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Tracking Physical Silver Prices

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From the Archives : Originally published November 23rd, 2012
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Category : History of Gold

 

 

 

 

We have repeatedly over the years bleeted about why the silver guru 'smarties' have no info sources within the silver refineries.



From our own personal experiences when the refining inventories are bursting, the retail CASH price for silver will fall. With the COMEX manipulation causing unreliable (misleading) physical silver pricing, shouldn't we be looking at the real supply? What better method than to track refinery inventories. Here's a snippet of ours from a 2007 article :

One more important area that none of the silver newsletters reports on is the crucially vital refining inventories & capacities of the leading silver refiners. Some of you will remember when, I think it was 1998, that the refiners were jammed-up & backlogged with inventory for weeks on end. Knowing this & realizing its significance would have been a clear-cut indicator that silver was due for a fall. I knew this was occurring before the fall because a coin dealer told me by way of his grapevine. One hundred ounce bars were even discounted below the spot price! I don't get paid enough to assemble this reporting feature, but anyone wanting to can get a start at this refining site. Where do silver refiners stand now? What are their silver inventories? Is their silver refining capacity growing or stagnant? What are their lead times from receipt to delivery? What are they paying for 90% coin melt? Sterling?

One large coin dealer this weekend is selling 90% $1,000 face bags (715 silver ozs.) for $9,220 which is equivalent to about $12.90 per silver ounce based on the closing silver spot Friday of $13.16 - that's a very respectable premium discount of -1.98% ! Halves by the bag have all but disappeared at these low prices. Silver dollars went before them, and quarters will be next. If the past is any guide whereby shrinking premiums are an indication of silver availability then silver's price is high enough now to attract coins for melt. Recall that in Feb/March 1980 (all time high peak) the premium dropped to a minus 14-18% range. There is no assurance that the discount will again achieve those discounts we saw in 1980. From what I witnessed in sterling heirlooms going into the pot, there may not be much sterling out there either.

I have two pages up on my web site on this frantic period: Coin World Article on the Big Silver Rush of 1980 , Page 2





The here being that coin dealer, eBay quotes, or from whomever are colloquial, and not always a reliable predictor of scarcity. Whereas the refinery inventories tell you how much is being brought into their warehouse needing refining. We would also expect a smoothed-out tracking history would foretell how hard the miners are being pressed or cutting back. The LBMA has published a lengthy list. Or, this list of 120, mostly U.S. Just selecting several of the larger representative refiners should be adequate to reveal an accurate snapshot of real physical demand coming down the pike. As 70%+ of silver is derived from mining copper, maybe that's a clue as to an ebbing or rising supply. Maybe just a comparison of a refiner's buying price matched with the silver's paper price on the COMEX could tell us a lot more info than what's permitted to come our way, no?


 

 

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