Wednesday, April 24, 2013

Worldwide Silver Shortage Pushes Silver Eagles Premiums to All Time High

In just the past few weeks the premium has nearly DOUBLED, despite the silver price dropping sharply and investor sentiment supposedly at multi-year lows. The manager of the shop told me the silver shortage was worldwide and it was more difficult than ever to secure supply and keep up with demand.
Ebay prices are even higher at around $32 per ounce for silver eagles or $9 over spot price. This is a premium of roughly 40%! Silver eagles from a few years back are selling for $700 or more per roll of 20, which is $12 over the spot price and a premium of more than 50%.
Whatever the truth may be, the disconnect between paper prices and free-market real-world prices has never been greater. There is definitely something strange happening in order to create an environment where increasing demand and supply shortages somehow results in lower prices. This breaks the most fundamental economic law of supply and demand, supporting claims by GATA and others that gold and silver prices are being manipulated.

PS. I had the same experience and observation while making my own silver bullion purchase.

Wednesday, April 17, 2013

Paper Gold Silver Price Down but Physical Gold Silver Demand Up

Although the price of Gold and silver is down in the recently correction, the demand for physical gold and silver is up everywhere, even in Singapore.  Experience precious metal investors will know that this is due to the discrepancy between the paper gold silver market and the physical gold and silver market.  There are actually 2 separate markets going on.  The current smack down in the paper price is causing a surge in demand for the physical metals.

Look at website, all the coins have been snapped up.

So I had to look for another dealer - to find silver coins.  When I got there, the seller Dennis told me that all the Monster boxes have been snapped up.

Then I read in a reuter's report that says, "People are actually buying everything, gold bars, gold coins. People are rushing to get a hand on it. We have a problem meeting the demand because we are unable to get new supply," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore. "There's a huge backlog. It's the same for silver. So far sentiment seems to be improving. Even the price has more or less stabilised."

Friends, we should not be confused and discouraged.  There are 2 different gold/silver markets functioning here.  The paper gold silver market is not reflecting the true market price of the metals because it is a speculative market.  One day the real physical market will prevail when people lose confidence of the financial system in view of all the QEs that are going on the Japan, US and Europe.   

This is one of the best opportunity to stack up more.   People like Jim Rickards, Jim Rogers, Marc Faber, Bill Gross (bond king) Peter Schiff, Eric Sprott, James Grant, James Turk are still bullish about gold and silver.

Finally check out this recent related blog - The Real Price of Gold is More than the Gold Price

Sunday, April 7, 2013

How High Could The Japanese Yen Go With Recent QE?

Hayman Capital's Kyle Bass expects the Japanese yen to weaken significantly (could hit 200 vs US Dollar) against the dollar and says that this is the riskiest time for an investor to be complacent about the markets.  He believed that if the Japanese QE failed, markets everywhere will sell their bonds and the Japanese retirees will loose up to 50% of their retirement savings.

Can BOJ Print Its Way Out Of Japan's Debt Trap?

Haruhiko Kuroda followed in the footsteps of Ben Bernanke and Mario Draghi as he swung the Bank of Japan (BOJ) to unprecedented stimulus in his first policy meeting as governor.

He has promised to to unleash a massive programme of quantitative easing – worth $1.4 TRILLION to double the monetary base by the end of 2014 through buying government bonds.  This is even more aggressive than what Ben Bernanke is doing because Japan's economy is only one-third the size of US. This is truly a race to the bottom in the on-going currency wars.

The idea and motivation behind this move is to encourage companies to raise wages with the hope that consumers will in turn respond by increasing spending, and thus cause prices to rise. They believed that persistent deflation tends to encourage households to hoard their cash, as they wait for prices to fall further.

Japan's debt is already 24 times its GDP.  Here is a video to explain how serious their debt trap is today.  They cannot keep kicking the can down the road without any consequence.  If you are holding or earning Japanese Yen, you might want to quickly convert them into hard assets (eg. real estate, gold, silver, commodities) because they start to lose more purchasing value.