Is There Really A Physical Silver Shortage?
by Dave Kranzler
I have a couple different business colleagues who have spoken with bullion smelters who say the market is in short supply right now. Furthermore, Swiss money manager Egon Von Greyerz stated yesterdaythat "we are now seeing very lengthy delays in getting physical silver."
What does all this mean? First, let me say that a "shortage" in physical supply does not mean that I'm saying there is not any physical silver available. But what it does mean is that there are not many interested sellers of actual physical at the current price level. To be sure, any shortage of a non-depletable resource can be solved by price. What this means is that we are going to see much higher prices for silver in the coming months, until the new market price is set at a level which balances supply and demand. It's basic economic law.
[also from Dave Kranzler via http://lemetropolecafe.com [Please subscribe]
Two interesting observations: 1) most of the growth over the past year has been in the eligible inventory. I don't know if you've been following Ted Butler's analysis, but every report now pretty much he goes over the massive flows in and out of the Comex every week. This is something that didn't start occurring until about 4-6 months ago. He's convinced that it is direct evidence that it's a signal of how tight the physical market is. That combined with the SLV/HSBC reports is quite strong circumstantial evidence that SLV and the Comex eligible inventory is being used to put out physical "fires" on a weekly basis. 2) JPM has gone from not being silver vault custodian on the Comex about 18 months ago roughly to now being the third largest custodian. Given that is commonly accepted that JPM is the primary illegal Comex silver manipulator, combined with the fact that is the primary SLV custodian, can only lead one to conclude that JPM, the Comex and SLV are the heart of a massive scheme to cover up just how short the paper market is of physical silver. Just look at the inexplicable delivery to HSBC - the largest Comex silver custodian and no longer an SLV subcustodian - of $876 million worth of 1000 oz silver bars. Now the U.S. Mint and the Royal Canadian Mint are failing to meet the retail investor demand of physical silver. The difference between the Comex and the Mint business is that the mints have no choice but to either make hard physical deliveries or cut off orders. They are both cutting or limiting orders. When you put all of this together and stir it up it, the only conclusion is that the world is massively short physical silver delivery obligations. This is why the Comex long interest is staying so persistently high at the 140,000 contract level despite numerous aggressive cartel raids. We have never seen the silver open interest behave this way under such paper duress. There is a massive physical shortage of delivery obligations derived from the massive paper short, both Comex and OTC derivative based. There is going to be a huge explosion higher in the price of silver at some point in the near future…
one more point about the Comex open interest. The true industrial and commercial users of physical silver, the commercial end users as opposed to the bullion banks who are also classified as "commercial," require physical delivery under any circumstances. It is my hunch and it is highly likely that the persistent high level of silver o/i could be attributed to the fact that the commercial end-users of physical stay long regardless of the paper raids. They need the silver to run their businesses. If we could determine if this is the case in terms of a detailed breakdown of the open interest, then my analysis is 100% correct.
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Let's refresh our understanding of the difference between registered and eligible status at the Comex.
"Comex has two categories of silver in its warehouse.http://jessescrossroadscafe.blogspot.com/2011/04/silver-eligible-versus-registered-and.html
The eligible category means that the silver is in a condition that conforms to the standards of delivery. Size and quality of the bar in other words. It is being stored at the Comex warehouse, but is not offered for delivery into contracts.
Registered means that the silver is available for delivery to those who demand bullion by being registered as such with a bullion dealer, in addition to being in a fit condition to satisfy the contract…
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silverdoctors.com / By The Doc / January 29, 2013
The US Mint restarted Silver Eagle sales via allocation/ rationing Monday, and has just updated their month-t0-date sales totals.
Despite 2 production shutdowns in January, the US Mint has sold a record breaking 7.13 million Silver Eagles in only 10 business days in January, shattering the previous monthly record set in 2011!
Despite 2 production shutdowns in January, the US Mint has sold a record breaking 7.13 million Silver Eagles in only 10 business days in January, shattering the previous monthly record set in 2011!
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U.S. Mint Silver-Coin Sales Surge After Temporary Suspension
By Debarati Roy - Jan 29, 2013 12:06 PM ET
The U.S. Mint resumed sales of American Eagle silver coins after being suspended for more than a week because of a lack of inventory.
The Mint sold 1.123 million ounces of the coins yesterday, Michael White, a spokesman in Washington, said in a voice mail left late yesterday in response to questions from Bloomberg News. Before the suspension, sales this month totaled 6.01 million ounces, according to data on the Mint’s website. That compares with 6.107 million ounces in January 2012. White did not respond to e-mails or a voice mail left today.
Silver futures are up 3.2 percent this month in New York, after advancing 8.3 percent in 2012, as central banks from the U.S. to Japan pledged more stimulus measures to boost economic growth. Global holdings of the metal in exchange-traded funds rose to an all-time high of 19,699 metric tons on Jan. 18.
“The demand for precious physical metal is surging as the continued global quantitative easing is leading to currency devaluation,” Jeffrey Sica, who helps oversee more than $1 billion as president of SICA Wealth Management, said in a telephone interview from Morristown, New Jersey. “People are realizing this is one of the best asset-classes to hold.”
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kingworldnews.com / January 29, 2013
Today the outspoken hedge fund manager out of Hong Kong, who recently lit the gold world on fire with his comments about a coming short squeeze in gold, told King World News that managed money around the world is already beginning to convert paper claims on gold into physical metal. Kaye, who 23 years ago worked for Goldman Sachs in mergers and acquisitions, and who is now the founder and principle shareholder of Pacific Group in Hong Kong, strongly believes that “… only a small fraction of investors in the world need to do what we are doing to create an enormous short squeeze (in gold).”
KWN will be releasing a series of written interviews today with Kaye which discuss the coming global systemic meltdown, and how it will impact investors and key markets around the world, including gold and silver. Here is what Kaye had to say in part I of this exclusive interview: “We know the claims on gold in the marketplace exceed, depending on various estimates, 100 to 150 times the amount of physical gold known to exist. So when a credible country like Germany has sufficient concerns about whether they can get physical possession and safe storage of fully allocated gold, it’s our contention that any prudent investor should be concerned.”
William Kaye continues:
“When the music stops, what the leverage in the system should tell you is there aren’t going to be enough chairs. So Germany, as a credible country, is saying, ‘We’re reserving our chair.’ Now this is exactly the type of catalyst that, as investors, we look for as owners of fully allocated gold ourselves.
We share many of Germany’s concerns….
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Consumer Confidence in U.S. Falls to Lowest Level Since 2011
By Jeanna Smialek – Jan 29, 2013 12:23 PM GMT-0300
Confidence among U.S. consumers declined more than forecast in January, reaching the lowest level in more than a year as higher payroll taxes took a bigger bite out of Americans’ paychecks.
The Conference Board’s index decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December, figures from the New York-based private research group showed today. The January reading was lower than the most pessimistic forecast in a Bloomberg survey, which had a median estimate of 64.
The drop in confidence coincides with a two percentage- point increase in the payroll tax used to fund Social Security, a hurdle for consumers after a projected pickup in spending in the fourth quarter. The outlook for employment prospects and incomes also deteriorated this month, today’s data showed.
“The thing that’s particularly troubling is the sizable decline in expectations,” said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who projected a reading of 61.6. “As those expectations deteriorate, it doesn’t bode particularly well for day-to-day consumer spending.”
The 8.1-point slump in the gauge of sentiment from a month earlier was the biggest since August 2011. Estimates of the 73 economists surveyed by Bloomberg ranged from 59 to 70. The measure averaged 53.7 in the recession that ended in June 2009.
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May 2013-End of the Road-John Williams
28 JANUARY 2013
Greg Hunter’s USAWatchdog.com
Anybody who thinks the U.S. is in a so-called recovery isn’t listening to economist John Williams. He contends, “We haven’t had a recovery and we’re not about to have one, and it’s getting worse.” Williams says it’s because, “The consumer is in very serious trouble. . . . The average guy is not making it. His income is not keeping up with inflation.” As far as Congress getting the budget and debt ceiling under control, Williams says,“Both sides are faced with devil’s choices.” If Congress does not get its financial house in order by the new deadline in mid-May 2013, Williams predicts, “It will be the end of the road . . . . They are not going to have another opportunity . . . they are pushing the limit as it is now.” Williams says he expects, “. . . a negative reaction in the next 3 or 4 months to the dollar.” Williams adamantly calls for hyperinflation to the U.S. dollar by the end of 2014. Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
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China Just Threatened a Currency War if the Fed Doesn't Stop Printing
The tension between Central Banks that we noted yesterday continues to worsen. This time it was China and the EU, not just Germany, that fired warning shots at the US Fed.
A senior Chinese official said on Friday that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar.
Asked whether he was worried about the dollar, the chairman of China's sovereign wealth fund, the China Investment Corporation, Jin Liqun, told the World Economic Forum in Davos: "I am a little bit worried."
"There will be no winners in currency wars. But it is important for a central bank that the money goes to the right place," Li said.
Speaking at the same session, French Finance Minister Pierre Moscovici voiced concern that the euro was becoming overvalued as a result of quantitative easing and other stimulus actions taken by other nations' central banks.
"Certainly, the level of the euro is high and creates some problem," he said, attributing the single currency's recent gains partly to the return of confidence created by the European Central Bank and euro zone governments in starting to overcome Europe's debt crisis.
So first Germany begins pulling its Gold reserves from the US, and now China and the EU are saying publicly that the Fed’s policies are damaging confidence in the US Dollar.
This does not bode well for the financial system. The primary role of Central Banks is to maintain confidence in the system. If the Central Banks begin to turn on one another it is only a matter of time before the system breaks down.
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MONDAY, JANUARY 28, 2013/
From The Golden Truth
Are The Currency Wars For Real?
I thought it appropriate to start this piece with a quote from Ludwig Von Mises regarding the global system of "flexible" currencies:
A general acceptance of the principles of the flexible [currency] standard must therefore result in a mutual overbidding between the nations. At the end of this race is the complete destruction of all nations' monetary systems. LINK
That was written in 1949 and essentially prophesied the eventual global currency war that Von Mises visualized unfolding, as countries used currency devaluation strategies in a desperate attempt to prop up their own crumbling economic systems and "protect" their relative export power.
I am not alone in thinking that we entering a very real and very dangerous global currency war. The highly regarded Comstock Partners issued their view on this four days ago: "If we are correct, the U.S. and global economies will contract and there will be a race to the bottom with "competitive devaluations" rampant. All the countries that need exports for economic growth will be very aggressive in the race to the bottom..." LINK.
I remember when I first started looking at the precious metals back in 2001. I read one of James Dines newsletters at the time in which he was promoting gold and mining stocks as the ultimate defense against a global race to devalue currencies to zero. At the time I was unaware that his vision was based on the work by Von Mises fifty years earlier.
Essentially, in a system of flexible, floating national currencies, the currency of each nation achieves relative value in relation to the other currencies based on either relative economic strength or relative supply of the currency. With the weak global economy, nations have resorted to devaluing their own currency in an attempt to keep their respective systems from falling apart from the burdens of too much debt and as a means of making their exports relatively cheaper. The latter strategy is also an attempt to stimulate domestic manufacturing by stimulating foreign demand.
A general acceptance of the principles of the flexible [currency] standard must therefore result in a mutual overbidding between the nations. At the end of this race is the complete destruction of all nations' monetary systems. LINK
That was written in 1949 and essentially prophesied the eventual global currency war that Von Mises visualized unfolding, as countries used currency devaluation strategies in a desperate attempt to prop up their own crumbling economic systems and "protect" their relative export power.
I am not alone in thinking that we entering a very real and very dangerous global currency war. The highly regarded Comstock Partners issued their view on this four days ago: "If we are correct, the U.S. and global economies will contract and there will be a race to the bottom with "competitive devaluations" rampant. All the countries that need exports for economic growth will be very aggressive in the race to the bottom..." LINK.
I remember when I first started looking at the precious metals back in 2001. I read one of James Dines newsletters at the time in which he was promoting gold and mining stocks as the ultimate defense against a global race to devalue currencies to zero. At the time I was unaware that his vision was based on the work by Von Mises fifty years earlier.
Essentially, in a system of flexible, floating national currencies, the currency of each nation achieves relative value in relation to the other currencies based on either relative economic strength or relative supply of the currency. With the weak global economy, nations have resorted to devaluing their own currency in an attempt to keep their respective systems from falling apart from the burdens of too much debt and as a means of making their exports relatively cheaper. The latter strategy is also an attempt to stimulate domestic manufacturing by stimulating foreign demand.
The fact that silver is so much cheaper than gold makes a great case for favoring it over gold 50 to 60 ounces of silver for every 1 ounce of gold seems pretty good to me.
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