Cu Penny Hoarder wrote:There is NO shortage... there NEVER was.
That's far too broad and assertive a statement to defend. There's no context. On what level? In what market? At what time? You are saying that because the premium on ASE's rose from $2 - $3 to $5 - $7 (no minimum), then dropped to $4 (with a minimum qty), and that bottom barrel 90% went from $1 - $2 over, to not available at all, to $5 over, at one dealer, that there was never a shortage of retail physical silver? That's like standing in your backyard and saying, "there are no dinosaurs here now, so there were never dinosaurs anywhere."
Was there an overall global shortage of the element silver? Definitely not.
But when a dealer sells their shelves bare in a short period of time, and then finds that the US Mint has suspended orders and private mints are backlogged and 4-8 weeks out on delivery, that dealer is certainly experiencing a shortage. The shortage is in small retail physical silver bullion on dealer shelves, not collectively in the element silver.
When a natural disaster strikes, the area hit will often run out of generators and gasoline. There doesn't need to be a global shortage of generators and gasoline for there to be a very real shortage in one sector of the market that is hit with a sudden spike in demand. If you want a generator and gasoline in that market during that time, it's going to cost more than usual. Small retail physical bullion is just one small sector of the silver market, and experiences the same market forces. If you want small retail physical silver at the same time as a spike in demand, it's going to be harder to find and cost more (over spot) than usual.
It is certainly temporary. So for silver, it becomes a question of whether spot will stay at the low level long enough for supply to catch up so premiums drop, or whether spot will rebound enough before the premiums drop to eat up the potential savings of waiting. It can and has gone both ways. And it can go different ways for different products. Privately minted ("generic") silver usually comes back faster than government silver.
Cu Penny Hoarder wrote:Like I've said before, it's been hype and collusion among the bullion sellers.
I think you are confusing natural market forces with "collusion." There is nothing mysterious or evil going on. Just basic supply and demand economics.
Cu Penny Hoarder wrote:Dealers who are not hedged (60-70% of them) hold back inventory because they bought at higher prices.
They don't "hold back" inventory so much as they simply don't drop the price down to match the movement in spot. If they bought at $20 on Day 1, and spot drops to $15 the next day, you can either buy the stuff that is still priced at the $20 level and say the premium "went up," or you can wait 4-6 weeks for new stuff to arrive that the dealer ordered at the $15 level. Either way you are not likely to find $15 physical silver a day after there was $20 physical silver. It takes time for a significant drop to propagate from the source (paper silver) through the supply chain (metal brokers, mints, and distributors) all the way to the end product (retail physical silver on a dealer shelf). Shortages in retail physical silver following a drop in spot price are temporary, but real.
Posted: Fri Oct 09, 2015 6:49 am
