whats going on out there

Clearly their seems to some disconnect out there in Silver and Gold. Econ 101 says that a falling price is due to an over supply/lack of demand and vice versa. Even blind Freddie could see that this is not the case at the moment (for whatever reason), the fact is there has been a huge plunge in prices at the time of supply problems and fairly reasonable demand.

Below are a number of emails/comments/postings/website warnings that I have collated from HC, Le Metropole, articles and various websites, regarding the shortages:

1. I rang the Australian Bullion Company in Melbourne this morning to find out if they are experiencing fabricated gold shortages. I asked about availability of 1oz bullion coins.
As of this morning they have:
3-4 1oz Gold Eagles
3-4 1oz Canadian Maples
4 Krugerrands

2. Further to my previous posts, I have just spoken with a rep from the Ainslie Bullion company in Australia and they are also having problems sourcing silver. I asked on his opinion with regards to the Perth Mint and his personal opinion is that he is hearing that they too are having problems especially with regards to silver.

3. The U.S. Mint has suspended sales of American Eagle gold coins and is refusing orders from dealers, two coin and bullion dealers confirmed Thursday.

The mint's suspension of gold coin sales follows its tight rationing of sales of silver eagle coins, begun in May, when sales to the public were terminated and sales to the mint's 13 authorized dealers were tightly limited.

4. "IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults."

5. Silver & Gold Shortage Announcement
Due to the recent price fluctuations, APMEX is experiencing a temporary shortage on certain popular products.
We are actively scouring our sources to locate additional inventory to satisfy the needs of our valued customers.

6. Gold and silver are about the only commodities that have not yet surpassed their previous all time highs on an inflation adjusted basis. That is very strange for the two metals that are the classical inflation barometers! Silver hasn’t even come close to its nominal all time high! And now we find that demand is so high that all stocks of dealers have been depleted. Miners keep reporting losses because the price of the metal has not risen as fast as their costs. When something becomes scarce that is in high demand its price should go sky high not crater well below a recent high that is barley 1/3 of its all time inflation adjusted high price.

6. 5 months ago a shortage in silver began. It was explained that there was so much buying at $20 by the public that the shelves were emptying. Now under $13 an ounce we have evidence that the shortages are intensifying. Something is wrong here. Silver has dropped like a rock for 4 weeks now. Shouldn't that mean that there has been huge selling and the market should be flooded with silver? Physical Gold and Silver have gone into hiding for the time being. Physical supply has dried up and won't be for sale until we see much higher prices. This is the "two tier" market I wrote about last year. It has arrived. The government sponsored "cabal" has sold and sold and sold paper contracts for both Gold and Silver. This has depressed the prices artificially. The result is less supply. I believe many mining companies may be slowing deliveries and individuals are not selling to dealers because they deem the prices to low. Funny result we are getting here. The COMEX [paper futures market] is portraying a panic out of Gold and Silver while in the physical market, supply of any real size cannot be found at these prices. In a "real" market, a selling panic would result in a glut of product. We clearly don't have that now! This has the potential of destroying the credibility of the US futures markets plain and simple. The way I learned economics, when there is a shortage of something, anything, the price rises to ration remaining supply. But since we are living Alice in Wonderland, I guess I have my glasses on backwards.

7. Just got back from the local coin merchant - only 1/2 bag of junk available... They had not yet heard about the gold Eagle sales suspension. It seems that there is a growing disconnect between paper and physical markets - something you have noted for a while.

8. I was at my local coin shop having a long conversation with the owner. He's been in business for 30 years and I've known him for ten. I feel that he shared more private info with me than he would with the average Joe, so I'm not going to name his business out of respect for his privacy.

He had just learned about the Mint ceasing production of Eagles, which he heard was because blanks weren't available. And the decision he made may telegraph what will be unfolding in the markets next... who knows?

This guy has no bullion for sale, but he DOES have inventory. Hundreds of ounces of Au, and substantial Ag in bars. However, he decided to cease all sales indefinitely, until he knows that he'll be able to re-order what he sells.
-He has no idea when that will be, of course. He confirmed what so many of your contributors have also said, that wholesalers will take an order and accept the money, but will not give a date for delivery in full, because of backlogs and BS and gods know what else. This dealer will not place an order under those conditions as he will not let his cash be used to enable more short-term paper manipulation of the physical market.
-He told me that for the first time in 30 years, if a customer walked in with $100k to spend on bullion, he'd have to spend a few days working the phones and buying 'five or ten' coins here and there until he could fill the order. In other words, he's trying to talk other people into selling a little, because he will not sell from his own tranche.
-He had one mint box of silver eagles left, which he won't split, and it's $5 over spot, which equalled $18/oz. yesterday afternoon. He has no other silver for sale save for a little 90% coin.
-He didn't quite acknowledge that two separate price tiers are operating in silver, but he fully understands that the paper manipulations have distorted the physical market beyond belief. I think he knows that day may not be far off.

9. My bullion dealer here in Edmonton did a record day in silver on Friday...only to have to cancel all orders because his suppliers (in both Canada and the US) would no longer take orders for silver because THERE WAS NONE TO BE HAD...anywhere, and at any price!!!

He says that as of Monday, the retail silver market will be at a total stand still all across North America. Right now he can get gold maple leafs...but that's all. And the Royal Canadian Mint is no longer taking larger order for silver maple leafs.

I note that the US Mint sales in gold eagles have taken a huge jump. We're only half way through August and the mint has already sold 100,000 gold eagles and buffaloes.

10. Note the notice that just went up at Kitco. At Tulving and A-Mark the cupboards are bare as well. I hope you have your stash already...because it doesn't sound as if there's going to be any more coming...as the retail pipeline is empty and will be impossible to refill. My bullion dealer and I discussed this very thing last year, and to see it actually come to pass is truly frightening. Even if the price of silver dropped to $5 next week, it wouldn't matter, no one is selling and everyone now wants to buy...but the cupboard is bare.

11. This is precious. The paper price of Silver is crashing tonight, which is sure to push even more investors to buy up any physical supply they can find tomorrow, making the physical shortage gain momentum. Anecdote after anecdote tells of problems with getting Silver bullion in quantity. ColoradoGold.com is reporting no more 100-oz Silver bars until J-M catches up on its 300,000-oz backlog. Now the US Mint isn't going to be issuing anymore Gold Eagles until further notice? The world has gone mad. We have got to be so very close to this entire scam coming unglued.

12. Don't know if you care to post this tonight as great color on the physical shortage which has developed. I know that Jason Hommel put out a report today. This large dealer has some interesting color not covered by Hommel:
Well, a number of factors are to be "blamed" ........
1) Both the U.S. and Canadian Mints have not been able to keep up with the demand.....shortages there...
2) Foreign Mints have kept much of their product "at home" for their local citizens who have been buying moreso than folks here in the U.S..........
3) ETFs have taken huge amounts of potentially available "commercial-sized bars" out of the markets and away from Bullion Banks who might otherwise sell them to fabricators for resale in smaller coin and/or bar form....
4) HUGE quantities of Gold went to both the Asian and Middle Eastern [Dubai] markets starting in early 2007 and has not let up since.........
"Available" products HERE, therefore, are in tight supply, being chased by MANY buyers, and the premiums are now sky-high
13. The wider implications of the suspension of gold sales due to shortage along with the concurrent collapse of the futures price cannot be overstated. The IDIOTS in control of the American Money Machine have effectively DISCREDITED the whole futures complex and the 1.15 quadrillion derivatives complex that stands on its shoulders.
14. My guy in Rocklin is out. Amark is out. Mish in Menlo Park is out. Klaus in Denver is out. All those guys cannot find silver to buy from any other major dealer, and they are all very well connected in the industry.
15. Meanwhile at Ebay (Europe), premiums on both gold and silver eagles/maples remain firmly in place, if not actually increasing. I noticed one power seller actually +withdrew+ a 100 eagles lot, not what you'd expect if silver was suddenly so truly worthless.
16. My usual supplier Tulving is completely sold out of any type of silver for the first time that I can ever recall in the last 7 years.......and the price plummets after hours to $13.60. Also on Tulving there is almost no gold bullion product whatsoever available




One can also add to this an article I read yesterday and has since been posted on HC regarding Indian demand.

Now whatever your take on the reasons, I think you have to agree that something really seems out of whack with this situation

Lets just bear in mind what has occurred over the last few weeks. We have had over a $200 drop in gold and over a $6 decline in the price of silver as well as (in terms of relative historical moves) an extreme move in the dollar (something like a 3 standard deviation move etc), all the while, the news emanating from the US continues to be horrific (even an indicator designed NOT to pick up inflation has it running at 5.6%). I wont even go into housing prices, unemployment, cc defaults etc. but you know they are there, they aren’t going away anytime soon and they are NOT bullish for the $US.

Now would it really be too far fetched to think that there might actually be a market price driven by the selling of futures contracts with paper money that is disconnecting from the price of the real thing because there is heaps of demand at that price, but no-one willing to sell (bullion) at that price because they deem it to low. How does this occur in a ‘freely’ traded market? Yes there may be a temporary blip in delivery for the states, but silver shortages around the globe were first noted about 6 months ago in Switzerland, Germany, the UK, Australia and the US. This isn’t just a blip in the US. Also, up till recently it had just been silver, but now the US Mint (that’s right, the US MINT) has to suspend the sale of some gold coins.

The funny thing is, this is the kind of result you would get if, as many of us suspect and discuss, the Comex Futures market was being sold short in an attempt to suppress the price with paper dollars, is it not? Don’t get me wrong, I’m not saying that this is absolute proof that this is occurring, but this is what had been speculated may occur as a result of the manipulations prior to first signs of the shortages, ie a disconnect between the paper price and the bullion price.

For me the evidence continues to mount and I find it less and less plausible that normal market forces are at play. When you consider that:

‘Gold and silver are about the only commodities that have not yet surpassed their previous all time highs on an inflation adjusted basis. That is very strange for the two metals that are the classical inflation barometers!’

as well as the fact that that the Fed and its agents, the large investment banks, have the motives, the connections, the ability, the money, the protection and the size of derivative positions required to carry out such a job, and you combine that with the apparent shortages and disconnect between price and availability, you’ve got to admit that something smell’s pretty funky at the moment


I can’t say I know what’s going on at the moment, but it feels like we are right on the edge of something big.