Front-Line Observations From A Seasoned Gold & Silver Bullion Dealer

Tyler Durden's picture

Submitted by Adam Taggart of Peak Prosperity,

Spikes and plunges in the U.S. dollar price of gold; this is not new. It goes back to the early 1970s. We remember that for most of the past 40 years, physical gold and silver investors, particularly in the U.S., tended to chase big rallies and buy late, while too often selling after plunges or after long periods of price erosion. Gold was sold then primarily as an inflation hedge. When it was working, speculators bought much more. When it stopped working as an inflation hedge, they first became puzzled and frustrated, then fearful, and they sold out at bottoms.

 

So, fast-forward to this month, and today’s gold community starts to look a bit different as the breakdown below previous gold and silver price support levels began, and especially last week, with gold going below $1400. Physical buyers were outnumbering sellers in our store by at least 5 to 1. And some of the unfortunate sellers had not changed their thinking about gold long-term; they just needed fast liquidity, which is another benefit of gold.

 

80 – 90% of the people who have bought gold from us in the last two weeks on the drop were already gold owners, already gold savers. 

 

Their attitude is, gold is on sale 

Robert Mish kindly took a break from operations at his bullion dealership to return for another conversation with Chris on what he's been observing on the front lines this week, transacting with both retail and wholesale customers.

Gold

Gold is a little bit backlogged. The premiums are slightly elevated. Products commonly traded, such as gold maple leafs, American eagles, and refiner one-ounce bars are 2-3 weeks out. And for some of my colleagues further away in the supply chain, 4-6 weeks out. The premiums are up to maybe $5 to $15 dollars an ounce over normal.

Silver

Silver is another story. The demand for silver has completely overwhelmed existing inventories and the ability of the mints and their refiners to produce more product.  The other big mystery is: how much more silver is there to make product out of? Will the buyers be able to keep the pressure on until the price of [physical] silver and paper silver have to move up just to return the market’s equilibrium? Right now, 100-ounce silver bars, which a few months ago were trading dealer-to-dealer around melt or a little over, are now 75 cents to a $1 an ounce not retail, our cost and 4 to 8 weeks out.  1-ounce and 10-ounce refiner product used to be 30, 40, 50 cents. Now it’s  $1.10-$1.25, our cost, 2-4 weeks out. Silver maple leafs, our cost from the prime American distributor of the Canadian Royal Mint today: $3.75. It was $1.70 a month ago. 3-4 weeks out. Silver eagles, normally a little over $2, they are $5 if you want them live; $4 if you want them in 4-6 weeks.

 

These premiums are the physical market saying, we are willing to pay this for real silver right now. Whether the suppliers can meet this demand and bring the premium down, we’ll see weeks from now. It is much different this time than it was in the past, in that the drop in price is bringing in buyers rather than sellers. It used to be that a rally would bring in the buyers. So we have had an important change.

The Big Picture

The powers that be guided a lot of that potential demand into paper gold and exchanged traded products of various forms. Then they slaughter those products, and I’m sure in their mind hopefully discouraged those people for a long time. But in time, changing cultures and the prosperity of people internationally in cultures which understand gold, I think is going to take its toll on the shorting game. And the shorting game will end badly. And that doesn’t mean that those who have the other side of the equation necessarily will profit, because they will find a corrupt way to burn them.

 

What we have now is a game of chicken between the physical buyers and the paper shorters. It is like, who will quit first? We have a shortage of physical product. But we are told by the mint distributors and the refiners Oh, don’t worry. In two, three, four, five weeks your orders will arrive. If the buying continues at the pace it’s going, or begins to expand to a greater percent of the population in this country and worldwide, eventually, by asking for delivery, the physical buyers will change the game. It is a poker game of both real cards and bluffing. Are the shorts bluffing? Yeah. But they get away with it over and over again. This time when the longs fold as they have in the past, the shorts, they sandbag the river. But the flood of fiat currency keeps rising. If buyers would stick to their guns and develop habits and understand why they buy gold and silver, the shorts will run out of sand.

Robert also shares details on the buying activity of his Asian clients. There is much for the West to emulate, particularly if it does not want to wake up one day realizing it has dis-hoarded the bulk of its bullion overseas.

Click the play button below to listen to Chris' interview with Robert Mish (41m:34s):

Click here to read the full transcript

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kindape's picture

oh my god adam taggart and chris martenson posting on 'seasoned bullion dealers'.  this is what we've come to... won't be long before they are parodied.....

Taint Boil's picture

 

 

Chris has got his shit together and his crash course is a must watch – but yeah, probably what you said.

Had to Google parodied.

kliguy38's picture

Don't overthink this game.....you'll lose. These guys will rip your heart out and shove it up your ass if you play their game. Just buy the physical and let them crush the leveraged punks that want to take them on.

Cheesy Bastard's picture

Physical shortages of gold, silver, and ammunition.  If only we thought of this in advance and took action...Oh wait, we did!

Cheesy Bastard's picture

In the interest of full disclosure, I stopped buying silver at about $17 in mid 2010.  I bought a boatload then.  I speculated that the price would rise and then drop, and began stockpiling physical dollars.  I still believe that stocks will collapse and drag commodities down further.  Will it be available?  I think so.  If I wasn't Fairly well stocked, I would not take the chance, and would buy now.  Same with ammo.  I am well stocked so I will wait. 

fonzannoon's picture

It's funny to me that a diversified portfolio these days is.

25% Phyz PM's

25% bullets/guns

25% cash

25% food/water

I can't wait for Blackrock to issue the etf so I don't have to buy any of them

Cheesy Bastard's picture

+1.  Lol.  Paper water.  Just add liquidity.

fonzannoon's picture

Ticker symbol SHTF

*"This etf has everything the doomer/gloomer is looking for but does not have the time or inclination to purchase on their own. Imagine a portfolio of every essential commodity one would need in an end game scenario without having to get your fat ass off the couch to actually prepare!".

*terms of delivery may vary

Cheesy Bastard's picture

Thanks for the tip.  I will be looking out for the physical fitness etf.

fonzannoon's picture

I can't wait until someone dumps 400 million ounces of paper guns on the market and CNN shows a room full of traders getting hit by spitballs as the paper guns hit he floor.

Big Slick's picture

WITH ALL DUE RESPECT Kindape (first post in the thread), the headline is billing Robert Mish as the ‘Seasoned Gold & Silver Bullion Dealer.’  Not Martenson or Taggart.  Though I would take their advice on precious metals over the advice of 99% of the “experts.”

knukles's picture

You want hard to get?
Just try buying silver bullets.

Booyah, motherfuckers.

 

BTW, told my uber-liberal golf buds today when the topic of Syria came up (Not me! And nope, no hew and outcry, just sad looks but better than excuses) that one permanent solution to the problems is to take one whole inner city and deposit it smack dab in the center of the conflict country without EBT cards.
The whole world would surrender, we could collapse the military budget, decrease transfer payments...
To quote the Veep, "This is big fucking stuff"

TwoShortPlanks's picture

Why choose Physical over Paper?

'A bird in the hand is worth a hundred in the bush'

GetZeeGold's picture

 

 

Gold is a game of musical chairs with 100 participants......and one char.

Beam Me Up Scotty's picture

GLD is a game of musical chairs with 100 participants.....and one chair.

Fixe for you.  :)

OutLookingIn's picture

GLD is a game of musical chairs

with 100 participants...

and NO chairs!

Now its fixed.

CompassionateFascist's picture

knukles, U can get your actual silverbullets at Northwest Territorial Mint. Tho, as with the ASE's, plan on about a 3-month wait. 

Theosebes Goodfellow's picture

Yeah, but what do you want with silver bullets when lead is golden?

 

(Sorry, simply couldn't resist.)

Henry Hub's picture

I hope you realize that lead can cause blood poisoning whereas silver has anti-bacterial properties.

Parrotile's picture

Seeing Silver's OK against vampires, maybe it's effective against vampire squids too??

francis_sawyer's picture

I thought it was wooden stakes for vampires & silver bullets for werewolves...

smlbizman's picture

francis, its obvious you are not keeping up with todays vamps......

EnslavethechildrenforBen's picture

Gold could drop to a dollar an ounce with a hundred year wait for physical delivery. Printing GLD shares is even better than printing hundred dollar bills

Uncle Remus's picture

Technically, those are cartridges. Bullets are just the projectile. If one were into reloading, casting silver bullets is likely not dissimilar from casting lead bullets and from a raw material perspective, more cost effective*.

 

*silver shot vs bullion

Cheesy Bastard's picture

As long as the straw doesn't hold more than 10 spitballs, and you have taken a certified straw wielding class, and you have a straw license, then I would say you are a perfectly acceptable straw man.

Big Slick's picture

My straw does hold 10, but I promised little Andy Kuomo I'd only load it with 7.

We're governed by de-balled, drug adled, sodomite worshipping, imbeciles!

Take that into account when balancing your portfolio.

erg's picture

I like to add some crazy glue to the mixture.

thatthingcanfly's picture

One also needs to be diligent in ensuring a straw safety lock is affixed to one's tongue at all times, except when the user is in a safe environment to practice spitballing. Gotta think about the children.

Also, a tongue-return release notch must be installed to prevent full automatic spitballing. Removal of this feature is a felony.

bunnyswanson's picture

http://www.youtube.com/watch?feature=player_embedded&v=wmx0aJ1KC1w

(spain 14000 police blockade)

If Mayor Bloomberg has nightmares, it is this taking place in America before guns are confiscated.

 

GetZeeGold's picture

 

 

 

Better hope they can still come up with enough cash to pay the cops.

daveO's picture

Banking Slave Rebellion!

disabledvet's picture

try this piece of paper: http://en.wikipedia.org/wiki/Paper_battery like i've said "there's no shortage of capital out there to put to work"...and as the price of gold declines i would argue STRONGLY that the incentive to "put that capital to use" soars. "i can then take the profits and buy gold with it."

disabledvet's picture

there's no shortage of ammo. the Federal Government is buying billions of rounds. "they make 'em for ten cents" and ain't talking plastic.

erg's picture

Where's that fucktard PUD? I hate to raise grim shades here but...

Where is that pribbling weather-bitten pumpion?

disabledvet's picture

here's a real winner to go with your style big boy! http://seekingalpha.com/symbol/abx?source=search_general&s=abx hmmm. "keep stacking those Maple Leafs Canada."

Beam Me Up Scotty's picture

DV, you are correct.  The government is the uber rich guy in the room who can afford to buy all the ammo, for whatever price they want.  The manufacturers are under contract with .gov, so they can't even tell them to F-off, or they lose their big customer.  Meanwhile, the rest of us are squeezed out.  As long as they take Bernanke's clown bux for ammo, it will be hard to find.  When you have unlimited printable dollars, you can buy absolutely everything, as long as some people think those dollars are worth trading for.

koaj's picture

You sir have won the internet,. Congratulations

gaoptimize's picture

I largely agree with your portfolio allocations, but were it so easy.  The list of preps go on and on beyond these things.  It is debilitating from a time and money stand point.  It's a beautiful day here in the mid-atlantic.  I could play with the kids and mow the lawn like every other family on the street and enjoy the day.  But time is short, so I'll plant the garden more and work on other preps.

scrappy's picture

Just got 2 sq yards of incredible compost from a guy in the biz for 30 yrs., they use fish guts too!

PiratePawpaw's picture

+1 then my portfolio is just about right.

A is A's picture

Don't forget leveraged 3X!!!

ATM's picture

Gold isn't a commodity.