04 December 2012

Plenty of silver?

Two "insiders". First Adrian Ash of Bullion Vault on This Week in Money podcast (19:32 minute mark):

"Silver is a very interesting case at the moment, there is an awful lot of talk at the moment about silver supplies are very tight, London’s got no silver. I don’t know where this idea comes from - London liquidity in silver has never been so strong, you know there’s plenty of silver around in London right now."

Then Eric Sprott on King World News on his recent PSLV unit issue:

"It’s around nine million ounces. For the most part we will have purchased that already. I don’t know that we have all of the delivery yet because we just had the green shoe exercised on Thursday night. So that purchase has been made, but obviously we wouldn’t have delivery yet. I don’t think we’re going to have delivery problems. As you know, I’ve always hoped we can’t get that last bar (of silver) because we’ll publicize it. But so far the silver has come in."

Contrast with TF Metals Report:

"The commercial short position has grown so extreme AND the physical supply has grown so tight ... We KNOW that this silver manipulation cannot go on forever. In fact, the increasing physical supply tightness makes this eventuality a possible near-term event."

And Alasdair Macleod at GoldMoney:

"... the bullion banks which are short in the silver market are potentially in serious trouble, unless somewhere there is a pot of physical silver they can dip into. There isn’t ... There is no other identifiable source of silver, other perhaps than some producer supply, and there is anecdotal evidence that on every dip, cash silver migrates from West to East, confirmed by silver being constantly in backwardation."

Interesting difference of opinion. I'm not sure exactly how many weeks "near-term" equals, but surely no more than a few months at most? Look forward to the resolution, but while the future is uncertain, I can guarantee 100% that no one will say they were wrong.

BTW, I do not get why this claim that silver is in backwardation has been popping up recently. Backwardation is when a futures price is lower than spot (or lower than the current month). When I look at the silver futures contracts prices I see the futures prices rising from Jan 13 through to Sep 14 then sloping downwards, but only falling below Jan 13's price after the Dec 16 contract. It is an odd shaped curve, notwithstanding the illiquidity of the far months, but certainly not backwardation.


  1. Bron, I have to ask - is it still the opinion of the Perth Mint that silver is also easily obtained? (to add a fifth opinion to your list).

    I noticed Perth Mint was doing some advertised discounted specials on buying bulk coins in bulk the other day - your sales people have it all wrong ;) Larger deliveries of silver attract higher premiums up to 30% more to stop people from taking delivery !!! I read it a few months ago.

  2. We have a good supply of silver out of refinery at the moment, more than enough to meet the demand for our coins and bars, so no shortages at this end.

  3. Is it just me or does anyone else notice that most of the people shouting "Silver shortage" have a vested interest?

  4. Bron,

    Thanks for this post (and all of your others).

    Any way you can set it up so that your blog emails out new comments? Instead of having to go into RSS reader?

    I prefer having everything dump into my email if at all possible.



  5. I only found a gaget that allows you to subscribe to posts by email, I've added it to the left side of the blog.

    Alternatively you can put the RSS feed into Microsoft Outlook.