Many times over the last three years we’ve seen shortages develop in the precious metal sector, especially in the silver market. Just recently the US mint ran out of silver coins again. This has happened multiple times over the last several years.
So let me ask this question: Has there ever been a shortage in the oil market? Copper market? Grains market?
No of course not. Why? Because price automatically adjusts to maintain equilibrium and prevent a shortage from ever occurring.
Gold has gone through bear markets before. It had a secular bear market from 1980 to 2001. To my recollection there was never a shortage during that time. As the new bull market started from 2001 till 2007 I don’t recall ever seeing a shortage during that period either. Why? Because price rose along with demand, automatically preventing any shortages from developing. Heck, even during the last big surge from 2008 to 2011 I don’t ever recall seeing a shortage in either of the metals markets.
However, since 2013 not only have we seen multiple shortages, but during this period we have seen regular attacks on the gold market with dumps sometimes it as large as 20,000 contracts, usually in the middle of the night. Again I never saw anything like this prior to 2013.
So my question is: If gold & silver are trading freely, and this is a natural bear market, then how in the world are shortages developing? In a free market, and in every other commodity market in the world, shortages are impossible. They simply never happen. They didn’t occur during the last bear market. Price automatically adjusts to prevent it.
Based on standard regression to the mean principles, this should mean that when the market finally breaks free the rally will be much larger and more aggressive than it would have been naturally, if the metals market had been allowed to trade freely.
The answer is that there are no shortages. The shortages that you see are anecdotal, local, and do not apply to the broader physical market. It doesn’t matter if the US Mint runs out of coins–that absolutely does not equal a shortage. It just means they didn’t produce enough. But supply is readily available elsewhere.
The dream has long been that price would drive down low enough to a point where sellers simply refused to part with supply, thus creating a true market wide shortage. Hey, maybe that happens.
But it hasn’t happened yet.
“supply is readily available elsewhere”
And tell me where this readily available supply is? A coin dealer friend has to wait five weeks for a few hundred lousy ounces of silver. Another well-known dealer in my state didn’t even have ten ounces on hand aside from high-premium (around 50% above spot) coins. Another friend in the industry couldn’t find a few hundred ounces for a client that didn’t involve a waiting period of weeks. If there is no shortage then why do these dealers have to wait weeks on end to get small order sizes? It should be readily available right?
You don’t know what you’re talking about.
I have 100 Canadian Maple Leafs from 2005 in RCM flat sheets, never opened. As you believe I have “no idea what I’m talking about” and that there really are shortages, I am happy to sell them to you for $30.00 USD per coin. That’s a pretty good price for someone who is convinced there are shortages. Alternately, you could buy 100 of these (2015’s), or 1000 of these, at APMEX for $18.38 per coin.
I’ll let you decide, and will wait for your answer.
LOL. Why not sell them to me at spot since you say there’s no shortage and they’re readily available? I will grant you that they’re not as expensive as I’d thought. Don’t know why my local dealers are having a hard time getting them.
+1
Excellent reply……Yes shortges do exist in commodity but it is for short term…There can be various reasons from supply disruption to political upheaval…but it is short term in nature because a freely trading commodity will make itself available where the demand lies. I don’t recall any public having any problem buying any commodity since 2013….I am getting tired of these gold conspiracy theories and hey get weirder and weirder with evry passing day……..someday they will be proven right but they have been wrong for more than 2 years !!!!!!!!!!
Need to eat that humble pie !!!!!!!!
You’re talking about shortages at the mint! Essentially they’re a retailer, they cap their production annually, this is not a problem of sourcing material.
Investors can enter the spot market an buy all they like. Or they could stand for delivery!
The “dumps” have existed for decades, these are trading maneuvers. When 20,000 contracts are purchased at 2am to push gold up by $30, there is oddly never a cry of manipulation.
Without question manipulation occurs both upwards and downwards as bullion banks make money by trading against the trend funds.
+1
Gold almost at $1130 and GDX struggling to try and stay above $15
naturally all that means that precious metals are manipulated, controlled and finally set free by … the illuminati … we are mere pawns in their game, therefore if one sincerely believes that, then one should know their next move and would be on the right side of it
Maybe I’m just impatient, but this doesn’t really seem like the most powerful rally of the bear market.
It is stupid to say there is no shortage in precious metals. They are rare compared with other commodities. When everybody wants them, there won’t be lots of them in the market. That is why they can be the money for centuries. Rareness is the key property of the precious metals. If you don’t understand this, you don’t know about precious metals.
And of course they turn the NASDAQ green for the day! Truly unreal.
Funny looking at the financial markets reaction to the Fed minutes – some think a rate rise is now definite, others think a rise is less likely.
Oops, typo – I meant the reaction of various financial websites.
I dare you but is there anyone here that can give me ONE fundamental reason why gold should be or turn into a bull market ?
Gold will never be money or money reserve again. It is going to be a status. Just like a race horse that can be shown around but demand for it will be simply grounded.
That one is easy. Global money printing on a staggering scale.
But Gary – you are the first here that does not believe gold is money, do you ? If gold is not money for you how come you believe there is correlation between printing money and gold ?
It amazes me how emotional people get when it comes to Gold. Take this commenter above, he’s practically delirious and in denial of the facts that Gold always will be, always has been and will continue to be money. Problem for him is he is clueless to the ideals of what is real money and what is fiat currency.
Me I like to own a buffet plate of everything…
Money is what the market chooses to be. And as we see the markets are not allowed to choose freely. Do we see any indication that this will change ? Yes ? What is it ?
go to jim willie’s website http://www.goldenjackass.com
you will know the answer why gold will still be the money.
Sorry Boys . . . . But there are delays . . . . try buying 10 kilos of Gold at a Swiss bank these days and see how long you got to wait !
Gold should run into a lot of resistance at 1150-1160, assuming it hasn’t topped out around 1130ish.
When enough people realize that even tho the market tells you that you have a hand full of money and instead it is a hand full of confetti there will be no augment whether gold is money or not.
The central planners are manipulating all the markets. Manipulated markets do not achieve price discovery,there for market results can be untrustworthy. My advice, buy gold bury it and wait for the intrinsic value to shine through the purple haze
A few follow up notes on shortages:
1. All shortages are local, except when they turn global (which is rare).
2. Various commodities have experienced local shortages continually, throughout the past 15 years. West Coast gasoline, natural gas in the Northeast, coking coal in China, and yes, silver or gold at your local dealer.
3. you can buy monster boxes of Canadian Maple Silver Leafs right now, today, at APMEX…along with a dozen 10 ounce bars. No shortages.
Repeat: if and when a true global shortage in precious metals not only develops but is sustained, you will know it in real time. Holders will refuse to part with their metal. Like I said, maybe that happens. But as of today: no shortages exists and raising your voice won’t make it so.
Ofcourse the gold price is manipulated just like interest rates are manipulated. Ofcourse the Fed thinks it is managing the economy for the benefit of society. One person’s “manipulation” is another person’s “management” .
History tends to show that when the government takes control of society (ie communism) things work out worse than when they allow more individual freedom (“democracy”).
So I would be expect if the Fed takes too much control of the economy instead of letting it be free i will end badly just like Russia collapsed in the 90s after communism.