[Originally posted on 20 March 2020 - and the supply shortfall is now even greater.]
According to those in the know – being those speaking with bullion dealers, wholesalers and the mints daily…
‘The shelves are now empty!’
Much like the toilet paper and grocery runs we are seeing at the supermarkets, demand for physical gold and silver is up 10 fold in the past 7 days.
Speaking with a dealer yesterday – they claimed they were experiencing ‘unprecedented account registrations’ as people sought to buy physical. Unfortunately for these new comers, this dealer had no stock on hand and the orders they would take – expect an 8 week delivery time-frame.
Tuesday night the Perth Mint sent out a message to distributors – they were no longer taking orders for their 100 ounce and 10 ounce silver bars due to ‘unprecedented demand’. Yesterday their website was updated to indicate that they had no silver bullion in stock at all.
There is still gold available, however be prepared to pay $AU2,700+ per ounce plus delivery costs.
Photo by Tim Mossholder on Pexels.com
At this time the gold and silver paper spot prices continue to be the prices quoted by the media. These paper prices are down. However, there is now a huge disconnect between the physical prices being charged.
Customers are reporting that dealers who do have stock on hand are charging 25%+ premiums over the spot price for gold, with anything from 50-100% on silver. As one industry observer put it – ‘the dealers aren’t even looking at the spot prices anymore.’
At present the silver spot price is $US12.50 per ounce. Single ounce Liberty Eagles however are now selling for around $20+ on ebay.
I expect that the news of this surging demand will go mainstream within a week. At this stage the only discussion is taking place is on Twitter and in other social media sites.
There have now been a couple of industry articles published explaining current conditions in more detail than I will here – excerpts and links follow.
The disconnect between paper prices for precious metals and demand in the bullion markets has never been clearer. Nervous investors are frantically buying coins, rounds, and bars. Dealer shelves quickly emptied of more popular products and delays are now being quoted on many products – especially in silver.
The demand experienced industry-wide over the past 5 days has been unprecedented. This is worse than Y2K, 9/11, or the Great Financial Crisis. It is the speed at which demand spiked (seemingly overnight) that has crippled the industry. Volume is up over 10x (in some cases much more) in a matter of days. This has strained customer service, logistics, and – relevant to this article – supply. The industry is built for elasticity. We are used to big spikes in demand. We can handle a 1 or 2 standard deviation move. We can’t handle a 5 standard deviation move in 5 days.
Distributors sold out of stockpiles in 48 hours. Dealer inventory disappeared immediately. Precious metals are the toilet paper rolls of the financial markets – under appreciated until there isn’t much left.
Sales of the one-ounce American Silver Eagle coins were at 3.1 million so far this month, as of Wednesday, compared with total sales of 650,000 in the month of February, according to data from the Mint.
As discussed previously, it is important to hold ‘Good Money’ – not the paper promises which are currently being printed by the trillions. Some people are waking up to this and a new trend is forming. Perhaps for most however, it is already too late.