What's behind the unexpectedly high physical silver demand recently?
- Thread starter SpacePete
- Start date
Anything we say is going to be speculation. I reported what facts I knew and we've had some clarification.
BIGs reported NTR in the US had been clean out of silver and can't meet demand. But that this was a fabrication issue not silver shortage.
Bron reported Perth Mint is "struggling" to keep up to and flipping between product to make larger batches to produce more to keep up.
Usual commentators have been talking about issues for a while but we can now confirm that this is true.
Seems as though demand from a retail level is being sustained for the moment. Comex registered inventories have fallen to 50.4 mil ounce which is very low. Back in 2011 when silver popped inventories were extremely low at 25 million ounces.
Putting the pieces together... maybe we are seeing the "excess" metal build up being stripped from the system and those that have held off buying are now diving back in. The shortage of product may be driving demand higher as people through fear/greed don't want to miss out on a buying opportunity at these lows.
Product supply constraints seem to be what everyone is talking about. There is silver out there and by no means are we back to 2008 "no product available" signs, but it is certainly unusual.
My thoughts are panic buying due to supply constraints which is driving the market.
BIGs reported NTR in the US had been clean out of silver and can't meet demand. But that this was a fabrication issue not silver shortage.
Bron reported Perth Mint is "struggling" to keep up to and flipping between product to make larger batches to produce more to keep up.
Usual commentators have been talking about issues for a while but we can now confirm that this is true.
Seems as though demand from a retail level is being sustained for the moment. Comex registered inventories have fallen to 50.4 mil ounce which is very low. Back in 2011 when silver popped inventories were extremely low at 25 million ounces.
Putting the pieces together... maybe we are seeing the "excess" metal build up being stripped from the system and those that have held off buying are now diving back in. The shortage of product may be driving demand higher as people through fear/greed don't want to miss out on a buying opportunity at these lows.
Product supply constraints seem to be what everyone is talking about. There is silver out there and by no means are we back to 2008 "no product available" signs, but it is certainly unusual.
My thoughts are panic buying due to supply constraints which is driving the market.
Panic buying is driving up premiums and sucking up inventory. A similar thing happened with ammo shortage a few years back but at a larger scale where demand was high and supply became low. Retail AND Corporate/Gov't demand was high. If there are deals, a lot of us retail and newer entries are buying bulk. We're either going to get really screwed or we'll just make out alright. Metals being wealth protection the upside is limited. It's very possible there will be another run up and drop off like what happened in the 70's, 80's, more recently late 2000's. No one knows for sure, but I don't see it going 4x and beyond. We'd be lucky if it spiked and I think a lot of people are betting on that.
It's a consumed material. There's only so much. People are buying and stacking. It's been money for 5k years. yada yada etc. etc. whatever the reasoning, more people are back into the retail space and buying up inventory because of market volatility and history of what happened last time. Many of us remember when the dow dropped 1k in a day and what happened to the markets after that. Many of those same people are looking at alternatives because they see signs of another type of bubble ready to pop. Those people are joining the regular stackers, i'm one of the new people buying in, because last time I watched as my holdings evaporate while PM's did reasonably well. This time I want at least some protection/hedging. In addition to panic buying but the regulars, noobs, etc. There's also strategic buying. It's like Final Destination, you know its coming (not exactly what, just know something is brewing ), its just a matter of when and how. Many people feel this way right now as uncertainty continues to build.
The other reason is the Schmeetaaaaah... or was it the reset of the Mayan Calendar.. Or the lining up of 7 planets.. Really... Humans like to hoard stuff when they thing famine is coming, mainly superstition, since the world never ends. But bad things can happen if you aren't prepared financially. So I think people buying metals are trying to rush in and minimize the damage.
It's a consumed material. There's only so much. People are buying and stacking. It's been money for 5k years. yada yada etc. etc. whatever the reasoning, more people are back into the retail space and buying up inventory because of market volatility and history of what happened last time. Many of us remember when the dow dropped 1k in a day and what happened to the markets after that. Many of those same people are looking at alternatives because they see signs of another type of bubble ready to pop. Those people are joining the regular stackers, i'm one of the new people buying in, because last time I watched as my holdings evaporate while PM's did reasonably well. This time I want at least some protection/hedging. In addition to panic buying but the regulars, noobs, etc. There's also strategic buying. It's like Final Destination, you know its coming (not exactly what, just know something is brewing ), its just a matter of when and how. Many people feel this way right now as uncertainty continues to build.
The other reason is the Schmeetaaaaah... or was it the reset of the Mayan Calendar.. Or the lining up of 7 planets.. Really... Humans like to hoard stuff when they thing famine is coming, mainly superstition, since the world never ends. But bad things can happen if you aren't prepared financially. So I think people buying metals are trying to rush in and minimize the damage.
Message from Ainsile Bullion website
Important Notice to Customers
Due to the extremely high demand of late for precious metal, we are
experiencing an extraordinary shortage of many lines of product. This is due
to refiners themselves experiencing difficulty in keeping up to demand. This
is a world wide shortage.
Whilst we have had a large inventory for many years, the huge demand over the
last few weeks has seriously diminished our stock levels.
Whilst this is not an issue restricted to Ainslie's, we have always been up
front with our customers if we can't supply straight away. You will,
therefore, only see a limited number of lines offered on the web shop and also
in our store, and many with wait times.
If you want to buy something in particular and it is not on the web, please
call us as it may be available in store or over the phone. We have been in
business for 40 years because we have put customers' interests first. We
don't put them at risk.
We trust that you understand. We would rather be up front and keep you
informed of the current volatile market.
We will also be paying more than spot price for buy backs for
most products for a limited time.
Important Notice to Customers
Due to the extremely high demand of late for precious metal, we are
experiencing an extraordinary shortage of many lines of product. This is due
to refiners themselves experiencing difficulty in keeping up to demand. This
is a world wide shortage.
Whilst we have had a large inventory for many years, the huge demand over the
last few weeks has seriously diminished our stock levels.
Whilst this is not an issue restricted to Ainslie's, we have always been up
front with our customers if we can't supply straight away. You will,
therefore, only see a limited number of lines offered on the web shop and also
in our store, and many with wait times.
If you want to buy something in particular and it is not on the web, please
call us as it may be available in store or over the phone. We have been in
business for 40 years because we have put customers' interests first. We
don't put them at risk.
We trust that you understand. We would rather be up front and keep you
informed of the current volatile market.
We will also be paying more than spot price for buy backs for
most products for a limited time.
black5wan said:
That last line is telling, when a dealer buys back at above spot.
After reading that statement, it's great. Anslie is being honest and straight forwards with their customers with a statement like that, that deserves recognition and respect.
Look if this kind of demand if sustained, it may have an effect, we've seen 2008 and then the peak of 2011.
Watching the markets over the years this is unusual, no denying it and in the past it signaled change.
Only time will tell.
For me the best indicator of bullion shortageand demand is the ASE price
Premiums are on a very high level momantary
http://forums.silverstackers.com/message-847323.html#p847323
Premiums are on a very high level momantary
http://forums.silverstackers.com/message-847323.html#p847323
I read it completely different.
Why would they be stocking silver when in all likelihood there is going to be a bigger fall on the horizon. It would make more economic sense to buy slightly above spot on a needs basis rather than buy in quantity and suffer a 20% loss or more in the short term.
Shortages can easily be created if you are not stocking the silver required to manufacture. They are not telling porkies but are creating an illusion.
They are just as capable of buying at spot as they are off investors at above spot.
Premiums are high because that is what the sellers need to stay in business. It is not a function of demand.
With the silver price dropping as much as it has, sellers are under pressure to maintain margins.
You cannot buy silver at $25 in bulk, make the coins required and sell them 3 months later at $28 when spot has dropped to $21.
It is business.
Keep an open mind. Stop looking for proof of your own convictions. You will lose a lot of money.
Why would they be stocking silver when in all likelihood there is going to be a bigger fall on the horizon. It would make more economic sense to buy slightly above spot on a needs basis rather than buy in quantity and suffer a 20% loss or more in the short term.
Shortages can easily be created if you are not stocking the silver required to manufacture. They are not telling porkies but are creating an illusion.
They are just as capable of buying at spot as they are off investors at above spot.
Premiums are high because that is what the sellers need to stay in business. It is not a function of demand.
With the silver price dropping as much as it has, sellers are under pressure to maintain margins.
You cannot buy silver at $25 in bulk, make the coins required and sell them 3 months later at $28 when spot has dropped to $21.
It is business.
Keep an open mind. Stop looking for proof of your own convictions. You will lose a lot of money.
wrcmad said:
I didn't say it as a reference to spot - I do not dispute the price of spot - it is what it is.
Spot price is taken from the futures market so the current spot price is a true reflection of the supply and demand in the futures market
The futures market, however, is not necessarily a true reflection of the supply and demand in the real world
It's like watching a food platter at a party
People are content to continue conversations without eating so long as they have an eye on the food and they are not even worried about a few people tucking in but as soon as it looks like it's running low everyone wraps up their conversations at a similar time and they all say "Hold on a tick, I better go grab some food before it's all gone"
Then there is a hustle and bustle around an empty plate and people miss out
This is what is happening in the Silver market
People are content to continue conversations without eating so long as they have an eye on the food and they are not even worried about a few people tucking in but as soon as it looks like it's running low everyone wraps up their conversations at a similar time and they all say "Hold on a tick, I better go grab some food before it's all gone"
Then there is a hustle and bustle around an empty plate and people miss out
This is what is happening in the Silver market
ninteno said:
I don't know if you have ever tried to hedge but it is not the great panacea that everyone thinks it is.
It is an insurance and as such it is pure gambling. Just like a casino, there are two sides to the trade and both sides have all the same information and the higher the risk, the higher the spreads.
As risk grows, hedging costs grow.
Perhaps it is the hedging that we should focus on rather than the retailer. Hedging would be a better reflection of where the market believes that the silver price is heading. Just what are the "put" contract premiums now compared to several years ago.
If the spread is too great and the silver price does not fall enough then it is a loss making exercise.
Perhaps it is this expense that mints are trying to overcome.
wrcmad said:
Except that the real world is limited by physical reality and the futures markets are not
You just have to look at the oil price chart over the last 10 years to see that
Did the real world have such a massive physical shortage of oil in 2007/2008 that the price went from $50 to $140 ?
And did the real world suddenly start producing massive amounts of oil in June 2008 that sent the price back to $40 in 6 months ?
There was probably very little change in real world supply and demand all through 2007 and 2008 - just a whole lot of futures BS
Choose wisely who you give your money to. The quickest way for a bullion dealer to go bankrupt is to be unhedged
A bullion dealer that anticipates violent moves in the market and momentarily suspends trading then quickly resumes it is probably deserving of your money
A bullion dealer that closes down for an extended period after a violent move in the market does not
A bullion dealer that anticipates violent moves in the market and momentarily suspends trading then quickly resumes it is probably deserving of your money
A bullion dealer that closes down for an extended period after a violent move in the market does not
wrcmad said:
That's a throw away line saying nothing more than there's a price for everything.
It does not refute the point...
The futures market, however, is not necessarily a true reflection of the supply and demand in the real world
Which is accurate and saying it ain't so, doesn't mean you are right. Markets have, can and do fail.
Arbitrage in this instance only works if you can actually acquire the metal. Selling physical metal in the hope that a futures contract will deliver in a looming environment where financial settlement vs actual delivery seems likely.
This has long been a contentious issue. I'm not saying it will happen though. But it has in the past and will continue.
This story is as old as markets themselves, John Law is a perfect illustrative example.
It isn't a throw away line... arbitrage is the leveller that permabulls love to ignore, and despise being reminded of.Miloman said:
It refutes the point so well that there is no sensible retort, except to ostensibly dismiss it as a throw-away line.
It is more right than 'not necessarily', and more right than 'probably'....
There is no problem getting the metal. There is no supply problem.
As numerous posts have already explained, the metal is there to be had.... the mints just can't stuff it through their premium-producing machines fast enough ATM.