Hm... in demand, unavailable and getting cheaper by the day. Everybody loses!

jp said...

Not a fan of the maple leaf?

Anonymous said...

Pretty clear that the paper and physical markets aren't equivalent. Premium to melt on Krugs used to be $5, now over $20.
Aside: Depew's write up today at Minyanville is pretty good. Don't think we'll see $600s though. If physical shortages continue, the paper-phys spread is profit op to take delivery orders.

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