An Inside Look at the Rapidly Escalating Physical Silver Shortage Via SDBullion

*Updated- shortage spreading to Silver Maples, SDBullion experiencing unprecedented demand for silver bullion

On Thursday, we alerted SD readers to the fact that the US Mint had sold out of Silver Eagles, selling over 6 million ounces over the first 9 days of sales in 2013, and was shutting down sales and production of Silver Eagles through at least 1/28, and would ration sales of eagles upon resumption of sales.

With a rapidly growing presence in the retail gold and silver market via SDBullion, we have had a unique perspective of the escalating physical silver shortage, and would like to give our readers an inside glimpse of the time-line of events evidencing a growing shortage of physical silver.

Full time-line of the developing silver shortage from a wholesale perspective is below:


Silver Shortage Time-Line:

Mid December 2012: US Mint announces 3 week halt of Silver Eagle production as the Mint transitions to 2013 Silver Eagles.   Wholesale premiums and retail pricing of Silver Eagles do not change. 

Late December 2012:  Wholesale premiums begin noticeably rising on 90% silver -pre-1965 coins. 

Monday 1/7:  US Mint begins sales of 2013 Silver Eagles

Monday, 1/14:  Wholesale suppliers run out of 90% face pre-1965 silver coins.  Wholesale premiums rise 2-3 fold, and suppliers quote 3 week delays.

Tuesday 1/15:  SDBullion’s primary supplier informs us that premiums on generic 1 oz rounds are doubling, effective immediately, with a 1-2 week delay on delivery.  Delivery on previously placed orders are also delayed 1 week.

Wednesday 1/16: Rumors begin to circulate that premiums on Silver Eagles and Silver Maples are set to jump .75/oz imminently.  All major suppliers deny the rumor, and state they expect premiums to remain stable for the foreseeable future.

Thursday 1/17: 9am:  SDBullion’s suppliers all confirm ASE’s are in stock at standard premiums. 

Thursday 1/17: 3pm: US Mint sends the following communication to authorized purchasers:

Authorized Purchasers,

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process.

Please feel free to call us if you have any questions.

Regards,
Jack A. Szczerban
Branch Chief, Precious Metals Group
Department of the Treasury
United States Mint

Thursday 1/17: 3:30 pm: SDBullion’s primary ASE supplier raises premiums by .75/oz. 

Thursday 1/17: 5pm:  SDBullion’s primary ASE supplier is sold out of 2013 Silver Eagles

Thursday 1/17: 5:30pm: SilverDoctors.com advises readers that the US Mint is sold out of 2013 Silver Eagles

Thursday 1/17: 6pm: SDBullion is forced to raise premiums on 2013 Silver Eagles as wholesale supply is rapidly vanishing, and premiums are skyrocketing.

Thursday 1/17: 9pm: SDBullion.com sells out of all remaining 2013 Silver Eagles

Friday 1/18: 9am: SDBullion is able to procure a small order of 2013 ASE’s from a secondary provider for .75 over normal wholesale premium.

Friday 1/18 3pm: Nearly all wholesale bullion dealers are sold out of 2013 ASE’s, wholesale premiums have risen by nearly $1.50 for those wholesalers with any remaining (and rapidly diminishing) inventory.  

Friday 1/18: 4pm: SDBullion’s primary supplier refuses to honor the new and increased pricing for 1 oz generic rounds agreed to 48 hours prior

Monday 1/21:  SDBullion’s primary suppliers are running out of 2013 Silver Maples due to massive demand, wholesale premiums have tripled on Silver Maples, and have already been raised twice today at our primary supplier!

Monday 1/21: 2:30pm: and……they’re gone!  SD Bullion has again been completely cleaned out of all on-hand 2013 Silver Eagles

Monday 1/21: SDBullion experiencing unprecedented demand for silver bullion in all forms

 

2013 Silver Eagle retail availability As of Sunday 1/20/2013:

Apmex: Sold out

Provident: Sold Out

Tulving: Sold Out

Scottsdale: Sold Out

SDBullion: Under 500 oz remaining, with one last inventory order en route.

With the US Mint not scheduled to begin resumption of ASE sales for another 8 days, at which point it will begin sales with rationing/ allocation, expect premiums on Silver Eagles to continue escalating, and expect supplies of alternate forms of physical silver coins and rounds to begin drying up, as investors turn to Silver Maples, Philharmonics, generic rounds, 10 oz and 100 oz bars as alternatives to the skyrocketing premiums Silver Eagles are commanding.

With shortages causing panic buying among silver investors, much the way that the recent gun and ammo shortages and threats of gun confiscation have caused massive demand and 2-3 fold increases in prices of guns and lead futures, a similar situation could easily develop quickly in the silver market, particularly with the fact that silver is a Giffen good, and is an extremely small market.

SD Bullion

Comments

  1. Ration?
    Doc, this is the 1st I’ve heard of ASE rationing.
    And that word–Ration–does nothing to make me not think I’ve drawn the right conclusion—and that we’re about to see, and endure, a staggering premium increase……

  2. Time lines can be very telling.  PAY ATTENTION

  3. The fact that the mint halted orders can simply mean that they can’t handle these unusual large orders at this time; they may just need time to ramp up production just as they did in the past, i don’t know why you are jumping to the conclusion it’s a silver shortage. I remember years back when people were paying $6/7 premiums for silver eagles when the mint halted eagles and silver was $20/$21, a hefty premiums not seen since then, everyone was screaming SHORTAGE SHORTAGE but all it was is the mint needed more blanks and had to to halt silver eagle … so please provide PROOF as to why you claim it’s a shortage or STOP THE HYPE

    • Supplies of 90% US coins are drying up/commanding high premiums, many retailers are out of generic rounds with no timeline for new inventory coming in. Large orders from the London PM market are being delayed months, paper silver to physical ratio is about 300:1 now.

    • I agree that the evidence of a “silver shortage” seems minimal here.  It could well be due to the US Mint simply under estimating the large demand for ASEs.  Don’t they run these off in batches?  If so, then their batch size seems too small to meet the current demand.  IIRC, US law requires the US Mint to produce a sufficient quantity of gold and silver coins that will meet the public demand but I don’t know how they measure this demand.  My guess would be that it is on an annual basis and not a monthly basis.
       
      I don’t see any shortage of silver Maple Leaf coins out there or any sign of rising premiums on them, so silver must be available for their production.

    • We still have plenty of silver to sell here in Switzerland. And last year I ve seen a large silver order or two being instantly shipped by a London Vault.
      Anyway I save only gold and silver.

  4. What many do not understand is that the elites have had information about the silver shortage months in advance. They have had plenty of time to develop a different game plan. Don’t expect things to change very soon.

  5. It is difficult to understand why so many people are doubting that the supply of Silver available for investment purposes is dwindling more and more with each passing day.  Each and everyday, more and more people throughout the world are waking up to what’s really going on with the world’s financial system.  They fear for what may lie ahead.  Naturally, people under such circumstances want to seek protection, and protection of their savings–for the sake of their families.

    People study history.  They understand that what has happened before will in all likelihood happen again.  Times may change, but human nature hardly does.  People are finally coming to understand the importance of saving money in a form that cannot be debased.  The only form proven throughout history–that is, savings in physical Gold and physical Silver.  Gold prices have become out of reach for most people.  They are left with the only logical, reasonable, and prudent alternative: Silver.  People want Silver, all throughout the world.

    • @ Plebian This arguing phase is a very common phase of psychological process, next to denial. When you find out a contradicting reality to yours. In itself it’s quite out of concept that you have to face the fact, that something that has already been there, is about to get appreciated tens, maybe hundreds of times. Because that’s what you have to face if you start to estimate the fundamentals here.
      The best thing we, in another stage of awareness, can do, is to stay calm and show our stage of confidence based on facts. Because confidence is usually interpreted attractive, and promotes a safe enviroment for the newbies to get familiar with the subject.

    • @Plebian
      You are absolutely correct in what you are saying. I believe Just Causes always win in the end, My problem with many of the articles here save all, the facts continually change and Yes Gold and Silver will eventually prevail, but some posters here relish in getting into a pissing match with their posts such as Silver Dollar.
      Regards,
      Ranger

  6. @Silver Dollar
    You should go elsewhere to hurl your insults. You are not needed here.
    Ranger

  7. Yes.  Silver is a Giffen good I believe.  It will remain so until the end of the currency wars when the CBs capitulate and restore PMs to money again.   It won’t be backing the money the tax farm peasants use, but it will be fixed into an international system of payments as JS alludes to is my gut feeling.   Time to buy a few silver rounds now!   Need to get a few of the new 2013s.   I am not going to buy Eagles for bulk at $5-6 over spot I will tell you that.  There is a dealer that will sell Eagles for well under that with a minimum order of a 500 box.   For $5-6 over I’d be more inclined to buy Kooks or Koalas, Pandas, Britannias or those Fiji coins or something that has a more limited mintage and not as readily supplied.   Those coins have artwork that change every year and add to the collectibility.   So I am not against paying well over spot, I just prefer to focus on getting the most weight for my money the majority of the time.    However, MAYBE I AM WRONG!   I notice APMEX sells Pandas and Brittanias from just a few years ago for $60-80 that I turned up my nose to for $4 over spot when silver was $13!!   Instead I bought 100 oz bars for 59 cents over spot!  So I guess I could have added 100% to my total return if I had done mostly otherwise.    I say strike a balance in your shiny.   Silver is like beautiful women, they come in all weights, sizes, and shapes, and like a good woman, silver is a MUST HAVE!  lol

  8. If you asked me, I would say the fresh fiat buying up silver was released when folks sold stocks for tax purposes late last year. Silver and gold got the nod. A lot of rich people sold due to fiscal cliff and election results. With manufacturing seeing heavy demands, spot silver should adjust upwards. Then we could see shorts covering causing a decent spike.
     
    My problem is Apmex is charging 21% (6.61) premium with credit card for one ASE over spot for purchases, but 1.60 over spot to sell back….

  9. I see silver as a Giffin Good. But not gold. I would classify it as a Veblen Good “or both” at 1600+ an ounce.

  10. The only thing that matters is do you have a sufficient stack? If not, then you should have started sooner or hope you can still add to it. The rest is academic. There will be no trophies given out in pissing contests over theories. Personally, I am happy with the stack I have accumulated and thankful the road has been this easy.

  11. @MaryB:  Enlighten me please on that 300:1 ratio of paper silver to physical silver. Thank you.

    • The large short paper positions have always been thought to be 100:1 there was a recent post on here showing it may be as high as 300:1 leverage. For every ounce of silver in their vault they have sold 300 paper ounces.

  12. What I don’t understand is: The Premiums are going up but not the Spot Price. Is this another scare tactic to get us to buy more? I don’t really care if it is or not as I’m still buying when I have the Fiat to do so. Keep Stacking.

    • A wise man (in silver/gold) told me  not too long ago that the price of spot silver is unimportant.  The premium that one pays to obtain silver (especially) is key.  He also said that he would not be surprised to see the premium AT LEAST half of the spot price when supplies REALLY tighten up.  Of course, my response was, is, and will always be: why not just buy “junk” silver?  It makes more sense, and value too. Junk has lower premium, and so you get more OUNCES for your money!!!!  How can that be bad?

  13. @Silvrizgold said…  “There is a dealer that will sell Eagles for well under that with a minimum order of a 500 box.
     
    Please tell us which one – thanks!

  14. Just as a cat will pounce on a string dragged in front of it, right when it is almost out of reach – this is what the sudden spike in ASE demand sounds like to me.  However, this DOES NOT account for the recent run on 90% pre-1965 US Silver coins, which has been going on for some time.  So there may indeed be a Silver shortage forming.
     
    While all the time & price forecasts ($250 Silver & $5,000 Gold by X Date) may just be a bunch of hype, one would be prudent to consider what may happen to Silver demand if and when the MSM goes full-steam ahead and announces to the general public that Silver is becoming more difficult to come by.

  15. Politeness seems to be a Giffen Good as well.  It’s scarcity makes it ever more valuable.
    When things get serious, governments lie.  Like now
    Our DNA compels us to value that which is scarce.  Feed frenzies are a result. 
    Socialists and socialist governments are good at one thing. 
    Rationing. 
    Rationed goods control the masses more effectively than guns, do so without the dead bodies, wrecked buildings and graves to be dug.  Rationing leads to the same end though, only much more slowly.  Rationing permits control of markets and people. The Mint knows this and uses it to their own ends

  16. There is a story that has been in the headlines recently, how the state-of-the-art Boeing 787 Dreamliner aircraft is in major trouble.  The source seems to be faulty batteries and related electrical systems.  The batteries are lithium-based–old technology and known to be potential fire hazards.
     
    Fast forward to Silver… We all know that Silver is a monetary metal, but it’s about time that people switched from lithium batteries to Silver-Zinc batteries that are safer and more environmentally friendly.  There is a reason that NASA uses Silver-based batteries as opposed to lithium-based batteries that are known to be a fire hazard…
     
    When the use of Silver-Zinc batteries becomes more mainstream, this will be another major factor in the increasing industrial demand for physical Silver.

  17. Rationing.
    One for every US citizen. Shouldn’t be that hard to distribute. Not too long ago every dollar had like 3/4 oz of silver, right?

  18. XC Skater Good idea    One oz for each citizen. 315,000,000 American, 325 MOZ
    It would crash the paper system, explode the value of silver.  Two problems.
    1.  Precious metals have no counterpart risk.  Government handouts have one particular counterparty risk.  You pledge your SOUL at the door
    2.  Second problem..   see problem 1.

  19. For what its worth heres why I beleive there is a shortage.  We can blame it on the Feds.  They have artificially suppressed the price and now the suppliers don’t want to sell the silver at these giveaway prices.  The suppliers will sit on those 1000 oz bars until the price goes up.  Finally.  I say its about time they make a stand.  I don’t believe there are any shortages of metal at all.  Let silver go up to 40 per oz and watch those premiums drop down like they used to be.  This is a case of unintended consequences.  The feds want cheap metals but they have gone too far with the scheme.  Shows how price manipulation can back fire.  Metals prices are going to be extremely volitile in the future.

  20. I’ll say it again…there is NO evidence of a silver shortage.  Perhaps we should be begin by describing what is going on is a temporarily backlog of investment coins due to demand.  We don’t know why the US Mint can’t plan ahead or keep up but didn’t this happen last year at the same time?  I have yet to hear of ANY user of industrial metal not being able to meet their needs.  So….for now….there is NO shortage of Silver.  One should always consider who is printing these articles.  Every time I read an article about a shortage of silver it is usually on a site that SELLS silver.  For the record….all of my future investment is in silver and I believe it is the best investment one can make.

    • Several major retail silver suppliers report the same shortage of ASE’s, so it’s not just Doc but APMEX, Patriot Trading Group, etc.  ‘Shortage’ in a commodity can mean a couple of different things.  If it’s grain we are talking about and there has been a severe drought, then there is an actual physical shortage.  If we are talking silver the word ‘shortage’ refers to a restricted amount of silver available at the present price.  For people to part with their 1000 oz bars a higher price is required.  A higher price relieves this type of shortage.

  21. I’d love to see a good estimate of how much silver was in the people’s wallets, saving jars and tableware, in the 1940-50′s, compared to today. In my country, money was 72% silver. And having a bit in your wallet easily addded up to over an ounce. Just children’s saving pigs  should ramp up average silver holding per capita hugely. And then there are the typical jar saver.
    If any of that silver after demonetization in 1967 survived till 1980, it was sold there, for a ~10-fold increased value. You’d be mad to not bring yours to the smelter with silver near $50. Not strange that junk is running out. There just isn’t that much out there anymore. It’s flushing around a bit, but slowly finding stronger and stronger hands to settle in.
    So where has all the silver gone? Is it in ETF’s now? Really? Is it in Sprott’s vault? In the computers and other gadets we’ve bought the past 20 years?

    • This is just a dumb anecdote.  When I was a teenager in the 70′s my aunt had a floor lamp.  It was in the shape of a giant smirnoff vodka bottle and had the label and all.  The damn thing was a piggy bank where my Aunt thru her change and it was damn near full.  I noticed that all or almost all the change was pre 1964.  Even in those days we admired and valued the silver.  Must have been several thousand dollars face in the lamp.  Anyway, Aunty came home one day and found the lamp missing.  No, it wasn’t me that stole it.  I never seen anything like it since.

  22. Bu, bu, but…..Funky Monkey Boy assured me that there were tens, no, hundreds of millions of ounces of silver phyzz along the sides of the street that people tripped over when they walked…..

    I was waiting for silver to go back to single digits like he said! 
    FMB: you’re a CIA shill(and not a good one).  In the coming days….you’re gonna make 2007 Miss South Carolina look like Nikoli Tesla…

    https://www.youtube.com/watch?v=lj3iNxZ8Dww

  23. Cle isn’t FMB the dude that is always posting  s*** on Harvey Organs site.  Sounds like a jerk there too.
    XCS  The junk bullion sales boom of 1980 depleted about 90% of those silver coins. They were bought and smelted back into 999 silver.  50-60 years ago there was between 6-7 mbillion ounces in the US either in government storage, coins or storage.  It is a Just in Time commodity now with demand equal to or a little greater than supply  That comes to about 800 MOZ a year.   It is estimated that there is between 2-3 billion ounces above ground in one form or the other, Sprott, CEF, SLV, China and India funds that are now buying and absorbing 40% of the world supply this and last year. The rest in either in commodity used from electronics, solar panels, medical, clothing etc.  Most silver is NOT recycled due to the cost of extraction. Much silver evaporates after use since much of the use is single use such as medical, clothing, water purfication, weapons system and disposable trash items rotated to the land fill. About 15% is recycled from industrial, commercial and jewelry recycling.  As SRS Rocco says, cost to mine is increasing. spot shortages are indicative of long term supply dearth that is starting to show itself in many markets, not just investment routes.
    $50 silver in 1980 was like $300 silver today. Its value as a sale item was too good to be true and thousands of tons were sold and smelted back then.
    PS I had about $250 in silver change left from my waiter days and tips plus what I tossed in the change drawer. I sold for about $30 an ounce. I pissed teh FIAT down the drain on consumer crap, stereo, car, records etc.

    • The day will come when we mine old landfills for minerals and metals.

    • Yes AG, it’s that pesky gnat on Harvey’s site.  lol I log into Harvey’s place for two reasons:
       
      1) For Harvey’s unique Comex analysis…
      2) And for FMB’s unique slap-stick comedy routine!
       
      Neither gets old…..well, that’s not entirely true of FMB, but he still gives great laughs.  Trust me, you and I are on the same page: 98% of all silver mined since the Garden of Eden…..has gone back into the earth.
      The Chinese, the SLA, and Eric Sprott have the other 2% ;)

  24. Other countries….including Canada don’t seem to be experiencing the shortages that are allegedly occurring in the US So….to me anyway…It kinda makes sense that if Ishares trust just took possession of 500+ metric tons, that available physical inventories in the US might be somewhat depleted.  Perhaps if we keep an eye on shipments of phyzz comming into the US over the next few days/weeks it may support my half assed theory.   No major shortage…..just inventory imbalances.

    • I know a dealer in Guernsey UK who says that silver inventory has been tightening for 2 years now, and that many orders have a several week delay. This is a key retailer for the UK and Europe. However, I haven’t spoken with him in the last few months. http://www.guernseymint.com. SAEs are still available though.

      I believe that the huge addition in SLV was lies. jsnip4 does a good video on this, saying that he believes we are about to see huge interest in silver, and that this creation of 19 million shares will soak up the hard earned cash of the uninformed, and hold things back for a while.


  25. That being said….I only base my statement of “no shortage in canada” on my enquiries at vancouver coin shops and bullion dealers.

  26. :)

  27. 571.6 metric tonnes for ishares = 18,376,940 troy ounces we can’t get.  Thats alot of eagles

  28. Shortage?  What shortage?  Somebody’s always selling paper silver!  Every f-ing day!

  29. Heck of a lot more people here in the States Stacking Silver than in Canada. Also I believe our government is paying off their debts with Gold and Silver to China and the like, hence the shortage here. I don’t hear of them buying any, just selling and transferring to other Counties, one of the big ones, the UK.  Keep Stacking

  30. @m45
    The Doc shared a great post by SRS rocco on Jan 4th titled “Official Mint Silver Sales Surpass Domestic Silver Production in US & Canada in 2011″  great post!
    Considering the fact that the US has roughly 10 times the population of Canada, one would certainly expect that domestic silver sales would be higher.  The one stat that none of us seem to have however, is exactly WHO is buying all these eagles…..Joe Americans, ETFs or foreigners.
    Given the stats that point to less than 1% of the US population invests in phyzz, I suspect a sizeable portion of eagles are purchased and shipped abroad or gobbled up by the likes of the SLV and ishares and savy hedge funds.  Who knows, maybe Mr Sprott is bulking up his phyzz backed trust with your shiny birds.   I have no proof of this however just speculating :-)
    I hope your govt ISN’T paying off china and the like with fed held bullion. Wouldn’t it be a crime for the US govt to pay off their debts with gold and silver since tricky dick closed that window in 71?  If this turns out to be the case, you’all best start your revolution tomorrow morning  :-)

  31. Believe me CC that’s why Silver Stackers and some off the Sheepee are stacking up on Guns and Ammo. We see it coming my friend. Keep Stacking.

  32. Doc, could you please elaborate on the “unprecedented demand” ? I.e. your current weekly physical Silver demand is XXX% higher than your previously record week in XX month.
    Thanks Doc!!!

  33. It has been interesting to watch the Forex charrt today. Everytime a red came out it candled to blue but then waited for another red and candled into a blue. It looks to me to be a persistant and savvy buyer. On to 33 I say! Silber Liberation Army!! Onward chistian Si-il-ber stacking all the waa-aay…sound off One Ounce …sound off Two Ounce…I don’t know but I’ve been told….Blythes pillow is mighty cold …Hoo-Raw!!

  34. The Trigger!
    its the perception of why it will take 7 years For Germany to repatriate its gold?

  35. Doc, just so we can see, is it possible to display live inventory on sd bullion for all items?

  36. No problems in the UK with shortages of PHIZZZ at the moment regarding coins and bars.
     

    • im noticing premiums going up though. i often buy from atkinsons in birmingham, premiums up on maples there now as well as eagles. The noahs ark is the best buy and was same price as the maple until yesterday.

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