Retail Market Survey
It’s been a while but I’d like to hear from you about recent experience or success purchasing physical gold and silver. I’ll get the ball rolling by relaying my conversation earlier today with Mr. Hannes Tulving of www.tulving.com. They have good quantities of silver Eagles, silver Olympic Maple Leafs, and gold Eagles. The premiums are substantial but that is precisely why there is inventory. As Jason Hommel of www.silverstockreport.com has been hammering home for weeks, the only way dealers can keep any inventory in stock is buy raising premiums to account for the excess of demand over supply.
I’d be careful buying at these premiums especially if this will be the first or single purchase in the past few months (or for many months into the future), but those who have substantial new money to commit to bullion can buy in moderate quantities and be just fine. If you do have $20,000 or more to invest, I would definitely go with wholesale bars of 1,000 oz. silver or kilo gold which Tulving and others are selling at very small premiums (near historical norms). No longer do you have to take delivery of COMEX contracts to get wholesale metal; the dealers are now bringing it to you (see more discussion below). Some of you may want to let Jason Hommel, Ted Butler, David Morgan and others know about this development, which could turn out to be pretty huge in the scheme of the gold and silver markets.
Otherwise, one way to deal with the premium issue is to perhaps split the investment into two and place one half into bullion and the other half into an ETF, or other metal-backed investment vehicle, such as GLD or SLV. Make sure there is true metal backing and adequate legal protection for investors. GLD, SLV, the Swiss ETFs from ZKB, and the physical metal ETFs from ETF Securities in London offer adequate protection. If you are considering others but you are unsure of their safety, please get in touch with me.
Note that while Central Fund of Canada is a perfectly fine outfit (I still owe you my report on them and the fact they are not experiencing “delays” as alleged by Ted Butler) and may be a great way to invest in precious metals, the shares now carry a very sizeable premium (11%) so that would not be an appropriate substitution for physical purchases. This is especially true in the case of gold Eagles which can be purchased from Tulving and others for about $70/oz. (8%) over spot. Yes, this is steep premium but if you put half your intended investment in the gold ETF GLD and the other half in gold Eagles, the average premium is only $35/oz. This works even better in the case of silver, where the premium on silver Eagles is currently $4/oz. (35%). Put half in SLV, however, and the average premium is reduced to $2/oz. Indeed, the large premium on silver bullion products is probably a main reason why Central Fund itself is trading at such a high premium considering it holds approx. 50% of its assets in the form of silver bullion.
If and when retail premiums subside somewhat (or premiums on ETFs rise), the second half could then be moved into bullion. Don’t believe the anti-ETF hype, the ETFs I discuss above have the metal and are among the safest alternatives to bullion held in your own secure possession. I suppose the cost of disagreeing with me on this is that you will pay $4 over spot for silver that you can buy at spot now (through the ETF). Should the rampup of retail bullion manufacture eventually catch up with demand, which is highly likely, I promise that you will see a steep opportunity cost attached to your tinfoil-hat-tinged disbelief.
In addition, the allocated account programs at Perth Mint, FideliTrade and others are passable alternatives for larger accounts where metal deposits are in the form of wholesale bars and where you are provided with bar numbers or a warehouse receipt specifying the exact bars that you own. Despite the negative press and hand-wringing, it might also be acceptable, though only as a last resort, to consider the unallocated program at the Perth Mint. This is only because the Mint is fully backed by the Government of Western Australia in case of insolvency.
Along these lines, I would consider it imprudent to consider new investment in unallocated accounts or pool accounts offered by private entities such as Kitco, banks and dealers. Normally the fact that you pay no storage fee or premium might be an acceptable tradeoff against the default risk, especially if these accounts are used for trading in and out of the market, but given the current circumstances of the world’s financial system the risk of default is way too large. If you are currently in one of these pool or unallocated accounts, please look for opportunities to get out soon.
One more thing. I have noticed a very large increase in the quantity of wholesale bullion offered by retail dealers, and in the case of at least Mr. Tulving, wholesale bullion being sold. For example, note that www.tulving.com has “over 200″ 1,000 oz. COMEX acceptable silver bars in stock. And for delivery by the week of October 13, Mr. Tulving has “over 100″ of kilo (32.15 oz.) Johnson Matthey COMEX acceptable gold bars. He has apparently been selling these like hotcakes. Where are these bars coming from? Mostly from the refiner. This is nothing less than the beginning of retail investment demand sucking wholesale metal out of the industrial market. I’ll have more on this later to the extent Jason Hommel, Ted Butler and others do not start to adequately cover the topic now that I have let the cat out of the bag.
In closing, please consider providing your own recent physical buying or selling experience in the comment section below.
“the ETFs I discuss above have the metal and are among the safest alternatives to bullion held in your own secure possession”
Ever heard of ENRON?
Marc Faber says: “buy physical gold, don’t buy paper”
I agree with Marc. Period.
Spoke to NWT mint on friday about a order I placed sometime ago. They gave me a delivery time frame which was abit more then originally stated, fine it is what it is. I inquired about any additional orders, they indicated the wait time was 10-12 weeks for new orders. Another outlet I have been buying silver from for about 4 years now. I have never had to wait for silver at all, now 3 weeks on smaller orders and 5-6 weeks on larger orders. Spoke to a silver analyst last week which I speak to on a regular basis. He indicated SilverX exactly what you mentioned about the retail investment starting to eat into the industrial market, reason being higher premiums. I inquired about the slowing global economy putting more silver on the market because of the drop in industrial usage from the slow down. He sorta chuckled and said well, do you think mine production will stay at its current pace and not reflect the slow down. He said people never talk about that side of the equation, only the slow down and its effect. So I called a few of the mining stocks I own IR departments and got some information on that front about production. Also discuss some other issues and how they are handling the manipulated paper markets and the disconnect between paper and physical silver. Went to a decent size coin show this weekend. Well large for this area, big fall event 55-60 dealers, very little silver. One dealer had about 12-14 08′ eagles $20 each FIRM. A few other guys had a few rounds and a couple bars, all 1 oz pieces, $20 each. No 10 oz bars, no 100 oz bars. I asked around and spoke to a good deal of them, do you have silver and are not selling at these prices. A few of the dealers had some, but very little they were holding until higher prices, basically they bought it at higher prices. I was very surprised at the lack of silver or no silver at all. A few of the dealers laughed and said goodluck finding any.
Maybe the premium’s being paid because the entire financial system is collapsing? The paper price is totally manipulated and anyone who can’t see it is blind in my opinion. Premiums 4-5$ on silver IF you can find any. I sold 5- 10 oz JM bars on ebay for between 193-198 + 10$ shipping..people are willing to buy 20$ silver.
I purchased my last three monster boxes three weeks ago for a $3.89 premium. I am now buying change for my eagles in the form of silver quarters and halves paying $100 for quarter rolls and $110 for halves. It is amazing to pay 25% premiums for junk silver. This usually only happens at tops. Some of the 1000 ounce silver bars and gold bricks may be coming from refiners but most are coming from hedgie liquidation. They hold comex deliverable stuff for physical.
I would not buy anything in the form of an ETF at this time. I have seen many bear markets including the 74 disaster (wiped my neophyte ass and left me stumpless on the side of the road) to know that everything goes down in a liquidation. I have seen companies trade for less than they hold in cash! I am very nervous here and worried about rule changes that can make any kind of trading not viable.
I’ve mentioned this on another website. We are just taking turns pissing on each other while playing musical chairs for the nickle and dime amounts left as scraps for the small investor. My next focus will be the purchase of 1000 oz bars. Once that slippery slope of supply slides away from the industrial demand side, moreover into the hand of surfs, well, then we will see real fun times.
Pardon the Druken Monk posting… watch football
Why don’t these refineries purchase the 1000oz bars near spot directly from Comex or elsewhere and melt them down into coins or smaller bars and make a killing on the premiums?
Can you tell us what you know about the Comex delivery times? How long does it take to get your order filled?
Pete, not so simple to just melt down and make bars (from a whole of industry point of view) - see http://goldchat.blogspot.com/2008/08/fud-fear-uncertainty-doubt.html
In that blog, published one month ago, I suggested two scenarios. I was leaning more towards scenario 2, which was that Mints/Refineries would gear up in “a few months” (fact is industry bar production in quantity is not like turning on a tap) and meet retail demand. With credit crisis becoming hot topic since then, scenario 1 (retail market going nuts) is happening quicker than I expected.
Cooksongold.com (UK), 1000g silver bar = ?256.85 = $451.13 = $13.98 per ounce or a premium of $2.93, + VAT at 17.5%, in stock.
MTB - Gold and silver dealer in NYC has no gold, silver, palladium or platinum. Nothing. They do not know if they can get any. The guy I spoke to this Monday morning said they might be out of business soon..
EBAy on Sunday:
1 oz buffalo-$1,000
10z. gold eagle:
Ebay on Sunday:
1 oz. gold buffalo: $1,000
1 oz. gold eagle: $960
1 oz. Krugerrand: $925
roll of silver eagles: average about $390
100 oz silver bars: $1600.
Ebay is becoming the real PM market and probably the only consistent place to find physical for immediate delivery. the premiums are going way up or looked at another way the price has held firm even though the comex/spot price is falling.
No silver coins nor bars in Brussels available.
Some intermittently available on ebay, like one or two coins…not for serious money.
Perhaps Antwerp, but that could be black market.
I just came back from my local dealer, who has no silver other than a few individual Eagles marked at $22, and a few 1/10 oz Gold Eagles (as well as Maples and Krugerrands).
I was there a week ago, and picked up the last of his 2008 Silver Eagles ($360 for a roll). He bought those when silver was around $15, and has not restocked since.
I asked him today if he had been trying to get more silver stock. He hadn’t tried within the last week, being busy with a show, and restocking gold.
In Victoria on Friday Sovereigns were selling for 275 Canadian and Buffalos for 1235. I bought one of 6 of the latter when I heard they’d been discontinued. The dealer had just finished buying all he could find and had come up with…1 Buffalo. He had a handful of silver maples @ 40 and one sheet of 10 for 360 Canadian. No gold maples available. A 1 oz JM platinum bar >1500.
Can anyone explain to me why gold stocks are destroyed today? I just noticed that the XAU broke it’s long term uptrend and is now in bearmarket territory. I you have to believe the gold stock indices, gold should trade below $450. Very strange…
dieuwer, gold stocks are suffering because of the fall in the Dow. This is due to hedge fund selling and others selling to cover their margin calls. This can not last however with producers pulling gold out of the ground with gold at 850+. I mean, these companies are going to be kicking ass and paying dividends.
PPT is at it again: massive printing of dollars to buy DOW futures in the last 15 mins of trading, and dumping paper silver to scare holders of physical metal.
I guess “Silver” is a bit of a commedian (comment at 4:44). He states the question of the day i.e. “What affect will slowing industrial usage have on the availability and therefor the price of silver? He then tells us he took the time to consult with some of the mining companies he owns stock in and then………..he does not tell us what they had to say!
If you are still there please . . . . . .finish the tale.
from Halifax, Nova Scotia. Not a big town, local dealer has nada. Some junk 1$ and 50 cent. Selling for $10 = 16.67 can/oz. He sells what he gets right away. Just sold about 20 silver eagles for $19 each. Quick conversation, he believes silver should be 25 right now or higher. Is in the manipulation camp.
Not that I’m trying to promote paper metal or anything…
Is CEF’s “sizable” premium (9% at the moment), really all that high for a verifiable vaulted proxy for real metal (assuming it is), when there is a 45% premium on Silver Eagles and a 14% premium on a 100 oz bars deliverable from Tulving?
If CEF is a valid proxy, shouldn’t its premium continue to rise to reflect these rising physical premiums, as opposed to merely being an indicator of the fund fees consuming its assets over time?
Tulving is going the extra mile to get his metal, directly from refiners; Johnson Mattey out of Salt Lake and Kruggerands out of S. Africa. He deserves your business and I have given him mine and refer every one I tell about gold and silver to go to him. I have been in the precious metals since 1970 and I had speculated that something like this would happen; people are leaving “paper” metal (futures and stocks) for the physical world…the real world by the way. You can trade in and out and back and forth, but unless you take your profits (i.e. take physical delivery) off the table and leave the casino, it doesn’t count.
I would also recommend “investing” in brass, copper, lead, and steel (if you know what I mean) because “things” will get really bad, very soon.
HERES A BULLET FROM MY TRADING PLATFORM TONITE.
Dow Jones is now up significantly from the bottom of 9,518 on news that the Fed is working with the US Treasury on plans for a move into unsecured lending in the hope that this extreme step could help bring credit mkts back to life. As well as unsecured lending to banks, this could lead to the Fed directly purchasing commercial paper or funding a SPV set up to do this. (Source: Financial Times)
IF YOU DONT PAY FED SENDS IN THE BOYS.
PRINTING PRESSES AT FULL STEAM AHEAD
The Fed is already purchasing commercial paper, in fact that is what the first helicopter drop was all about! Stay tuned…
There is more and more b.s. flying around about gold and silver shortages
(i.e. Hommel, Butler). Kitco has virtually nothing to sell. On the surface, it looks like Hommel/Butler are correct.
However, platinum is not one of the “manipulated” monetary metals by concentrated shorts, yet it is down what, 60%?, and there are no platinum/palladium coins to be had.
I see shortages of products, not metal; as per Bron Suchecki’s link to gold chat blog.
I have taken delivery of 65×100oz silver bars from Kitco not long ago. The bars were ‘old’, in horrible shape and none from the same batch. None of them was ‘new’. All of them were trade-ins via their repurchase facility. However, Kitco has plenty of 1000oz bars. They are easy to get but difficult to get rid of later.
Tulving deserves my business? Take that altruistic crap somewhere else. Tulving is going the extra mile to sell more bars to make more money for himself, as he should. Judging from the huge premium he is making a killing to. You should buy from the most reliable dealer that gives you the best premium. Tulving is no more reliable than some of the others offering smaller premiums and better deals.
Some European pespective. ProAurum Germany supposedly the largest retailer (shop&online) of bullion in Germany (also present in Austria and Switzerland) yesterday shut down his online shop and no longer accepts telephone or fax orders because of unbearable und unfullfillable orderflow !
Austrian refiner OEGUSSA increased bar production ten times trying to keep up with demand.
Update from New Zealand
Gold $1550.00 an oz (spot 1414.77) 9.55% premium
Silver $720.00 a kg (spot 595.42) 20.9% premium
Oh… delivery greater than 6weeks
Roland: All commodities markets are manipulated, mostly by the commercials some more than others and some with govt. assistance/blessings.
In fact make that all markets are manipulated period!!!
If it was a free market there wouldn’t be shortages and there would always be willing buyers and sellers.
I decided to invest 5% into SLV. My bullion allocation is now 5% SLV, 10% physical silver, and 15% physical gold. Rest is cash and waiting to be deployed on the short side and in gold stocks.
I just noticed this on Kitco’s homepage
While I consider this premium still far too low, it is interesting to see they’re responding to market pressure.
Well I ordered some silver today, from a mint the family has been dealing with for over 20 years. The wait time is 10-12 weeks, this has never occured in the 6 years since I started buying silver. Also I found something that was very interesting in my conversation. When placing the order my friend indicated they were about 260,000 ounces in hole for orders and he expected that number to continue to increase. This number has come about in the last month or so he indicated. I asked what was the problem, couldn’t they mint enough bars. The reason I asked was because other places I speak to always tell me they have the silver but can’t mint the bars fast enough. His point blank response was, they did not have the silver to mint the bars. I asked then how is it you can sell something you don’t own. I said thats almost the same as the paper markets, he indicated there suppliers guarantee the silver at that price. I said what prevents them from defaulting if silver jumps up in price and selling it to a higher bidder or buyer. He did not comment much either way on that subject.
Spoke to longtime dealer Wexford Capital Management yesterday (his website is http://www.goldsilverbullion.com/default.htm#WCMpricing). His prices for Ag are all percentage premium calculated and look really good. The problem is he won’t lock in any prices until 3 weeks out (at a minimum, could be longer), until he has firm guarantees from his suppliers that inventory can be secured. Then I asked him once we are at the point where prices can be and are locked in, what time frame does he see delivery? He said that’s even more difficult to determine, maybe 4-5 weeks from when prices are locked in.
Premiums in Spain and Austria
I have only been able to locate two official dealers in Spain and their premiums are higher than any I have seen in other countries. The difference in their prices has also increased (ie the difference between the two dealers). Also, last week one of them was almost out of products, now they are stocked up again, but not with much of a coin selection.
1 kg gold bar: 25.429 euros at one and 22.364 at the second dealer.
100g gold bar: 2.652 and 2.303 euros
5g gold bar: 163 and 147 euros.
There are more bars but the above should indicate the scale of prices relative to amounts.
One dealer sells the Swiss Argo Heraeus bars and the other sells a Spanish product, Sempsa.
1oz. Kruggerand: 831 and 760 euros
1oz. Silver Philharmonic: 20 euros (plus 16% VAT)
1kg silver bar: 571 and 389 euros (plus 16% VAT)
The situation in Austria seems to be different. The other day I was talking to someone from a bank who was not aware of any difficulties in supplying gold or silver products, at least in that bank.
The premiums are also lower than in Spain. The prices on the left below are what they pay when buying back and on the right what they charge (prices in euros):
Philharmoniker 1 oz 654,00 684,00
Philharmoniker 1/2 oz 330,00 348,00
Philharmoniker 1/4 oz 164,50 180,50
Philharmoniker 1/10 oz 66,50 74,50
Goldbarren 1 Gramm - kinebar 18,85 30,85
Goldbarren 2 Gramm 40,50 54,50
Goldbarren 5 Gramm - kinebar 108,00 124,00
Goldbarren 10 Gramm - kinebar 213,50 231,50
Goldbarren 20 Gramm 420,00 444,00
Goldbarren 50 Gramm 1.048,00 1.086,00
Goldbarren 100 Gramm 2.097,00 2.157,00
Goldbarren 250 Gramm 5.225,00 5.365,00
Goldbarren 500 Gramm 10.440,00 10.720,00
Goldbarren 1000 Gramm 20.880,00 21.360,00
1 oz Britannia 654,00 688,00
1 oz American Eagle 654,00 688,00
1 oz Maple Leaf 654,00 688,00
1 oz Krugerrand 654,00 688,00
1 oz Australischer Nugget/K?nguruh 654,00 688,00
Mariatheresientaler unpoliert (UNPOLISHED) 4,00 10,50
Mariatheresientaler poliert (POLISHED) 4,00 17,00
1 OZ PHIL.SILBER2008 7,50 12,50
My local dealer was cleaned out of Gold Eagles yesterday, and is now working his way through his Maple and Krugerrand inventory.
He commented that he was looking at running out of bullion for the first time ever.
I just noticed that Tulving has substantially increased all of his premiums today, with the exception of 1000 oz silver bars, which are at $.49 over spot.
100 oz silver bars are now at $1.99 over spot (up from $1.49),
Silver Eagles are now at $5.99 over spot (up from 4.99), and
1 oz Gold Eagles are at $99 over spot (up from $69).
Meanwhile, paper silver is sitting at $10.17. What a joke.
If this keeps up, I might just have to sell a kid or two and buy those super cheap 1000 oz bars!
Well, looks like there is a rush to physical PM in Austria after all, and the Mint can?t keep up with demand, they are working all possible shifts and still aren?t getting enough out. Source: BBC.