Silver - $27 going to Zero! Call your boss..beg for job back

[68Camaro]

Email from Texas Precious Metals today:

Dear TexMetals customers:

I am writing to provide you with an update on precious metals inventories. We are presently out of stock on many products. I want to begin by quoting an article I posted on July 8th, 2015:

————

“It is important to understand how and why supply constraints occur during periods of falling prices, and why precious metals premiums consequently spike. Let’s use an extreme example to illustrate the nature of how the physical metals markets move.

a. Let’s assume the spot price of silver is $15 and subsequently falls to $10.
b. Let’s assume the annual average demand for physical silver is $1B.

In this scenario, if the demand in dollar terms remains flat, the manufacturing output would need to increase by 50%. The mint would need to increase minting capacity from 66.67M coins to 100M coins - a huge increase.

Now, if the silver spot price fell by 33% in a condensed time frame, you can be certain that demand would increase precipitously. If we assume demand (in dollar terms) doubles, the mint would need to increase production from 66.67M coins to 200M coins. What if demand triples or quadruples? You get the idea. Over the long term, the US Mint might be able compensate, but certainly not in the short term. No manufacturing operation could. Manufacturing is inelastic with respect to short term scalability.

Then you have the domino effect:

- The US Mint goes on “allocation", limiting supply to authorized purchasers.
- This supply constraint, in the midst of rising demand, forces dealers to raise premiums.
- Rising premiums on US-minted products induces buyers to purchases other sovereign coins, like Canadian Maples, or privately-minted products.
- The increase in demand for these products creates the same manufacturing constraints for these organizations that are affecting the US Mint. - The problem compounds and lead times extend until demand cools, supplies increase, and the coil unwinds.

These reverberations in the market are Economics 101. The physical precious metals market is minuscule relative to all other asset classes, and small shocks can create major supply shortages.”

————

Supply constraints began surfacing in July at the US Mint, and subsequently the Canadian Mint encountered severe manufacturing disruptions which greatly limited supply on gold, silver and platinum. The recent tremors in the stock market and decline in precious metals prices have compounded the problems in the supply chain.

As our loyal customers know, if we don’t have a product in stock, we don’t sell it. Given the recent events in the market and the supply chain, we are out of stock on many products. Please refer to the information below for the most recent information about our supplies:

TEXAS ROUNDS AND BARS: This past week we had an issue with a Brinks delivery which delayed a new shipment of Texas Rounds. We will have 20,000 rounds available beginning next Tuesday 9/01, with 20,000 rounds arriving every Tuesday thereafter. At current demand, it is unlikely that we will maintain deep supplies for the next couple of months. We are expecting a limited shipment of 10 oz Texas bars next Tuesday also. Premiums remain normal on these products, and we are hoping to keep these premiums unaffected by supply constraints.

US MINT: Presently, there are no delays on gold coins, and premiums for gold products remain normal. Silver American Eagles are on allocation, and allocated levels were extremely low this past Monday, 8/24. As of this writing, we presently have 50,000+ Silver Eagles left in stock. We expect further supplies out of next week’s allocation, but the volumes are presently unknown. We are attempting to keep premiums as the lowest in the industry, but they nevertheless remain elevated throughout the supply chain.

ROYAL CANADIAN MINT: Supplies for Gold Canadian Maples remain extremely tight, and premiums have elevated by a couple of dollars. Sales of Silver Canadian Maples, Birds of Prey Series coins, and 100 oz bars are suspended and unlikely to become available until late September at the earliest.

PERTH MINT: Presently, there are no delays on gold coins, and premiums remain normal. Supplies on 1 oz gold bars remain tight, but we do expect limited supplies to arrive by 8/31 at the latest. As of this writing, we presently have 15,000+ Silver Spiders in stock, as well as 25,000+ ozs of ½ oz Sister Cities coins. Premiums on both coins remain normal. We expect the new 2016 Silver Kangaroo to arrive by late September, but we do not yet have a firm date on their arrival.

Supplies for Platinum Platypus remain very limited. We are having difficult keeping any in stock. We are hoping to secure another small lot by early next week, 8/31.

AUSTRIAN MINT: We are expecting a shipment of 10,000 Silver Philharmonics due to arrive on Friday 9/04. The premiums remain normal at the present time. Supplies of Gold Philharmonics are presently constrained.

GENERIC 100 oz BARS: We have an order for 250 100-oz Republic Metals Silver Bars (25,000 ozs) due to arrive September 17th. Barring any unforeseen supply changes, we do not expect to have 100 oz bars in stock prior to then.

I hope this offers you a general overview of our present expectations for supply. Please note, this information may change as the industry reacts to these constraints. We will do our best to keep you posted on the latest developments.

As always, thank you very much for your business and your loyalty.

Sincerely,

Jason Kaspar
CEO, Texas Precious Metals

[rawteam1]

And that's why spot price has went down huge, no demand, nice to see it in black and white...

Edit to add: implying a meaningful demand as stated by Texas PM guy that results in true dollar amount that doubles and triples dollar amount invested...

[InfleXion]

Thanks for sharing that Camaro, excellent info. Would be awesome to see that premium stick on the gold maples since I've always preferred those over gold eagles.

and rawteam! There's a name I haven't seen in a while. I've still got your old merc collection you hooked it up!

[silverstacker]

Great Post!

- This supply constraint, in the midst of rising demand, forces dealers to raise premiums.

I stopped at my LCS and they raised prices from Tuesday to Wednesday in this Fashion:

1.) Generic 2.25 to 2.75 over
2.) ASE from 3.50 to 5.00
3.) Maples 3.25 to 4.00

Major hike

[InfleXion]

Major hike

Or in terms of the physical price - no change. I don't see the paper market controlling the price next year if things go any lower.

[Xelint]

Great Post!

- This supply constraint, in the midst of rising demand, forces dealers to raise premiums.

I stopped at my LCS and they raised prices from Tuesday to Wednesday in this Fashion:

1.) Generic 2.25 to 2.75 over
2.) ASE from 3.50 to 5.00
3.) Maples 3.25 to 4.00

Major hike

Closer to the top end pricing on the ones near me.

[Rodebaugh]

As predicted.....

Welcome to $13 in Change.

I still believe that low-mid 13's to be the floor.

[Cu Penny Hoarder]

As predicted.....

Welcome to $13 in Change.

I still believe that low-mid 13's to be the floor.

Lower me thinks... somewhere in the $10-12 range.

Not predicting this, but $8 would not surprise me either.

[pennypicker]

I sadly remember back in 2011 paying $42 + $4 premium for ASE's so I'm very comfortable buying them now for just $17 out the door. However it would indeed be a blessing if some time in the future we could pick them up for $15 or so.

[Cu Penny Hoarder]

I sadly remember back in 2011 paying $42 + $4 premium for ASE's :o so I'm very comfortable buying them now for just $17 out the door. However it would indeed be a blessing if some time in the future we could pick them up for $15 or so.

I think many stackers are in the same boat.

Vindication will come one day, but I think many weak hands will have sold before that day comes, unfortunately.

[aloneibreak]

coinflation shows below 10x now for 90%...

[beauanderos]

[PennysaverCP]

It wont be long until they pay you to take silver the way it has been going.

[MaxGravy]

As predicted.....

Welcome to $13 in Change.

I still believe that low-mid 13's to be the floor.

I remember this prediction, believe you said if 18 doesn't hold then grind down to 13.

[Rodebaugh]

As predicted.....

Welcome to $13 in Change.

I still believe that low-mid 13's to be the floor.

I remember this prediction, believe you said if 18 doesn't hold then grind down to 13.

Ramblings of a chartist......Correct, this is my floor. Welcome to the bottom as I see it.....or at least seen it.

[silverstacker]

As predicted.....

Welcome to $13 in Change.

I still believe that low-mid 13's to be the floor.

I subscribe to that price point unless it breaks $13 then $10-$8 is looking more and more realistic IMO.

I actually hope it stays above $13 and the strong $US slows down. However, the world is just so "up in the air" right now I'm not sure how to predict. It was hard enough years ago to take a somewhat educated guess to a somewhat neutral degree of accuracy. But in today's world it just compounds the plaguing issue that I keep pondering of where the bottom is and where its headed. I don't think i'llbe able to get a clearer picture until At least the end of in Q1 2016.

I just can't make any sense of it as the consensus was that the markets followed oil and then oil dropped even more and then the markets went up (prior to Janet's conformation of the increase).

Speculation?? Ok I can buy that but the moves and the deviation between commodities, markets and PM's are so violotile right now now it's hard to predict anything even to a small degree of accuracy.

[Cu Penny Hoarder]

Predictions are fun to make, but major dips should be bought.

I'm more concerned when Ag gets back up in the $40's. People that bought there will want to get even. Will there be a flood of silver hitting the market?

[beauanderos]

Predictions are fun to make, but major dips should be bought.

I'm more concerned when Ag gets back up in the $40's. People that bought there will want to get even. Will there be a flood of silver hitting the market?

I doubt there will be a noticeable increase in supply at that time. As prices rise, more weak hands will relinquish their holdings, capitulating only in the sense that
"I'm pretty sure I'll never get what I paid for these... might as well sell now and get something." The long term suppressed channel has washed out all but the most
die-hard of the older stackers, so new influx of ninety percent, for instance, is likely from boomer kid's inheritances. There is a constant shift of privately held above
ground silver stacks occurring (picture juice being squeezed from an orange)... and until the last coins have been shaken from the money tree at each dollar point level
the prices will remain rooted. By the time we reach the 40's again, most of those who were going to sell at various levels along that rise would have already done so.
Also, $40 silver in the future won't mean what $40 silver in 2011 meant.

Previous "highs" may form short-lived resistance (and you can be sure that those who move the markets will assist in painting triple tops, etc, when we return to those
levels)... for awhile, as some of those who bought at those levels unload a portion of their positions. To get back to that point, psychology will have to change, and at
those levels there will likely be more greed manifesting, once again, than fear. I'm wondering how long it will take at these pricing levels before retail inventory shortages
begin to develop again?

Anyway, all of the trials and tribulations we stackers endure are requisite to moving from manipulated markets, to the endgame, through the change, to new revalued
monetary system. It's the little things that make life interesting.

[InfleXion]

Good to see some posting around these parts. At this point nothing would surprise me. I think I've given up trying to figure out what the market is going to do, and am happy just to own something that doesn't have any counter party risk. I hope Doc is right though, because the economy needs it. I've held the idea for a little while now that the dollar could break before we see new highs, and may never see new highs. It might just get run into the ground and then become unavailable. If it's true that metals need to be suppressed to prop up faith in the dollar, then it stands to reason that whoever is pulling the strings could try to time the likely eventual demise of the dollar with the end of metal availability. If those things are co-dependent then timing them together kicks the can the furthest down the road.

[operadad]

a great article.
thanks

[henrysmedford]

Closed up close to $15!!!!

[blackrabbit]

Great to see some friday green! I was getting used to the smackdowns. In a way I like the bear market as I can still flip semi-numi and other collector stuff and use the proceeds to pick up interesting things on the cheap. However, I would not mind a run up though as I think even a minor one would draw a lot of new people into the coin market.

[pennypicker]

I was getting used to the smackdowns.

Love the smackdowns

[Rodebaugh]

Welcome back 15

[blackrabbit]

Looks like you might have called the bottom Doc.