Tuesday, April 16, 2013

Surge of Buyers Rush for Physical Gold & Silver

Here is a summary of some observations and dealer notices / comments I've seen over the past few days (please note some are candid comments, not intended as official communique). I have been tweeting many of them as I see them, so if you're on Twitter you can follow me here (@BullionBaron) for more timely updates.

Weekend (13th/14th of April):

Tulving (US) - Site was down for the majority of Saturday (Service Temporarily Unavailable message), returns later in the weekend with heavily depleted inventory.

Atkinsons (UK) - "Due to volatility in the precious metal markets we are unable to take any further orders at present."

Provident Metals (US) - "Expect a short delay on orders containing 2013 Silver Eagles."

Bullion By Post (UK) - "Due to unprecedented demand and price volatility, we are unable to take any further orders until 9am Monday."

Bullion Club (AUS) - Ran out of 1 ounce Gold coins.

Monday - Tuesday (15th/16th April):

Gold Stackers (AUS) - "Bloody busy. All buyers, no sellers, but have heard of a few major sellbacks at other dealers."

Bullion List (AUS) - "There may be some delays on shipping some items due to the mad rush for physical at the moment. It seems the entire world is going bargain hunting for physical at the moment but we can still take orders and lock in prices."

Bullion Bourse (AUS) - "Please expect delays due to extreme market conditions. Orders may take up to 4 weeks to dispatch."

Ainslie Bullion (AUS) - Closed their online store, reports their phones were ringing off the hook.

Perth Mint (AUS) - Reports of customers 12 deep at the counter. Perth Mint Bullion site went offline for part of the day on the 16th.

APMEX (US) - 2013 American Silver Eagles out of stock.

Atkinson (UK) -"I need to thank you one and all for your support, orders, and patience. The simple truth is we are inundated with orders on a daily basis."

People's Daily Online (CHINA) - "Shoppers swarmed into gold jewelry shops in Shanghai over the weekend lured by the two-year low of bullion price after global gold prices plummeted."

Kitco (US) - Kitco is now no longer selling Eagles, Maples, Bisons, or Koalas to anyone in the US.

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Wow and that was just after a quick flick through some threads on a couple of forums. Make sure you don't confuse shortage of retail products for a "Silver shortage" but there is no denying we are seeing some massive demand for physical metal at the moment.

Margin calls in the paper market are causing some forced selling, but if this were really a bursting bubble then shouldn't we be seeing the physical buyers panicking to sell their metal rather than scrambling to buy more?

Guy Debelle from the RBA made some comments on Gold today:
A senior Reserve Bank official has all but declared that gold was in a bubble - one that seems to have burst.

Speaking at an economic forum in Canberra, RBA assistant governor Guy Debelle says the price of gold has fallen because it does not have much inherent value.

"Gold often has a high price because people believe that other people think it's worth a lot," he warned.

"When you describe other markets like that, the word bubble often gets rolled out. I'm not going to say that here, you can draw your own conclusions." ABC News
So the RBA representative is implying Gold is a bubble... is that the same RBA who sold 167 tonnes of Australia's Gold right at the bottom in 1997? And then watched from the sidelines as Australia inflated a housing bubble? Yes, I'm sure they are an insightful bunch who are right on the ball with the value of assets and being able to judge when they are in a bubble /sarcasm.

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BB.

11 comments:

  1. Good post Bullion baron, Followed you to your article from zero hedge.

    These are very interesting times. Surely the metals exchange default is not too far away. The Comex and JP Morgan are likely not to have enough silver in the vault to meet commitments. We just need to wonder what will the too big to fail institutions will do if futures contract holders stand for delivery on physical silver, and clear out the metals exchange. Surely there isn't enough silver they can scrounge off eBay to satisfy their outstanding orders.

    ReplyDelete
    Replies
    1. Thanks.

      There's a good video from Kyle Bass where he talks about the ratio of deliverables in the COMEX warehouse relative to open interest:

      "So $80 billion in open interest — $2.7 billion in deliverables. We're gonna own it a long time. You're on the board, as a fiduciary, what do you do? That's an easy one. You go get it."

      LINK

      Delete
    2. Something that eludes most in the PM world is that the short side of the trade on the COMEX doesn't have to deliver physical; they can settle in cash if they want.

      Only 5% of all deliveries made are through the COMEX. What will kill the COMEX is a simple drying up of liquidity. How will that happen?

      When players who DO want their metal can't get it why use the COMEX? If the price of silver, eg, is $20 on the COMEX and you can't buy it for less than $50 anywhere else, what's the relevance.

      Delete
  2. Apmex is essentially sold out of 100 ozt silver bars as well. They list some for sale, but with an availability date of April 24. Sounds like they don't have any in stock at the moment.

    ReplyDelete
    Replies
    1. Thanks, will be interesting to see how long it takes dealers to respond and restock after this massive influx of demand...

      Delete
  3. Interesting post,it seems there is indeed an increased demand for physical right now.However there are also some dealers who have been forced to pull their products from their shelves/raise their premiums substantially due to bad/nonexistent hedging.I would say that all in all it's a mixed picture.
    During the panic of 2008 I recall seeing a real gold rush,with people going berserk,not only in the retail space,but in the institutional/HNWI world as well:I had the chance to speak with the management of a major European gold ETF and afterwards conduct an on-site due diligence(just to make sure I wasn't going to get "Corzined" ;))and they were seeing enormous influxes of large buyers and they were scrambling to find the physical,going as far as buying directly from a major central bank and taking deliveries twice a day or more(as opposed to the usual once a day settlement)to keep up with the issuance of shares.I also saw real shortages of both metals at the retail level.
    So far nothing like that is happening,although it's nice to see that there exists a real and strong underlying interest in PMs.

    ReplyDelete
    Replies
    1. Thanks for the interesting insight and I agree some of the rising premiums & "shortages" may be due to lack of hedging. Quite a few dealers getting burned by people not paying for orders placed before the drop, so some may be increasing premiums to try and make up for these losses.

      There have been further articles since I pieced together the above post including comments from Perth Mint that they are seeing double usual buying activity and a record day in Gold sales from US Mint (as reported on Zero Hedge).

      There is definitely an increase in demand, but whether that can continue and translates into a bottom formed and rising spot is another thing, too early to tell.

      Delete
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