Chris Duane of Silver Bullet,
Silver Shieldis one of the true “good, smart
people.” One of the growing ARMY of silver experts, he recently created
a fantastic video chronicling the history of silver premiums over the past
decade…
http://www.youtube.com/watch?feature=player_embedded&v=jiUN-j4QlTk
“Premiums” are the difference between the “spot” price quoted in fraudulent PAPER markets like
the New York COMEX – and what people actually
pay for real, PHYSICAL metal.
PHYSICAL prices are ALWAYS higher than spot – for a variety of
reasons. From a practicality
standpoint; the costs of refining,
storage, and transportation must be
passed along to customers. However, these objective costs are supplemented by subjective “premiums”;
based solely on
varying demand trends.
During “normal” conditions, PHYSICAL premiums are typically 3%-5%
above spot, give or take – depending on the specific product. However,
in times of tight supply – driven by either FEAR or GREED-based buying;
premiums can sharply expand;
as we saw in January and
February after
the U.S. Mint suspended Silver Eagle sales for nearly two weeks…
US
Mint Out Of Silver Coins – Suspends Sales
Subsequently, Silver Eagles spiked to between $3/oz
and $5/oz above spot; yet, still the Mint SHATTERED
its all-time monthly sales record. Moreover, this occurred amidst no
specific “crisis” to point to…
The most notorious premium EXPLOSION occurred in Fall 2008; when the
Cartel viciously attacked
PAPER prices to prevent the masses from realizing gold and silver are the
only true safe havens
in times of political,
economic, or social crisis. As it
turns out, they actually were
safe havens, as I am about to explain.
During Global Meltdown
I, PAPER gold only declined 30% at its trough, and quickly
recouped ALL losses – while equities continued to plummet – in early
2009. As for PAPER silver, it was smashed
from $21/oz to $8/oz. However, the PHYSICAL
price NEVER fell below $15-$16/oz; as demand skyrocketed and premiums
surged to more than 100% of spot. ALL global mints sold out for months; and just two years
later, prices raced up to $50/oz – where again,mints
sold out and premiums soared.
Below is a table based on Chris Duane’s video; notating each major
silver premium spike of the past decade. Notice how they occurred in both up and down markets;
as unlike non-monetary
assets, gold and silver have inelastic
demand. Moreover, see how the time frames between premium
spikes has dramatically shrunk
in recent years – to the point we’ve now had four in the last 22 months alone…
Even today – following the Cartel’s most prolonged, egregious
PAPER raid I can remember; we are seeing selected premium elevations and
demand delays in the ultra-thin PHYSICAL silver market. For example,
“Junk silver” – i.e., pre-1965 dimes, quarters, and half-dollars with 90%
silver content” – are seeing $2+/oz premiums
compared to their usual valuation closer to spot; with delivery delays in the
3-4 week range.
Finally, there’s no
better way to demonstrate how tight the PHYSICAL silver market is
than to view the “futures strip” – depicting futures prices for contracts in
“out” months and years. Per below, silver is now in backwardization out to May (spot price higher than futures
prices); with NEARLY ZERO Contango out to the
DECEMBER 2017 contract!
Silver Futures – BarCharts.com
Keep your eyes on PHYSICAL premiums versus the fraudulent PAPER prices; as
they give a good indication how tight the real
market is. Just give us a call at Miles Franklin, and we’ll
be happy to let you know what they are at any time. Ultimately, PAPER
markets will disappear entirely…
Jim Sinclair – Paper Markets to
Disappear As Gold War Rages
…and when they do, the odds are that PHYSICAL supply will be gone…
Read
the Friday Afternoon Wrap-Up for 3/8/2013 and the Monday Morning Commentary
for 3/11/2013
