Sep 142015

Last week I got into a Twitter debate with Jan Nieuwenhuijs ‏(aka Koos Jansen) on his tweet about Peter Hambro’s Bloomberg interview:

I sarcastically replied that if it was virtually impossible to get physical “then Bullion Vault and Gold Money must be running fractional scams, alert James Turk immediately to put a stop to it”. As I said in this post, when physical pool products start to increase premiums or limit inflows, then you know there is a real shortage.

Don’t get me wrong, there is a shortage of retail coins and bars – at The Perth Mint we are seeing huge demand for silver and we are trying to get back in stock on 1oz Koalas but struggling to keep up. However, turning what is a production capacity issue into a meme that there is a shortage at the wholesale level and that the gold and silver markets will “fail” or “default” is fear mongering.

The level of hype does get quite silly. I saw one dealer referring to the high price of junk bags of silver relative to spot as an example of backwardation. Some got very excited about this Financial Times reference that the “cost of borrowing physical gold in London has risen sharply in recent weeks”, which would not have been news to anyone following the work of Keith Weiner, whose basis charts showed increasing scarcity since mid-July.

Zero Hedge, unsurprisingly, got into the act with this claiming that the shortage of US Mint coins was proof that there was no metal in Comex warehouses:

“IF that silver were actually in the [Comex] vault, the U.S. mint could buy a spot contract – September has a silver contract open – and take immediate delivery.”

I find it surprising that Zero Hedge/article’s author are completely unaware that the US Mint cannot accept 1,000oz bars and instead has outsourced blank manufacture (see here). They also seem oblivious that their logic can be equally applied thus:

“If Eric Sprott’s PSLV fund’s silver were actually in the vault, the US Mint could buy the fund and request a physical redemption.”

Of course PSLV is backed by physical metal so how can we explain the fact that PSLV has not had one physical redemption since it listed and is only trading at a very small premium to net asset value if the “silver market is seizing up”? Obviously because wholesale players have no problem acquiring 1,000oz bars and thus don’t want to pay the costs of redeeming from PSLV. For additional proof of that, consider this recent interview with Sunshine Minting’s CEO Tom Power by Silver Doctors:

  • “We act as a conduit for the US Mint for acquisition of silver on the market. We go out on a weekly basis and puts bids out for the supply of the 1000-ounce bars – the raw materials – that we use for the US Mint”
  • “we have seen a push on premiums … subtle changes … little push on premiums”
  • “as soon as we start to see the physical shortage on the supply side for 1,000oz bars because the refining output is down then that’s when I normally would believe that’s when the price would start to escalate again and we just quite haven’t hit that point yet”

He does note that some suppliers “seem to be digging deep into the vaults and pulling out a lot of old stock that has been sitting there for a while … you can always tell when the market starts to get a little tight” but then only talks about subtle changes and little premiums and does not say there is a shortage on the supply side.

Furthering the hype is the recent reduction in Comex warehouse stocks and resulting owners per ounce (open interest vs stocks) moving to over 200:1. This is a perennial favourite of bloggers and while a useful statistic it is often presented using a narrow definition of stocks (eligible) which can give a distorted view – see here and also this recent tweet:

As Kid Dynamite (widely hated in goldbug circles so I guess most will ignore his quote) noted to me in an email, “the key to this meme is to start with the false equivalency: registered gold equals deliverable gold” and it ignores the fact, as this commenter notes, that “the percentage of the open interest that is actually positioned in the front months to take possession of any gold is about 5%, so that drops his 200:1 to about 10:1”.

In my tweet debate with Jan Nieuwenhuijs he questioned my scepticism. Why am I so cynical about shortages? Maybe it has something to do with the fact that I first covered this topic in my personal blog way back in August 2008 and repeatedly since, without any of the predicted failures of “the system”. Alternatively, try this video which covers the repeated claims of Comex’s imminent default (h/t Jan and Frank) – which I personally think would work better with the Benny Hill theme.

For all the conspiracy theories commentators are willing to believe, the one that they do not consider is that maybe Comex warehouse stocks aren’t what they appear to be and that maybe they are the ones being played, just like it has been done before:

“They were moving silver from New York to London where the Buffett orders were being executed. This made the US warehouse inventories drop sharply. Go look at the analysts who talked silver up on that very fundamental. If they said there was a shortage of silver and you better buy it is going to $100, then you may be dealing with a shill or a biased analyst.”

Bill Holter may not think that you should be shocked about 25% premiums in silver and that “whatever you must pay to get it into your hands” is fine. Personally I can’t see the sense of paying 25% when for a few percent you can buy physically backed pool accounts.

Think of it this way: when people are willing to pay 25% premium then for every $100,000 spent, only $80,000 goes to buying silver, which would be 5,333 ounces at $15/oz. If those people would be prepared to buy pool allocated at 1% fees, then the pool operator is going out and buying 6,600 ounces. That is over a full extra 1000oz bar pulled out of the physical market for each $100,000 spent on silver.

Guess who loves the fact that they are being saved from having to find and extra 1,000oz bar for every 5 bars currently being bought? Bullion banks. So silver buyers are so distrustful of The Perth Mint, Eric Sprott, James Turk and any other pool allocated operator that they are willing to take pressure off the silver market by spending their hard earned dollars on premiums rather than metal.

I will conclude with this comment from the owner of the Australian bullion dealer Gold Stackers: “A few core distributors in the U.S. are making an absolute killing in this market. Not a bad gig when wholesale margins go from 5c/oz to over 80c/oz, and the market is silly enough to say ‘Moar! Moar!’.”

So when you see the next article screaming about shortages and telling you to stock up on physical at any premium, ask yourself: who is the player and who is being played?

  • dolph9

    The point is that if you have individual, discrete pieces of physical metal, the trade has already been settled in full. Anything other than this is paper. Full settlement in metal has not occurred.

    Which is not to say that I’m a silver bug, which I’m not. Nor is to say that I don’t see the value of paper accounts, which I do.

    What you have to understand Bron is the extreme levels of distrust in the system. And who can blame them. Given the circumstances, people are going to turn in all sorts of different directions, and they are going to be very suspicious of anybody who doesn’t deliver the goods. In the case of pooled accounts, they are suspicious of being cashed out exactly when they need the actual metal, which they have never actually seen.

    • Bron Suchecki

      I understand the distrust angle, but 25%+ is a huge risk premium to pay, especially considering that the same people who promote that would never say that Sprott or Turk are frauds, so then exactly what are you paying all those excess dollars for. Seems then only a confiscation risk, which is IMO overstated as gold was only confiscated (or more correctly, expropriated) because we were then on a gold standard and it was a way of expanding the money supply. Today central bankers have other ways of juicing the system. So why is it worth 25%+ if your metal is held in non-bank storage with a trustworthy operator?

      • Chris R.

        First of all comparing the 25% premium between 1000 oz. bullion bars and a product like the Koalas is apples to oranges. If so desired, anyone can purchase those same 1000 oz. bullion bars and take physical delivery for a minimal premium over spot price.

        Secondly as far as trust issues go, didn’t we just see investors lose potentially ten of millions of dollars keeping their metals with the previously “trustworthy” operator Bullion Direct? How many other previously trustworthy financial institutions have gone down in flames due to either fraud, mismanagement, or government action over the years? Whether it’s precious metals or fiat, giving custodial control to another party entails second party risk.

        • Kid Dynamite

          don’t forget Sprott – investors lost tens of millions of dollars of premiums-to-NAV in PHYS and PSLV… but why don’t the gold promoters ever mention that? i think that’s Bron’s point…

          • Shavi Tupyraz

            would love to reply (as I did to your previous post), but I am being censored out :-(

          • Bron Suchecki

            There is no censoring, that comment got stuck in spam folder by Disqus – just released it.

          • Chris R.

            Well since he specifically mentioned PSLV’s small premium to NAV in his post, I doubt that was the direction he was going. I guess where I am confused is why anyone would buy precious metals to leave in a bullion vault instead of just buying shares of SLV. If someone has confidence in the system it would make sense to invest in the largest, lowest cost, and most liquid option, while if they do not have confidence, taking delivery of the physical product would seem to be the logical choice, which can easily be done without paying a ridiculous 25% premium.

          • Kid Dynamite

            “f someone has confidence in the system it would make sense to invest

            in the largest, lowest cost, and most liquid option, while if they do not
            have confidence, taking delivery of the physical product would seem to
            be the logical choice, which can easily be done without paying a
            ridiculous 25% premium.”

            yes I agree completely… what I (And Bron, frequently) was referring to is the narrative in the Gold Promoter community that All-ETFs-And-ETPs-Are-Bad-Except-For-Sprott’s… it seems so designed to misinform that one must wonder who is behind the disinformation: the narrative is: GLD et all = bad, Sprott = good. Bron’s point was that you will NEVER see the Gold Promoter Community write that PSLV must not have any real metal, else it would have been redeemed already…

            For example, there is only one gold exchange traded product whose custodian was robbed by inside workers… hint: it’s PHYS’s Royal Canadian Mint!!!


            but you’d NEVER read about that on any of the Sprott-pumping blogs that carry out his agenda… along those lines, I’ve written in the past, on my blog, about how GLD’s physical inventory undergoes an independent audit, with the certificate available online… SProtts? nope… although there is a letter from the RCM itself saying the metal is there, and an “audit” by Lehman’s own auditor, E&Y

  • Shavi Tupyraz

    I think I have finally got to the bottom of Jesse (CrossRoads Cafe Americain)’s fallacy – and it appears to be the same one that all the Goldbuggers latch on to. Here he is spouting about metal which is “deliverable at these prices“:

    “here are a total of almost 8 million ounces of eligible gold in all the
    US Comex Warehouses. I have included that chart at the end. So some
    will say, ‘see, there is more than sufficient gold in the warehouses.
    This is all nonsense.’

    And to that we may respond, yes, but at what price? That gold is
    presumably private property and not for sale at these prices
    , except for
    182,611 ounces of it”
    [my emphasis]

    If you follow Jesse’s logic that Eligible inventory is not “for sale at these prices”, then it is apparent that he for some reason believes that Registered inventory is necessarily “available for sale at these prices” and presumably is NOT private property. What does this mean? Jesse seems to believe that there is some kind of pool, or fund, or public “shop” at the COMEX where naughty Shorts have to queue up to buy Gold in order to be able to deliver it. Furthermore, the shop is running low on Stocks, and only higher prices will persuade the “private” holders of Eligible inventory to put it up for sale

    Where does this nonsense come from? For clarity, Registered inventory is also “private property”, and the owner may well have no intention of making it “available at these prices”; it’s the same quality physical metal as Eligible, but represented by a third-party electronic chit rather than a direct custodial relationship with a warehouse.

    We have absolutely no way of divining from the COMEX reports who owns what inventory, or what their intentions are with regards to any short futures positions they may hold. They could be covered; they could be naked, with the intention of closing out before expiry; they could be intending to roll their positions into a longer-dated contract; they could even be both long in the physical and long in the futures – there is absolutely no way of telling. But one thing is for sure – every last ounce of metal in those warehouses is owned by someone, and not a gramme of it belongs to either COMEX or some form of publicly-available pool

    People such as Jesse simply do not understand – or choose to ignore – either the operation or the economic role of a futures exchange, and keep mindlessly trotting out this nonsense without any real thought and even less accountability. And when all else fails and our wet dreams of a COMEX default don’t come true? – why, the numbers are faked, so let’s just make up some others to support our bizarre fantasies

    Kid – yes it is me, but I lost the email, please re-send

    • Kid Dynamite

      simpler, to quote Bron quoting me:

      “the key to this meme is to start with the false equivalency: registered gold equals deliverable gold””

      and to quote myself from earlier blog posts, such as this:

      “when your theses are based in false foundations, you can only be “correct” out of dumb luck. One shouldn’t be surprised when the predictions made by charlatans who rely on nonsense themselves turn out to be nonsense.”

  • E

    Your blog is very informative. Thanks for posting! What did demand look like at Perth Mint when the price of gold and silver were rising from the 2008 lows? Were shortages of the 1000oz silver and 400 oz gold common during the time gold price was rising?

    • Bron Suchecki

      The industry had never seen demand that high, it was much higher than what we are seeing now but there were no issue in the wholesale markets. As I blogged here “The 2008 premiums were celebrated by some at that time as a proof of a physical-paper price disconnect and a “good thing”. The fact is that there was plenty of supply of the raw gold or silver (the Perth Mint at one stage was shipping in 20 tonnes of silver each week for weeks on end from London with no problems).”

  • costata001

    Hi Bron,

    Here we go again. The Mints are (of course) a production choke point but the refineries have substantial spare capacity for bar production. Does this mean that the retail money will get gouged (by dealers) while Asian kilo bar buyers pay a few extra cents premium?

    Thanks for the links to Keith Weiner’s work on the ‘basis’. I don’t recall reading anyone who approaches analysis of the basis as an exploration of scarcity vs abundance due to hoarding or dishoarding of the stock. This makes sense to me. I’m enjoying reading his work and thinking about the implications.


    • Bron Suchecki

      Well yes the kilobars are cheaper and don’t suffer from the same production capacity issues, but few investors are buying kilobars – mostly they are being distributed to jewellers and other firms for manufacture into other products for retail consumption, so there is still a premium to be paid.

      • costata001

        Thanks Bron. How can you know that most kilo bars are going to jewellers?

        • Bron Suchecki

          A kilobar is really expensive, not many individuals can afford them, but mainly because of who we sell them to and who they distribute to.

    • Auldenemy

      Weiner is a brilliant analyst of the financial lunacy of our age. I think he would agree that freeing paper money from any gold anchor (Nixon 1971) was perhaps one of the most stupid decisions in monetary history. Does that make him into a scare mongering gold/silver bug?

  • guest

    What Caused The Bank Of England To Halt Gold Leasing In A Panic?

    bottom line is that when the shit hits the fan, nobody cares about
    paper and everyone with a brain, including apparently the Bank of
    England, hoards their gold and refuses to part with it.”

    bron the con is always on..but kid dynamite the faux erudite should be forced to eat vegemite as gold takes flight.

    • Bron Suchecki

      The RBA also scaled back its gold leasing, as did many central banks, after the financial crisis. Obviously they realised the risk/return tradeoff wasn’t there anymore but until holders of gold in London “take flight”, there will be no change.
      But making an American eat vegemite I think is a bit harsh.

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  • Navigator

    Great post Ron. I think the silver market is greatly over hyped also and will not touch it at these premiums. Also remember that annual silver production is 25k tons annually and investment demand has only been 19% of that usually. The silver hype people never seem to break down the actual supply and demand data world wide. Regarding gold I still see that premiums have gone up but not like with silver. I do wonder about the fact that London stopped leasing gold back in 2009 or thereabouts.

  • Skye Bowen

    Thank you. When the world around me becomes clearer, I know I have found some wheat among the chaff.

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  • Motley Fool

    Thank you Bron, for the sanity.

  • daytradeprofit

    great post thx

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  • Fraser

    Perth Mint (Bron’s employer) sells a 1oz silver coin for AUD $28.68 (or 40% over spot $20.20) and buys back the same coin for $19.20 (5% under spot).

    So when it comes to “playing the public” – I suggest Bron looks in the mirror!

    • Bron Suchecki

      More like 25%
      While I think having some metal on hand is a good idea, I would certainly not be recommending putting all your PM investment in coins. What you will not see the Perth Mint doing is pushing and using fear to convince people to only buy coins no matter what the premium. How you think our marketing is playing the public I do not know – is not this post an example of us trying to bring some calm to the market?

      • G

        No. This post is you trying to convince people to buy paper PM’s not physical. It is $33.60 for a Lunar Goat 1oz bullion coin so i don’t know where you are getting your %25. Thats a %64 premium over spot as of right now.

        • Bron Suchecki

          That is a semi-numismatic with limited mintage, try the spider or soon to be released silver kangaroo, true bullion coins

          • Fraser

            You claim there is “no shortage” at Perth Mint’s prices of 25% to 60% over spot – but release a coin at (say even) 10% over spot and Perth Mint would be cleaned out in weeks. You continually discount the element of price in calculations of supply and demand. Agreed that at $1million per oz there is no shortage whatsoever BUT at the current (manipulated) spot price there is a massive shortage!

          • Shavi Tupyraz

            Hello Fraser: what makes you think that Registered is any more “available at these prices”? than Registered?

            What do you mean by “available”?

            To help you, here is what I mean by “available”:

            Please feel free to phone them up and ask them if they can supply any typical retail investment amount up to, say 10kg, and at what price. Here is their number – +852 3568 6834 – although to save you the cost of an international phone call, I can assure you that I just did, and they can deliver at that price, immediately, in any typical retail amount. (I expect that if you ask them nicely they will even write “Registered” or “Eligible” or “Stuff this up your Arse Craig Hemke” on the invoice).

      • Auldenemy

        You have made no response to my reply to your commentary. Specifically:

        ‘However as of this morning, 16/9/2015 and after a long struggle to actually find your well hidden silver bullion section, it states that prices start at $28. That is somewhat ambiguous, as in perhaps one has to buy 5, 10, 20 or more to get a 1oz bullion silver coin for that price?’

        Perhaps you would enlighten us on this. Do you actually sell an individual bullion silver coin for the price stated, or does a customer have to buy multiples of bullion 1oz coins to get them at that price per coin?

  • Bron Suchecki

    Thanks for heads up, I’ll get around to reading it. Craig hit me up with 6 all caps tweets, they seem to be getting more and more angry or frustrated as to why things haven’t blown up yet. I need to address that and answer it, not that they will listen.

    • Shavi Tupyraz

      I wouldn’t waste your time, Bron – its just a tirade of ad hominem invective without any underlying argument other than “We’re right and you’re An Apologist!”. Which is sad

      As is widely known, few of these charlatans have any professional experience of wholesale markets, or any relevant academic credentials: Craig Hemke is a failed retail Pensions salesman and yogurt vendor, Harvey Organ is a pharmacist, and many of their followers appear to have IQ’s in the low single digits (often negative), or in Craig’s case, serious personal issues

      As you and Kid Dynamite have repeatedly pointed out – their entire House of Cards is based on the fallacy that only Registered inventory is “deliverable at these prices“: this is demonstrably wrong, as can be found documented in the NYMEX Rulebook and demonstrated every day in the workings of the Exchange – in fact any exchange. As before, I challenge anyone who doubts this to phone Brinks and ask them – here is their number: +1 804 289 – 9600. Brinks is not a Bullion Bank

      I happen to disagree with what I consider to be the bogus analysis promoted by Hemke and others; this does not make me “An Apologist”, but I hold my hand up to being a hardened Cynic – not about the workings of international markets, but about the motivation which drives such patently bogus commentators and their promotion of “a Faith-based” approach to investment

    • Mike

      His incessant and repetitive rantings are starting to show cracks in his rationale and the basis for his obsessive beliefs.
      His oversized ego and his sense of notoriety and accomplishment is ridiculous.

      He took your use of one word…”they”…and twisted it into some type of attack against him. He’s a classic narcissist who absolutely cringes at the thought of being wrong and he’s been wrong every step of the way.
      At this point he’ll say anything in order to look like he was right ehen in fact he’s been talking outbof both sides of his mouth the whole time.

      None of his hoped for or anticipated doomer scenarios are panning out for him so he randomly attacks others in the hope he can take the focus off of himself and project it onto others.

      Your last few words of this article are spot on and the title of Turd’s post and those clising words seem to describe him to a tee.

  • Bron Suchecki

    Could do, but the freight cost would kill it, which is how localised shortages occur. I suspect that as 1000oz bars aren’t exactly retail friendly product they don’t stock a lot of them but it is interesting that Asahi/JM may be focusing their supply to blank manufacturers rather than retail trade.

  • Bron Suchecki

    Not sure why you say the new 1oz is on hold, its supply date has always been 21 September

    Whats going on is we, like all mints, are getting swamped for coins, so factory is flat out. What you will find is no problem if you want to buy 1000oz pool allocated

    • ha

      You are being swamped for coins because people are losing patience with toilet paper fiat currencies stealing what they work so hard to earn straight out of their pockets and bank accounts through money printing. People are waking up and this is a clear result of that. You can try to calm people down but its not going to happen. And they can set the price all they like but demand drives up premiums and thats life. Spot price would also be increasing if it wasn’t being manipulated down to protect the mighty dollar. To give off the illusion of a strong dollar. Demand for PM’s is increasing while exodus from toilet paper increases at the same time. Soon it will be exponential. The people this article is directed at; you couldn’t care less about. You give off the appearance of wanting to offer helpful advise to individuals but this advise isn’t actually for them it is to protect you and your interests. Buy paper PM’s that we will sell to you and at least 10 other people, maybe 200. Just please don’t ever request delivery.

      • Auldenemy

        Well said! Pool accounts are just another paper scam at the end of the day. The whole ETF thing was banker created (again to keep people away from buying physical metals). No doubt 1000 Oz silver bars are still available but so what, most people investing in physical silver don’t want a ruddy great lump they can’t even lift….they want 1 oz coins because they know when the bankster paper Ponzi scheme implodes, they will have something of real value to fall back on. As to scare mongering, I don’t see it. What really scares me are all the banker-political goons at the helm. Gold and silver bugs are a minority still, it is the paper bugs who have ruined our economies.

        • Motley Fool

          So buy bars. Don’t pay stupid premiums on coins due too temporary supply constraints.

          At the end of the day, if you think physical silver is where it is at (it’s not, that would be gold), then clearly you want as much as you can afford, at the lowest possible price.

          Skepticism in the system is well and fine, I share it, but don’t be stupid about it.

  • Bron Suchecki

    Yes I am well aware of Freegold theory, having gotten involved a while ago, see as well as search on freegold or FOFOA on my personal blog
    What you refer to is a theory and I don’t have any inside information on those events to say one way or another (pardon the pun).

  • Auldenemy

    First off I think the quality of your Perth Mint coins is superb. Of all the portraits of the Queen by various world Mints, yours is without question the best. Anyone doubting this should look at the portrait of the Queen on Canadian coins (it is bloody awful!). I take issue with some of your beliefs concerning, ‘scare mongering’ by certain dealers and silver commentators in as much as most of the public of any country in the entire Western Hemisphere are not even aware of gold and silver markets, let alone own any actual physical metals. As to dealer premiums, these are to be expected as long as the likes of JP Morgan and Citigroup have such a vested interest in clobbering the paper spot price of silver. My one criticism of your on line site is the difficulty in finding bullion prices. Proof and other limited edition coins and bar designs are plugged endlessly and as such are multiples of the spot price. Again, I have no problem with that. However as of this morning, 16/9/2015 and after a long struggle to actually find your well hidden silver bullion section, it me fleet states that prices start at $28. That is somewhat ambiguous, as in perhaps one has to buy 5, 10, 20 or more to get a 1oz bullion silver coin for that price. The fact remains that something is very wrong in a world where Mints like yours are making a fortune compared to pre 2008, due to growing physical demand of precious metalsand at the same time the paper spot price has gone down the lavatory.

    • Shavi Tupyraz

      “the likes of JP Morgan and Citigroup have such a vested interest in clobbering the paper spot price of silver.

      what makes you believe this?

      • David Jensen

        ‘Eligible’ gold is gold that is not available for delivery. ‘Registered’ gold is gold that IS available for delivery. Why combine eligible gold with registered gold and say that there is a low ratio of open interest – to – gold stocks coverage?

        There are 6.7M oz of eligible (unavailable) gold but only 163k oz of registered gold in Comex warehouses. Thus 2.4% of gold in Comex warehouses is available for delivery.

        • Shavi Tupyraz

          You are wrong; Eligible Gold is delivered all the time, and is qualitatively exactly the same as Registered. Wise up and read the NYMEX Rule Book

      • Auldenemy

        Shavi, if you look at the history of JP Morgan’s huge control of the paper silver market (derivatives), you will see that in all the years they have constantly shorted silver they have never ONCE made a loss on those shorting positions. This in turn means they have made vast amounts of $ profits. Have you ever heard of even expert traders never making losses on going Long or Short on their positions? Isn’t it suspicious that a bank who has such control over the spot price of silver keeps making profits out of the positions it chooses to make (never losses)? This is a bank that like many other Shark sized banks has been fined for Shark practices (as in corrupt ones!). I am no conspiracy theorist. I always prefer hard facts. It is the facts that make me understand we don’t actually have free markets anymore (no more so than the silver market). As to JP Morgan now having a huge physical position in silver, that only started in the past two years and is no doubt due to them realising they can’t for ever manipulate paper silver downwards (in fact it supports my belief further in that while clobbering the paper price they have not only made huge profits on shorting silver but in turn this has given them the chance to buy real silver at rock bottom prices). It is a win, win situation for them because in effect they cornered the silver market! Is that an honest way for silver to be priced, mainly by one bank?

        • Shavi Tupyraz

          oh, I see, so they are long and short at the same time, and yet manage to turn a continuous profit from that? Wow – what is the source of your information? Lets see some of these “hard facts” you are so fond of – I would be fascinated. Really fascinated.

          • mark_BC

            “And you believe that they somehow manage to make a perpetual profit out of that?”

            Have they sold their physical yet???? As far as I understand it, profit comes from the difference between purchase and SELL price.

          • Shavi Tupyraz

            no, banks are obliged to mark their trading positions to market, and unrealised P&L is reported just as surely as realised P&L is

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  • Hogmeister

    If I was a controlling genuine (meaning no banker shares in my stock portfolio) shareholder of Perth Mint I would fire Bron over this article. Talk about management dissing the company product line and being disloyal to genuine shareholder interest. Based on the PR sprouted by current company management (Bron) you can be sure that the controlling interest of Perth Mint also has controlling interest in the fiat system. The current reality is a sham.

    • Bron Suchecki

      I’m not dissing the company product line, I’m dissing excessive premiums and BTW, 1% premium cheap pool allocated silver is one of our product lines – all products for all people. Having some physical on hand is a good idea, but at any price. Double the metal price, is that still a good idea as far as you are concerned, 200%? At what point is it stupid to pay a premium like that. If you really thought the system was so bad that those sort of premiums were worthwhile I’d suggest you’d be better off deploying any spare cash into other prepping assets and not precious metals.

      • Hogmeister

        Whichever way you twist you are in fact trying to talk down the street price of your most profitable business lines. I wonder if Apple has a spot open for you? What price you ask? Ask the population of “Weimar Germany”? Once the system blows only physical in own possession matters. Yes the risk premiums in fact are rising. It is normal market behaviour.

        • Bron Suchecki

          I think you have missed the concept of rationing and allocations – we don’t make all that profit from the excessive street price premiums our products are being sold at by bullion dealers – we sell them at the same wholesale premium as we have always done.
          And you have avoided my question. In a Weimar situation it makes more sense to hold other real assets than pay excessive premiums just to own one specific real asset like gold or silver. All prices are relative and it makes no economic sense to pay excessive premiums when other real assets represent better value.

          • Hogmeister

            Way to treat your principal customers, the wholesale clients – It may come back to bite you and your genuine stock holders (if you have any).

          • Bron Suchecki

            There are these things called bubbles, which are the product of human emotion and herding, that result in prices in a free market becoming excessive (no need to rely on manipulation, which I have never said doesn’t happen, check my previous writings). Encouraging people into such behaviour and paying excessive premiums which will fall is wrong IMO. You however would prefer to profit from that rather than have people directed to consider cheaper forms. We are at an impasse and I leave it to the reader to decide who is right.

        • Motley Fool

          So, just to be clear Hogmeister….you are upset because Bron is advising you to act in your own best interest, and not throw capital away?

          To my mind his willingness to give honest advice even when it is not in their own best interest is a feather in their cap. People and businesses such as that I grow loyalty towards and would deal with at any time.

          To each his own I suppose.

          • Hogmeister

            He is explocitly working against my best interest as an existing customer as rising premiums protects my investment in perth mint bullion against “excessive” volatility in the derivatives market. To each his own.

          • Motley Fool

            Increasing premiums only occur for brief periods of time when there are supply constraints. Every previous case of increased premium has abated once demand has been filled.

            So. Unless you mean to imply that your usual practice is to use periods such as this to sell your old stock to others to scalp a profit and then buy back such stock plus a bit more from the gains once the temporary hype fades, I don’t quite see what your issue is.

            Long term such moves mean nothing.

          • Hogmeister

            You seem to have a very myopic view of monetary history. In addition, recent history shows that the risk premium delta reduces volatility. I’m not trading the spread.

          • Motley Fool

            Sure, sustained premiums hedges volatility.

            The thing is, sustained premiums is within the purview of collectibles.

            There are many vehicles one could use if that is your strategy for wealth preservation.

            Personally I am interested in the intrinsic value of the underlying metal, as such I wish the premiums to be as low as possible, always.

            Yes, this means I am exposed to more volatility, but hey it’s not as if my timeframe is daily/weekly, so it’s a moot point.

          • Bron Suchecki

            So your position is that you don’t care about new buyers paying too much for your coins so you can profit at their expense?

          • joey

            Speaking of new buyers… Have priced some of Perth mints Silver and found it considerable dearer than say ABC? So i guess i find it ironic to see postings re “profit at their expense” ?

        • James Clander

          Hogmeister -you sound totally deranged & with no knowledge of what you are talking about. Take a cold shower & listen up. I needlessly paid fabrication & storage costs for the last Silver run from 2002 -2011 that in hind site on a large holding I shouldn’t have paid. I sold close to the top so it was money down the drain. Bron is talking about premiums & there’s a lot of bunnies being skinned alive by smarties overcharging premiums.
          The Perth Mint is a premium place to buy & with a State Govt Guarantee it doesn’t get much better. Silver is different from Gold being also a mainly industrial metal – it will suffer more initially price wise when the GFC 2 finally arrives. Those buying more than a hand full of silver & wanting physical should forget coins & buy 100oz bars to store at home & keep their mouths shut. The premium over spot is small & it will be easier to sell back when the time comes.

          • Shavi Tupyraz

            the problem with physical Silver is value density: you could carry $1 mio in Gold in a suitcase, whereas to transport an equivalent value in Silver you would quite literally need to “back up a truck”

            in a real “End of Days” armaggedon scenario played out in Western Australia, I wouldn’t want Mad Max to catch me behind the wheel of a ute (pickup) with a ton and a half of metal slowing me down on the way to the local coin shop

          • James Clander

            True enough to all above — Large amts of Silver have to be stored somewhere like the P. M. My comments re 100oz bars would be fine if they fitted in a wheelbarrow :)

    • Mike

      “The current reality is a sham.”

      On it’s face that quote sounds a little nuts and vaporous.
      Could it be that you’re out of touch or uncomfortable with actual reality and are simply manufacturing some other alternative reality that suits your bias?

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  • serpo

    Here is a notice from Anisle bullion who cannot seem to source any silver bullion from the Perth mint…………..

    Important Notice to Customers

    Due to the extremely high demand of late for precious metal, we are
    experiencing an extraordinary shortage of many lines of product. This is due
    to refiners themselves experiencing difficulty in keeping up to demand. This
    is a world wide shortage.

    Whilst we have had a large inventory for many years, the huge demand over the
    last few weeks has seriously diminished our stock levels.

    Whilst this is not an issue restricted to Ainslie’s, we have always been up
    front with our customers if we can’t supply straight away. You will,
    therefore, only see a limited number of lines offered on the web shop and also
    in our store, and many with wait times.

    If you want to buy something in particular and it is not on the web, please
    call us as it may be available in store or over the phone. We have been in
    business for 40 years because we have put customers’ interests first. We
    don’t put them at risk.

    We trust that you understand. We would rather be up front and keep you
    informed of the current volatile market.

    We will also be paying spot price for buy backs for
    some products for a limited time.

  • serpo

    the comex now has 252 contracts for every ounce of gold

    • Shavi Tupyraz

      no it doesnt

      • Mike

        Check out Turd’s avoidance of the truthful comments after this…

        • Mike

          Oop’s, wrong link above…
          Turd’s non-answer below this vid…

          • Shavi Tupyraz

            a redneck radio host congratulating Hemke for his “otherworldly ability to firecast price movements”. Didn’t the Turd quite literalky (and publuclt) “eat his own hat” last year when Silver failed to reach his forecast of 23?

            I have never met Craig, though I am sure that in real life he is a decent enough guy just trying to make a living. But far from being a Metal Guru, his career background was in Regional retail stockbroking, until he lost his job in 2008. He then tried to establish an online pensions advisory service, which by his own admission was a monumental flop, and following this his primary commercial activity was to run a Frozen Yogurt shop in a suburban location near his home. This does not make him “a serial entrepreneur” – it just makes him look like a bit of a chancer struggling with a mid-life career crisis

            The problem with Turd is and always has been habutual narcissism:

      • Larry Lull

        Question: In regards to your statement “We are totally Blind”. If you are totally blind, which in the case you have resented this statement, how do you know anything about which you have written?

        • Shavi Tupyraz

          Blind people at least know they are blind – it’s only the totally deluded who think they have 20:20 vision

          My point was that the COMEX reports do not give us sufficient information to join the dots between Inventory and Deliveries

  • Motley Fool

    It occurred to me that if you had suggested I buy into a pooled gold account, I would understand your reasons for saying so, but would not be very open to the idea due to counterparty risk.

    Given that this crowd erroneously feels about the same about silver as I do about gold, I have some sympathy for their position.

    At the end of the day holding it in physical form is the only certainty that small players can have.

    Part of the reason I initially agreed with your logic about pooled accounts is that I do not care about silver, and do not think there will be delivery problems, ever. It is however a matter of trust alone, and one cannot blame pm bugs for being short on that. 😀

    That being said, I went to APMEX’s site and noted one could have 1 ounce bars or rounds for as little as 10% over spot, which is bloody cheap really given manufacturing costs, so I don’t get the hype. Are they whining because they cannot buy proof Eagles or Kookaburra’s at spot? 😛

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  • Bron Suchecki

    I think many here are completely ignoring the possibility that bullion banks engage in arbitrage and could easily be acquiring physical metal outside the Comex warehouse against any short positions they may hold and which they will deliver into Comex should longs refuse to sell out.

    They could also, in that market making/arbitrage activity, have purchased eligible metal against their short. There is no need for them to convert that to registered to satisfy market observers that the OI is “covered”.

    Indeed wouldn’t it be a strategy of such traders to purposely hide the nature of such hedged positions and what their true proprietary position is just so that silly “analysts” like ZH or Craig can get all their followers worked up about how there is no metal and Comex default is imminent and how prices will have to go higher to bring out metal to settle? I am sure these bullion bank traders are probably laughing their heads off at such lightweight analysis.

    • Shavi Tupyraz

      “I am sure these bullion bank traders are probably laughing their heads off at such lightweight analysis.”

      I know that for certain; what is truly astonishing is some people’s inability (or reluctance) to just put their hands up and say “Look, something just isn’t right here, but I can’t put my finger on it, because I really don’t understand how this all actually works” Instead they invent and then defend bizarre and often ridiculous theories which have no basis whatsoever in reality.

      Take this currently-fashionable nonsense about what metal is “available”: where does that notion come from, even approximately? It’s not in the NYMEX Rulebook, it’s not common market parlance and it defies logic, but all the Goldbuggers continually chant it like some kind of religious mantra. In truth, if someone sells you a Futures contract, then they are obligated to deliver you physical metal, unless and until either they or you decide to close the position in the open market. Whether that metal is “available” to that particular seller is completely unknown to us, as indeed are his/her intentions in respect of the Futures position – and that is the same whether some arbitrary amount of metal is or is not badged as “Registered” in somebody or other’s warehouse, because we have absolutely no way of knowing who owns that metal, other than the certainty that, in the case of Registered, it doesn’t belong to that warehouse itself.

      If anyone has the slightest shred of factual evidence to the contrary, I’m all ears …

      • Motley Fool

        But but, you are an evil conspirator and stupid, so there!


        • Shavi Tupyraz

          thank you for that shred of factual evidence – it’s reassuring to see that we are dealing with adults on this blog

          • Motley Fool



  • mark_BC

    I’m just amused at all the recent ramping up of (baseless) attacks against the goldbug community by Bron et al. Firstly, who cares? Is it because Bron and the various mints are just SO concerned about investors paying a 5% premium on metal?

    Aren’t you legitimizing the conspiracy theorist whackos by devoting so much of your time writing about them on official Perth Mint bandwidth? As the saying goes, “it’s not official until it’s officially denied”. Why don’t you just ignore them and when the premiums pass, as you are so certain, the freaks will again recede back into obscurity along with the other 2 billion Chinese and Indians? Why do you care if a segment of the population drools over PM’s, any more than a segment of the population obsesses about aliens in Area 51?

    Secondly, I don’t understand why you are trying to advise goldbugs to buy paper gold. Do you understand the audience you are preaching to? People buy and hold physical gold as insurance against monetary catastrophe. By definition, people in the goldbug community are distrustful of any paper asset which would of course become subject to confiscation or some other undesirable fate in the event of monetary meltdown. PM stackers are NOT buying to make short term profit, and therefore 5% premiums are irrelevant.

    It seems like you are just trying to stir things up and instil doubt in newcomers’ minds (those who see the rising premiums on physical and feel justified to jump in and join the bandwagon) about buying physical vs. paper pools. This then leads me to believe that you are trying to prevent newcomers from buying physical (why else would you be saying this?). Why do you not want them to buy physical? Because you would feel SOOOO bad for them for paying a 2% premium? Or is it because you want to minimize physical demand?

    It is absolutely true that premiums have risen and fallen in the past and this is something I am wondering about too. It may pass like the other times; only time will tell. If so, then PM investors got to buy physical at prices, including the premium, that are the same as what non-premium’ed metal cost only a few months ago. The problem being? Why are you so concerned about goldbugs getting hosed on their bullion investments when they are in it for the long haul and historically, gold ALWAYS goes up in dollar prices over periods of a few years or more (unless you happened to buy at the peak of the 1980 spike)?

    Sorry, but no one in his right mind is going to hold his PM’s in paper pools in some American bank when the Chinese have recently sold off over a tenth of their Treasury holdings over a couple months.

    • Bron Suchecki

      There hasn’t been any ramping up, just responding to stuff I see out there. And my concern is with 25%+ premiums, not 5%.

      I am concerned about legitimising and giving them oxygen, but at the same time people are being misled and I do care if they are unnecessarily paying premiums when they can buy cheaper.

      As to the audience, we hold around $2.5 billion worth for “goldbugs” in our vaults, and there are billions more held with the GoldMoney’s and Sprotts etc. I am merely drawing attention to these economical (and non-US bank) options, which coin dealers will not do as they cannot make money from them.

      Buying pool allocated results in physical being taken off the market, so I do not know where you get the idea that what I have said in any way minimises physical demand.

    • Motley Fool

      Pointing out that their understanding of how the market works is lacking is not quite what I would call a ‘baseless attack’.

      You know what the response should be, in an ideal world : Thank you for explaining this to us. Now let’s get back to focusing on real and relevant analysis of these markets and the actual problems there are.

      Not : You are an evil conspirator and stupid so there.

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  • peaknik

    Bron. I won’t argue with your logic that getting more metal for the money is a good idea…BUT

    When you say that pool accounts are a better option than paying high premiums, then I need to follow up asking; which pool accounts. Are you vouching for all of them having
    full backing of metal? Or would you say that it’s possible some of them operate on a fractional basis? If so, how many? Which ones? Do you think investors should just accept
    this risk? How would you say your average investor can do their due diligence to know with certainty that the pool is backed?

    Besides from this holding physical VS having an account with holdings, even if
    this contains physical metal, carry different risks. The obvious one with
    holding physical of course being theft. But with pool accounts the risks can be
    more difficult to assess. i.e. can redemption requests be reneged on? What is
    the lead time from when investment is made to when the pool acquires and
    receives the metal? How can costs and fees change in the future? Can rules
    change in relation to segregated accounts? (it was not long ago bank deposits
    were sacrosanct but now they can be bailed in.) If, God forbid, there is a confiscation in the
    nation where the metal is located, how secure is my metal in a pool account.
    (Not suggesting breaking the law, but actually holding the metal may give you
    some time to work out a solution rather than having it all confiscated.)

    If you are more uncomfortable with the potential
    risks related to pool accounts, ETF’s etc. then it comes down to the question
    what premium is acceptable in order to have the metal in your hand.

    Lastly I would state (perhaps) the obvious. If an investor is interested in the metal (as opposed to collectors value) then one should buy the products with the lowest premium. I myself for instance would never buy any gilded coin if I can buy two of plan coins. I am after gold and silver and don’t care about the pretty picture.

    • Bron Suchecki

      My comments regarding pool accounts were not in a general sense and only referred to reputable services like Sprott or GoldMoney or Perth Mint where bar lists and other governance controls are in place. In no way would I, or have I ever, recommend ETFs or unallocated accounts run by banks.
      I do have a planned article on the sort of due diligence questions people should ask of storage providers but as you numerous valid questions indicate, that is a big job if it is to be done properly.

  • Shavi Tupyraz
  • Silverbug

    Physical in hand is all that matters. Anything else is a paper promise at best.

  • KingTut

    Lots of confusing stuff in this article. The most confusing is the smug attitude of the author. Who the F is this twit that he can come off like … well … Gartman? It’s repugnant, but not surprising.

    Anyway, current Au shortages are only reported for large amounts (tons). This makes sense because roughly 250,000 oz arrive from the mines every day. That easily takes care of BullionVault GoldMoney etc. But if you want tons, you wait or pay a premium. As Kirby noted, physical is a cash and carry business, so premiums are getting paid. As for coins, you always pay premium and wait anyway.

    Sorry, but who gives a crap how coins are made? They could easily scale up thier business in response to demand, but don’t. Why are they dragging thier feet? (Rhetorical question)

    I do believe that the Bullion banks can change ownership categories whenever they please. So if there were emergency demand, that metal could be brought to bear. But how is it OK for them to sell it all, and have NOTHING backing billions in paper contracts? Somebody would be getting seriously stiffed. Even with all their gold they still have precariously little metal for the size of the paper market. At this point anybody trying hold gold long-term in a bullion bank deserves what he will get, paper.

    Right now panic is not called for,so I would never recommend anyone pay a huge premium. But buying into a pooled account is about as unclear on the concept as possible. (Gartman again?) If you are speculating on the price of gold, fine, do whatever you want. You are planning to end up in dollars. But the reason you own the metals is to protect yourself from monetary collapse. Now those collapses are rare, and require gallactic incompetance (or corruption) on the part of authorities, but they are also inevitable. It simply MUST happen, especially now that all fiscal discipline has disappeared down the toilet. So you buy and save gold to have something left when the awful thing happens, as it always does.

  • Shavi Tupyraz

    yes, robert, and there are Fairies at the end of my garden too

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  • Mike

    You just can’t make this stuff up… 😮

    “I’ve always believed that”

    Submitted by Turd Ferguson on September 17, 2015 – 3:53pm.


    “I’ve always believed that there’s at least a 50/50 chance that Kid Douchamite is written by Sister Christian himself. Those comments only seem to make it even more likely as Koos questions Sister in his article and then, out of the blue, Douchamite appears to defend Sister.”

    Response to: New York And London Gold In Backwaration

  • PP

    I will give you a breif regarding Coin premiums in China:

    below are online wholesale price against London spot price, not retail, not that more expensive flagship gold shopping center Caibai:

    Austrian Philharmonics 35%

    Canadian Maple Leaf 43%

    Canadian Birds Of Prey Series 49%

    American Silver Eagle 44%

    Britannia 36%

    Chinese Panda 63%

    Mexico Silver Libertad 65%

    Australian Kookaburra 69%

    Australian Silver Kaola 42%

    Silver Wedge Tailed Eagle 59%

    what’s wrong with it? why not only some particular kind, but all kinds of coins has such huge premium? why premium did steady increased from 2013, from only 10% (that time 15% is amazing), to 40-50%, and still soaring?

    BTW, flagship precious metals shop in Beijing, Caibai, is out of stock of all kinds of silver bars including their own brand. you say there is no shortage, but why?

  • GeorgeG

    Something feels a little off in the comments here in support of the bullion banks and exchanges like COMEX…..coordinated like…..firstly, why on earth would someone take the word of a fraudulent company like CME when it comes to what’s registered vs available…or argue for a criminal organisation like JP Morgan…that right there is a ref flag to me.

    As for pooled accounts, no thanks whatsoever.

    • Bron Suchecki

      I am pretty sure there is any coordination in comments, the ones I think you are referring to I have seen commenting in the past on my private blog and elsewhere for a long time.

      • GeorgeG

        Suggest you read my post again.

        • Bron Suchecki

          Wrote that comment too quick, meant “pretty sure there ISN’T any coordination”

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