Gold and Silver: Prices and Supply
February 19, 2013 in Economics
This past month, gold prices have dropped about $100 and silver has dropped a few dollars. This would seem like good news, but there are some occurrences happening simultaneously that make this quite strange.
The cheapest silver to purchase -that I could find online at a reliable web site called APMEX- were some cull silver dollars. (Cull is more or less the dirtiest and most worn type of coin or precious metal.) These have been priced about $2 UNDER the spot price since I have began searching for cheap silver going back to early 2012. These once-cheap-coins are now a dollar or more OVER spot despite the fact that the silver prices are dropping. This is happening across the board; although the price is dropping, the supply is shrinking as well which causes the asking price to remain above the spot price.
The same thing is happening with gold. There were plenty of fractional coins available just a few months ago. Now, the smallest and cheapest coins are gone. The ones that are left are being offered at an increasingly wider profit margin; the asking price is rising higher over the lowering spot price. The best fractional coin for its value was the Dutch Ducat (0.1106 oz) having been offered at a mere $5 over spot. That coin is no longer available. Most coins have increased the asking price to at least $12 over spot, but I have also seen it go over $50 in recent days.
Normally, this increased gap between the spot prices and asking prices would indicate that the bullion companies are trying to get as much money as they can while the prices are dropping. However, I submit to you that it is because the supply is running out. I talked with an APMEX representative through their customer help chat boxes, and they confirmed: their supplies are drying up.
Central Banks, China, Russia, and a list of fat cats have been buying enormous quantities which are starting to catch up to the market. The prices drop to compensate for the massive boost in sales while the profit margins (asking price over spot price) remain high until this little bubble bursts, and the void must be filled. And I think this bubble will burst sooner than later. (Perhaps Alex will have Gerald Celente or Lindsay Williams on this week to expound upon the gold markets.)
If you are unable to splurge on gold at this critical pre-bubble-bursting-period, I recommend bullets, seeds, water filters, and solar charging devices. I think we are at that stage; we have fallen over the edge and will hit the ground soon -barring something unforeseen to catch us.
Harken, evildoers: don’t tread on me!