Gold And Silver Physical Market And Inventory Update From The Source: "In A Word, Ugly"

Tyler Durden's picture

By now everyone and their kitchen sink has speculated on what caused the great precious waterfall which started on April 12 and continued for the next four days. The factual reason for the biggest gold down days in history will likely remain unknown. In fact, in a sea of unfounded opinions, the only thing missing so far has been an informed opinion on what is really happening in some market - be it the paper of physical, especially in the aftermath of the unprecedented scramble to buy physical, not paper, gold and silver. So to avoid further speculation, and focusing on fact, here is what the CEO of Texas Precious Metals has to say about the state of the actual physical market, not the one where one can create "gold" and "silver" out of thin air. The bottom line? "The physical silver market is, in a word, ugly" and more importantly, "Last week, we turned away business in excess of 100,000 ozs of silver because of stock depletion." Botton line: please keep selling your paper metals - the demand in the physical space has never been greater, and is absorbing all the available inventory at current prices.

From Texas Precious Metals

Inventory Update

Update, 4/22/13:

Dear TexMetals Customers:

As you all know, it has been a remarkable (and historic) week in the metals market, with metals prices falling precipitously. In the past two weeks, we have sold over 350,000 ozs of silver and 11,000 ozs of gold, which (as you can tell from our website) has placed an enormous strain on inventory levels, not to mention our loyal staff. As of today, we are completely sold out of silver. The purpose of this letter is to update you on inventory levels and the state of the physical market from our vantage point.

First of all, as our faithful customers know, we are the only bullion dealer in the country that promises to ship orders no later than three (3) business days from receipt of payment*. Our motto is: "If we don't have it, we don't sell it." Or, as one of our traders likes to put it: "we sell metal, not promises." Our business philosophy is strict and logistically quite difficult given the high security of bullion transport and packaging. We firmly believe in the importance of expedited order processing because of the high level of trust our customers place in our company. We are an anomaly in the industry, and we are proud of it.

Before I comment on the state of the market, I want to extend a tremendous debt of gratitude to our vault and shipping staff, who continue to pull 18-hour days (working through the weekends) to meet our commitments to customers. Given the sheer volume of orders, most orders are now shipping on day #3 from payment date, but we are extremely proud to report that, as a company, there have been no logistical disruptions of any major significance. Way to go staff!

The physical silver market is, in a word, ugly. There is no telling at this point when mint inventories will return to normal, but you can be sure it will not happen within the next 8 weeks. Most dealers, at this point, are selling their current customer demand forward, meaning they are selling product they do not presently have, expecting to pull from future mint allocations. Consequently, future allocations will face pressure from today's demand. It is not my intent here to comment on the business practices of other companies, but I will say that no one can possibly predict future allocations at the time. The US mint, for example, releases its allocations weekly, and until then, dealers have no insight into allocation levels. Last week, we turned away business in excess of 100,000 ozs of silver because of stock depletion. However, we stand by the notion that it is better to lose a sale than lose a customer by delaying delivery two months (or more).

Here is what we know about future inventories:

US MINT: Like most government institutions, the US Mint is highly unreliable. This week, we will take delivery of only 13,000 silver eagles. These coins will post for sale on Tuesday, April 23rd, at 8am CST, and ship as early as Friday**. On the week of April 29th, we will offer a minimum of 21,000 silver eagles, which will also post for sale on the Tuesday of the week. Subsequently, based on corporate agreements, minimum weekly allocations will not dip below 20,000 coins. Unfortunately, due to the extreme supply/demand constraints imposed on our business by the shortage of product, we will be offering eagles in monster box form (500 coins) only until allocations exceed demand. Coin premiums will be higher than normal, but our aim is to keep these premiums as far below market rate as possible.

On gold, there is some tightness in the Gold Buffalo series, but as of the writing of this message, Eagles are in fair supply.

CANADIAN MINT: As mentioned in an earlier posting, the Canadian Mint has been under pressure to meet demand because of the small eagles allocations and because of the minting disruption caused by the Wildlife Series last month. It will be weeks before the mint catches up to demand. We will receive, at a minimum, 10,000 silver maples weekly until allocations return to normal. Depending on logistics concerns, these will post either Tuesday or Wednesday on a first come, first serve basis. Like the eagles, we will be offering maples in monster box form only until allocations exceed demand.

We have large orders in place now for 100 oz RCM bars (1-2 weeks out).

On gold, the Canadian Mint is behind on its production of gold maples, but we expect to have more in stock Thursday or Friday of this week.

PERTH MINT: The Perth Mint is the only government mint (Australia) that runs its operation like a business. It is one of the primary reasons we promote Perth so heavily. The Perth Mint has swiftly and dramatically increased production to meet demand, and therefore supplies of Perth Mint 1 oz and 10 oz bars, as well as Kangaroos, are in very large supply. We have at least two gold shipments due to arrive this week. If there are any supply constraints, it may appear on fractional gold coins, but it will be only a temporary disruption.

The Perth Mint, unlike the USM and RCM, does not produce a silver monster box. However, we have 15,000 ozs of 10 oz Kookaburra and Kilo Koala coins due to arrive on Tuesday, April 29th.

TEXAS ROUNDS: We sold out of all 50,000 Texas Rounds from our initial mint run in four (4) days. We have another 25,000-30,000 rounds being minted this week, and subsequent runs will continue every other week indefinitely.

MISCELLANEOUS: We have large orders in place with Golden State Mint for buffalo rounds and 1 oz silver bars due to arrive in the next two weeks. The junk silver market for 90% coins is completely depleted, and we are only able to source supply at the present time from customers selling back to us (which are few). We have orders in place for 10 oz NTR bars which we anticipate receiving next week.

We are restocking gold in the next two days, and slowly restocking silver over the course of the next 7-10 days. Be advised that, in some cases, we are selling product faster than we can keep it in stock. Please be patient with our staff if we sell out of the product you want. I reiterate: "If we don't have, we don't sell it."

In conclusion, some have asked me the question: "How can I take advantage of silver at these low prices if you are out of stock on everything?" My only suggestion would apply to those with some trading experience. One option is to buy SLV or Silver Contracts for a short interval at the price point you want, and then sell that position the moment we have physical supply to sell. In this way, you can lock in your spot and buy yourself time until the physical market offers your product.

I would like to personally thank all of our loyal customers for helping us become the fastest growing bullion dealer in North America.

Sincerely,

Jason Kaspar,
CEO, Texas Precious Metals

h/t Eric

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Pladizow's picture

Walked into my local coin shop last week, they had NO silver coins, seven 10oz silver bars at 11.5% premium and 90% silver at 17% premium.

This is a store that has been there for 50 years!

BLOTTO's picture

I love a good mystery/conspiracy like most ZedHeds...but instead of focusing on the 'why' in this case...how about the 'why not' buy some more? :)

.

Oh, i know why not...because their is hardly any stock left.:)

In my neck of the woods in GTA...

https://www.canadianpmx.com/Products/Gold/2

4 week delivery for some fractional Au

.

https://www.canadianpmx.com/Products/Silver/2

Ag page doesnt even load up = nothing left

MillionDollarBonus_'s picture

All I know is that the good and silver charts keep going down down down. If prices have fallen this much, it stands to reason that they will go down further. Silver has almost fallen to fair value at 18 dollars an ounce just as I predicted, but that by no means implies that it can't fall much further.

EscapeKey's picture

"Silver will go down, because silver has gone down".

I also recall you stating a few weeks ago that the Dow will go up because the Dow has gone up recently.

Such genius!

flacon's picture

Putting the RARE in Rare Earth Metals (gold and silver). It's about time that these RARE precious metals become scarce

dontgoforit's picture

Has it really become so scarce?  Who's hoarding?  Certainly not Cyprus.

AllThatGlitters's picture

You can still buy 10 Ounce Bars for a reasonable premium:

http://www.pmbull.com/silver-price/

That page has live charts and shows dealers with reasonable premiums on inventory that is currently in stock.

You can also buy Austrian Philharmonics for a lot less than Eagles, and they look a lot nicer than the Canadian Mapleleafs in my opinion.

 

augustusgloop's picture

exactly - depends what you are buying: JMBULL ships silver eaglest 10-15 days after receiving payment. Silver eagle is still $29+ for smaller quantities. 

Pinto Currency's picture

 

Andrew Maguire today on physical demand for gold:

" So you’ve reached a point where the lines cross, and the physical market diverges.  I have checked the numbers now and we are very close to 1,000 tons of deliveries just this year into Shanghai. 


That does not account for the 25 tons we are seeing everyday through London.  And that does not account for what is being directly purchased through producers.  So there comes a point where you get such a discount that this demand increases exponentially.  And we are not just seeing the central banks and the sovereigns coming in,  we are also seeing some very smart money, I’m talking investment money, coming in (to the gold market as well). "


http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/22_Ma...

Cacete de Ouro's picture

Maguire needs to put all his data on a web site or similar. And let others analyse it. Without that, its just a set of claims, however true they may or may not be.

FEDbuster's picture

Is there anyone out there tracking premiums for physical over paper spot?  Take an average of the top twenty web dealers in stock inventory prices to get a fair avg. cost and compare to daily close.  That would track the disconnect between paper and physical. 

bitgroin's picture

That's what Assange says, not just about Maguire, but about all commentary and journalism. Then talk would be revealed as cheaper than Apple stock.

troublesum's picture

Is it me or has MBD gotten lazy in his sarc posts. Used to be so much more elgant and thought out. Like a mini sub story with a plot as to why the opposite of what you should do is the right thing to do.

smlbizman's picture

trouble,...every dick becomes useless as time passes......

silverserfer's picture

MDB has interns posting for him now and they are still polishing up their dry humor. MDB had to do this as he has a part time job now! Hes giving Krugman his baths in the evenings.

Why you ask, beacuse Krugman's mom is getting on and is to weak to give him his bath anymore. See, they are showing us that thier economic plan is working and helping the recovery.    

BeepBeepImAJeep's picture

As long as he's getting minimum wage!

draug's picture

I'm really wondering how much of the paper gold is really "there", and how much of it is double counted, "owned" by several people at once, or simply doesn't exist at all. There's a lot of fraud in the financial industry, so why not in gold. Especially since several too-big-for-law-enforcement institutions are heavily involved in the gold market (including governments and central banks) who all can get away with murder in broad daylight at this point.

TeamDepends's picture

We'll find out in a few days.  Long popcorn.

Herd Redirection Committee's picture

Its not double counted, its counted (and been sold) 10 times over.

Pension funds, hedge funds, trusting old people, have all told banks "Its ok, you can hold the gold for me, I trust you".  Some of them are wising up, and seeing what happens if they actually ask for their gold.  The answer so far, they get their gold.  But the truth behind the scenes is a little different.  More along the lines of "lets do WHATEVER THE FUCK we can to discourage people from demanding physical delivery.  Lets move the price of gold down by 7 standard deviations!  That'll show people!"

Except it didn't work.  Most people who own gold are used to this shit, the sheeple who are frightened by it have sold their gold (earrings, rings and necklaces) a long time ago.

Hulk's picture

The comex is levered greater than 30 to 1

See Kyle Bass's comment on this at 42 minutes in (nov 2011)

http://www.youtube.com/watch?v=5V3kpKzd-Yw

The comex believes that price will settle everything, hence last weeks action...

Thisson's picture

You are completely misrepresenting how the market works.  It's like complaining that a craps table has 20 people around it all betting, but that there's only 1 pair of dice.  The commodities futures markets are CASH SETTLED.  Yes, you can stand for physical delivery, but this is based upon a Contract - which is another word for an exchange of promises.  The remedy for a breach of contract of this type is MONEY DAMAGES, not specific performance (delivery of physical).  The futures market is a price hedging mechanism, not a guarantee of physical delivery.  All of this is FULLY disclosed.  It's important for people to understand how this works and read the documentation.  If you want physical, buy and hold physical.  For some market participants, it is more practical to rely upon promises, accepting the attendant risks.

Hulk's picture

My point is that it is highly levered, selling futures (and settting prices) for product that does not exist and cannot be delivered...

JLee2027's picture

43:12 in COMEX response: "price will solve everything"

LOL. 

gina distrusts gov's picture

rely upon promises

Wish in one hand,,,,, spit it the other see which one gets full first

toys for tits's picture

MDB,

Keep your eyes on the ass of that sheep in front of you.  It'll be the only way to know which way the herd is moving.

At least until the border collies show up.

Ignatius's picture

MDB used to be funnier... I miss that.

Locally (LCS), silver is sold out and gold is limited, FWIW.

Badabing's picture

"All I know is that the good and silver charts" ha ha what a dick

Duffminster's picture

For those seeking to understand how a gold default may have triggered the coordinated futures attack on gold, check here.  Remember, silver is also a lever to move gold and that was also attacked in my opinion.

 

Why the Western Banking Cartel’s Gold and Silver Price Slam Will Backfire – And How You Can Protect Yourself from the Inevitable Blowback
natty light's picture

AAPL will go down, because AAPL has gone down

Pladizow's picture

Your defenition of almost, is 22%?

Stupid in yet another way!

Bay of Pigs's picture

Good to see you again my friend. Haha...

LynRobison's picture

"All I know is that..."

The irony is that you don't even know what little you claim to know.

angel_of_joy's picture

You're getting lazy.

Lack of inspiration ??

-1 for today's effort...

spentCartridge's picture

Lots of folks 'go down further' when they have to, only the ones holding real money don't have to chew on so much meat a MDB?

caimen garou's picture

go ahead million dollar asshole, the truth is in the physical demand!

nope-1004's picture

20% premiums on rounds?  Did I calculate that correct?  Holy smokes........ no wonder they still have stock.

 

fonzannoon's picture

I think it's hysterical that miners are being forced to sell at these prices.

au_bayitch's picture

IF the pog is below their cost of mining it, they could buy the futures and ask for delivery.

Handyman's picture

They want $31.50 for a Canadian Silver Wood Bison. They are $28.70 at Scotia Bank.

Canadian Dirtlump's picture

they have revolving stock, they were out of maples for a time last week, bisons and they are out of 1/2 ounce golden state mint round, 1 oz buffalos, libert a marks and some other one which escapes me. they have been selling the shit out of product too.

 

Their premiums only shot up last week. I use them often and their prices are typically very competitive. I have 2 tubes of buffalos ( they have been sold out since last monday ) on the way. I'm shocked they shipped them so quickly.

 

I eagerly await the US mint to update silver sales ( they are clearly lying about sales numbers) properly. Right now the gold silver sales ratio they report for the month is 17.5 to one LOL! IT has been consitently more like 40-50 to one.

EscapeKey's picture

It's not quite that bad over here in Ole Blighty:

http://www.bullionbypost.co.uk/silver-coins/american-eagle-1oz-silver/american-eagle-1oz-silver-coin/

Record Orders!

Due to record orders we have had to set a temporary minimum order spend of £500. We are also unable to offer usual next day delivery. Orders will be dispatched ASAP in the order that funds are received. We expect to dispatch most orders within 1 week.

pop goes the weasel's picture

Dont buy from there, they are expensive. I use www.coininvestdirect.com loads cheaper and have never waited over 5 days for a delivery

css1971's picture

Won't ship outside the UK.

tsx500's picture

ditto here in midwest... 21% premium on 1-oz AGE .... 16% on junk Ag ..... 5-6% on 1-oz Au

DosZap's picture

I see no reason to buy AGE's, and pay the much higher prems.

I prefer IRA approved Ag, 1oz. rounds.More Ag for the buck.

AmCockerSpaniel's picture

Have any of you tried to Google Earth their address (look at the bottom of there web page https://www.texmetals.com/us-mint-silver-eagles-allocation)? 959 HWY 95N, Skiner, TX  77984