Tag Archives: silver

Does Gold’s Breakout Mean Silver Is On The Launchpad?

Gold and silver prices continue to push higher. They’re starting to get some attention from the mainstream, too. A new uptrend in gold is clearly underway, but silver’s performance has so far trailed gold’s. Let’s take a look at the price behavior over the past six-plus years of both metals to see if we can gain any insights about silver.

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If History Still Matters, Silver Is Poised For A Huge Move

It’s been a pretty good couple of months for precious metals, but more so for gold than silver. Both are up but gold is up more, and the imbalance that this creates might be one of the major investment themes of the next few years.

The gold/silver ratio – that is, how many ounces of silver it takes to buy an ounce of gold – has bounced all over the place since the 1960s. But whenever it’s gotten extremely high – say above 80 – silver outperformed gold, sometimes dramatically.

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As this is written, the ratio stands at almost 93x, which is not far from its record high. With precious metals finally breaking out of a five-year siesta – and the world getting dramatically scarier – it’s not a surprise that safe haven assets are catching a bid. And it would also not be a surprise if the current move has legs, as central banks resume their easing and geopolitical tensions persist.

Combine a chaotic, easy-money world with silver’s relative cheapness and the result is a nice set-up, for both the metal and the stocks of the companies that mine it. Here’s the one-month chart for First Majestic Silver (AG), a large primary silver producer. It’s up about 40%, even while silver underperforms gold. Let the metal start to outperform in the context of an overall precious metals bull run, and stocks like this will go parabolic.

https://www.zerohedge.com/s3/files/inline-images/bfm24B9.jpg?itok=AdGN9Ul2

Source: ZeroHedge

 

The Silver Supply / Demand Crunch In Charts And Video

(by Jeff Clark) The data is in: based on a review of reports from multiple consultancies, the silver market has officially entered a supply/demand imbalance. The structure now in place sets up a scenario where a genuine crunch could occur.

The silver price has been stuck in a trading range for five years now. But behind the scenes, an imbalance has been forming that could potentially lead to price spikes based solely on the inability of supply to meet demand.

That statement isn’t based on some far-out projection or end-of-world scenario. It comes solely from the latest supply and demand data. As you’ll see, it demonstrates just how precarious the state of the silver market is. And as a result, how easily the price could ignite.

Here’s a pictorial that summarizes the current state of supply and demand for the silver market. See what conclusion you draw…

Silver Supply: It’s Fallen and It Can’t Get Up

Annual supply is in a major decline. And the downtrend is getting worse.

Check out how the amount of new metal coming to market has rolled over and continues to fall.

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Continue reading

U.S. Mint Runs Out Of Silver Eagle Bullion Coins… 2nd Time In Six Months

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(Kitco News) The silver market is seeing a turn in fortunes as demand for physical bullion picks up, with the U.S. Mint selling out of 2018 and 2019 American Eagle silver coins.

The mint issued a statement late Thursday saying they had run out of last year’s and this year’s dated one-ounce coins. “Market fluctuations have resulted in a temporary sellout of 2018 and 2019 silver bullion. Production at the Mint’s West Point facility continues and when sales resume, silver bullion will be offered under allocation,” the mint said.

Year to date the U.S. Mint has sold more than six million coins, the best start since 2017. The surge in sales comes after a dismal 2018 which saw the lowest coin sales in 11.

According to some analysts, silver is attracting renewed investor attention as both precious metals and base metals trade near multi-month highs.

Following in gold’s footsteps, silver prices saw some selling pressure Thursday as momentum traders took profits as the market was trading near a nine-month high earlier in the week. Spot silver futures on Kitco.com last traded at $15.77 an ounce, relatively unchanged on the day.

https://www.clivemaund.com/charts/silver6month170219.jpghttps://www.clivemaund.com/charts/silver10year170219.jpg

However, analysts have noted that despite Thursday’s selling pressure, technical momentum points to further upside.

“The silver bulls still have the overall near-term technical advantage. Prices are in a three-month-old price uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the January high of $16.20 an ounce,”said Jim Wyckoff, senior technical analyst at Kitco.com.

Andrew Hecht, creator of the Weekly Hecht report, said that investors have been quietly accumulating silver since the start of the year with open interest has risen 25%.

“Silver is the kind of metal that sits hidden in the brush like a wild beast waiting for an opportunity to pounce,” he said in a report Thursday.

He added that he thinks silver has the potential to push to $21 an ounce in 2019. However, he said that the first level of significant resistance he is watching is at $17.35 an ounce.

Source: by Neils Christensen | Kitco

JP Morgan BUSTED for Rigging Precious Metals Markets For Years

https://s16-us2.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Fmedia.salon.com%2F2013%2F02%2Fjamie_dimon.jpg&sp=0b75c357def09705e3b7052650b2dcb9JP Morgan is the custodian responsible for safe keeping physical silver backing the SLV ETF

  • John Edmonds, 36, pleaded guilty to one count of commodities fraud and one count of conspiracy to commit wire fraud, price manipulation and spoofing.
  • Edmonds, a 13-year J.P. Morgan veteran, said that he learned how to manipulate prices from more senior traders and that his supervisors at the firm knew of his actions.

An ex-J.P. Morgan Chase trader has admitted to manipulating the U.S. markets of an array of precious metals for about seven years — and he has implicated his supervisors at the bank.

John Edmonds, 36, pleaded guilty to one count of commodities fraud and one count each of conspiracy to commit wire fraud, price manipulation and spoofing, according to a Tuesday release from the U.S. Department of Justice. Edmonds spent 13 years at New York-based J.P. Morgan until leaving last year, according to his LinkedIn account.

As part of his plea, Edmonds said that from 2009 through 2015 he conspired with other J.P. Morgan traders to manipulate the prices of gold, silver, platinum and palladium futures contracts on exchanges run by the CME Group. He and others routinely placed orders that were quickly cancelled before the trades were executed, a price-distorting practice known as spoofing.

“For years, John Edmonds engaged in a sophisticated scheme to manipulate the market for precious metals futures contracts for his own gain by placing orders that were never intended to be executed,” Assistant Attorney General Brian Benczkowski said in the release.

Of note for J.P. Morgan, the world’s biggest investment bank by revenue: Edmonds, a relatively junior employee with the title of vice president, said that he learned this practice from more senior traders and that his supervisors at the firm knew of his actions.

Edmonds pleaded guilty under a charging document known as an “information.” Prosecutors routinely use them to charge defendants who have agreed to cooperate with an ongoing investigation of other people or entities.

His sentencing is scheduled for Dec. 19. Edmonds faces up to 30 years in prison but is likely to receive less time than that. The guilty plea was entered under seal Oct. 9 and unsealed on Tuesday.

New York-based J.P. Morgan declined to comment on the case through a spokesman. It was reported earlier by the Financial Times.

J.P. Morgan learned about this case only recently, according to a person with knowledge of the matter. A recent regulatory filing from the bank didn’t make any mention of the issue.

Source: by Hugh Son & Dan Mangan | CNBC

U.S. Mint Runs Out Of Silver Eagle Bullion Coins Following Demand Spike

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Recent downturns in gold prices and silver prices have spurred a dramatic increase in both old and new bullion buyers snapping up physical precious metals at perceived low valuations.

For many decades now, the US Mint American Silver Eagle coin has remained the #1 choice for most physical silver bullion buyers worldwide.

In terms of annual sales volumes and total US dollars sold versus other silver bullion government mint and private mint competitors, the 1 oz American Silver Eagle coin is still the most highly purchased form of silver bullion worldwide (find updated US Mint sales data here).

Not surprising, with this recent downturn in precious metal prices, available silver bullion inventories are beginning to sell out and back order.

We foresaw and wrote about this shrinking silver bullion supply situation coming a weeks ago in SD Bullion’s new research blog.

Thus today, the following communication issued by the US Mint’s Branch Chief was not surprising to us:

Date: Wed, 5 Sep 2018

Subject: 2018 American Eagle Silver Bullion Coins Temporarily Sold Out

This is to inform you that due to recent increased demand, the United States Mint has temporarily sold out of its inventories of 2018 American Eagle Silver Bullion Coins.

All orders received prior to this communication shall be honored and settled according to pre-agreed upon value date arrangements.

The United States Mint is in the process of producing additional 2018 American Eagle Silver Bullion Coins. We will make these coins available for sale shortly.

Please let me know if you have any additional questions.

Jack A. Szczerban

Branch Chief, Bullion Directorate

United States Mint

Of course this latest US Mint sell out only pertains to Silver Eagle coins.

US Mint American Gold Eagle coin supplies still stand at reasonable, albeit recently lightened levels.

For seasoned bullion buyers, this latest sell out of US Mint 1 oz American Silver Eagle Coins is not a new phenomenon.

We have seen this happen in various years past, including periods of bullion product rationing, sell outs, etc.

What is different this time around is the low Silver Eagle coin volumes being sold by the US Mint month on month, compared to somewhat recent years of 2009 through 2016.

See below,

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It appears like much of our industry, perhaps the US Mint has cut down on staffing, even silver planchet inventory levels, and other resources required to meet this latest spike in silver bullion product demand.

Typical to past US Mint silver sell outs and coin rationings, product and price premiums usually also increase in order to meet the silver bullion supply demand equilibrium. Smart bullion dealers are not going to sell out of their shrinking inventories without a reasonable profit to match. 

You can see various 1 oz American Silver Eagle coin premium price over spot spikes in the following chart below.

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The price premiums spike coincide with the fall 2008 fiasco where virtually any and all bullion dealers ran out of bullion inventories, the early 2013 allocation rationing, and the middle 2015 sell out and order shut down.

Historically price premium spikes for American Silver Eagles tend to flow into other silver bullion product premiums. In other words, if the price premiums for Silver Eagles pops higher, you can expect various price increases and sellouts in competing silver bullion products to also ensue.

US Mint American Eagle Bullion Program 2010 Amendment

Yet even most industry onlookers and bullion buyers do not know that a small change to US law was made in 2010. It allows the Secretary of the US Treasury by fiat, and not outright public demand per say, to alone determine what quantities of American Silver Eagle coin supplies are sufficient to meet ongoing demand.

Pre 2010 amendment and law change:

(e)Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities sufficient to meet public demand,

Post 2010 law change:

(e)Notwithstanding any other provision of law, the Secretary shall mint and issue, in qualities and quantities that the Secretary determines are sufficient to meet public demand,

We do not expect the recent sell out of Silver Eagle coins to the be the highest priority of Secretary of the Treasury at the moment.

Bullion buyers should expect further silver bullion supply constraints both currently and ahead, especially if silver spot prices dip into the $13 or $12 oz zone some respected technical analysts have been calling for weeks / months in advance.

The following US Mint Silver Eagle coin annual sales chart encompassed the entire history of the US Mint American Eagle Bullion Coin Program. As you can see, the 2008 global financial crisis took the program to another level entirely.

https://www.silverdoctors.com/wp-content/uploads/2018/09/US-Mint-Silver-Eagle-sellout-annual-silver-eagle-coin-sales-1986-2018-Silver-Doctors.png

Even 10 years after the greatest financial crisis started, the worst since the 1929 depression, there are still both new and an already established base of silver bullion buyers who continue to aggressively buy silver bullion on spot price dips.

This recent US Mint sell out is just one example of that fact.

The following US Mint tour video was cut in 2014, but it’s still applicable to the way in which the American Silver Eagle coins are produced today. The only real difference is that the US Mint is currently selling less than ½ the volume it was then, yet still having issues meeting demand spikes in the short term.

More than likely the US Mint is currently dealing with a shortfall of silver planchets on hand.

The silver used in the program does not have to be mined in the USA as that law too was amended many years back. The US Mint does use silver coin planchet suppliers from Australia as well as domestic suppliers like the Sunshine Mint.

In terms of silver bullion on hand, don’t expect the Secretary of the US Treasury to have any available as they rely on private silver planchet suppliers and ‘just in time’ delivery for their program.

As most bullion buyers know, en masse the US government figuratively sold silver out in 1964.

The fact that the US government’s often clunky silver bullion coin program remains the largest in the world, illustrates just how tiny the silver bullion industry remains in the grand scope of global finance and economic financialization.

Sneaky law amendments aside, it does not take much silver bullion demand to break the industry’s small supply demand equilibrium.

Source: by James Anderson | SilverDoctors.com

 

Silver’s Slide Signals Scary Scenario For Stocks and Economy

Silver is down 1% year-to-date, while the dollar has tumbled 3.5% and gold has surged 4%, sending a possible warning signal to the broader market.

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This dramatic divergence between gold and silver prices has sent the ratio of the two to multi-year highs.

The divergence between the two means prices for gold are 82 times those of silver, which is 27% more than the 10-year average.

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As The Wall Street Journal reports, a higher gold-to-silver ratio is viewed by some investors as a negative economic indicator because money managers tend to favor gold when they think markets might turn rocky and discard silver when they are worried about slower global growth crimping consumption.

“There’s just not many people looking to buy silver at this point in time,” said Walter Pehowich, senior vice president at Dillon Gage Metals.

“There’s a lot of silver that comes out of the refineries, and they can’t find a home for it.”

The precious metals ratio last stayed above 80 in early 2016, when worries about a Chinese economic slowdown roiled markets, and in 2008 during the financial crisis. The ratio’s recent rise comes as speculators have turned the most bearish ever on silver and inventories in warehouses have risen, a sign there could be too much supply.

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While investors have flocked toward gold with equity markets wobbling, money managers seeking safety or alternative assets haven’t favored silver.

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“It’s not seeing great hedge demand because it’s just easy to go to gold,” said Dan Denbow, who manages the USAA Precious Metals and Minerals Fund . “Gold is a bit more predictable.

As WSJ conclude, some analysts think silver’s underperformance is a negative sign for precious metals broadly because it is a less actively traded commodity, making it more vulnerable to bigger price swings on the way up and down.

Source: ZeroHedge