Rory and I visited with Doc today because we wanted to hear first-hand about what he’s seeing in the markets which feed into the retail supply for silver investment products. The only time premiums across the board for retail silver products were higher than they are right now was during the 2008 take-down of gold and silver. There were a lot less retail participants back then, which means that the current market has been set-up to become even more extreme than it was in 2008.
There was a huge development reported in the silver market last week as the GFMS is reporting SIGNIFICANT DRAWDOWNS of UK silver inventories:
With imports in the first ten months totalling a massive 169 Moz many vaults in the UK, traditionally the largest supplier to India, have seen significant drawdowns.
A drawdown of U.K. silver inventories may mean a REAL ACTUAL TIGHTNESS of wholesale silver (not retail) in the future.
Investors snatched up a record number of Silver Eagles as the paper price was manipulated to new lows today. This is a very strange market phenomenon, as several “Official” analysts forecasted a drop or sell-off of physical metal if the price continued to decline.
In just the past two days, investors purchased more than 1.4 million Silver Eagles. This pushed the total sales for October to 5,790.000, surpassing the record set in March at 5,354,000:
While it’s true that the entire financial system is rigged today, some markets are manipulated more than others. This is certainly true for the precious metals… particularly SILVER.
This metal is the whipping boy of the Fed and Cartel Bullion Banks. Most would believe it’s impossible to manipulate a metal for decades… it isn’t.
If we look at the two charts below, we can see just how much more of a beating silver has taken compared to copper over the past 3 years:
The top 12 primary silver miners sold an additional 5.8 million oz of silver this quarter compared to Q1 2013 for a net loss of $78 million in revenue ($550 million – $472 million = $78 million)… whereas by-product revenue increased $105 million.
This resulted in the estimated break-even price for the top 12 primary silver miners of $19.78 or $4.27 lower than the average for full year 2013.
Due to the tens of $trillions of liquidity the Fed and Central Banks threw into the financial markets, the 2009 Global Depression was averted. This allowed BAU- Business As Usual to continue in the world and mining sector.
If the financial system collapsed along with the broader markets, global silver production would have fallen considerably in the years following 2009. Furthermore, easy money and low-interest rates allowed the world to extract and consume expensive low EROI oil that it really could not afford.
The end of this decade will be nothing like the beginning. The Financial Industry will come under the weight of peak oil. Paper assets will lose value and investors will be forced to move into physical assets to protect their wealth.
Gold and Silver will offer a WAY OUT to the PAPER PONZI SCHEME. Unfortunately, only a few will see the light before it’s too late.
Despite ‘crashes’ in the market, the demand for physical silver continues to rise. Buyers are already outpacing sellers by a stunning 50-to-1 ratio. We are seeing the beginning of shortages; but this will only accelerate if Western governments continue with this raid on paper gold and silver.
When Supply & Demand take over…the Squeeze is On!!
The precious metals have seen dramatic sell-offs before, although the primary difference between previous precious metal declines and the recent drop is the current shortage of physical metal.
Major dealers in North America and the EU seem to be out of physical precious metal stock almost across the board. This physical shortage had been developing for some time, in contrast to the 2008 drop.
In terms of the supply fundamentals, the loss of Kennecott’s Bingham Canyon mine last week, in addition to further postponements for Barrick Gold’s big Pascua Lama Project were as bullish as can be.
5 million ounces of annual silver supply and 500,000 ounces of annual gold supply have just been
Rio Tinto’s Kennecott mine in Utah- the US’ 2nd largest silver mine and world’s largest copper mine has just suffered a massive landslide which will likely shut down production at the mine for years as upwards of 1 billion tons of dirt and ore have collapsed into the basin.
16% of US annual silver production just vanished. Good thing there aren’t any physical supply issues in silver currently or anything…
Astonishing Photos below:
While Eric Sprott was speaking with The Doc this morning, Sprott’s Rick Rule was on CNBC discussing gold, silver, platinum, and palladium in the midst of the latest cartel raid on the metals.
While Rule’s entire interview is a MUST WATCH, the below clip was an absolutely classic response to CNBC’s claims that jewelry recycling will prove to bring massive supplies to the market:
In terms of gold and silver with supply, you have to think about historically mine supplies, but there are no substantial inventories of platinum and palladium. It has gone up a smokestack, it has gone out a tailpipe or been turned into jewelry. If you think your wife’s ring is supply, ask her. You’ll find out it isn’t.
When asked which precious metal Rule would recommend owning he responded: I would own the whole bullion suite.
Rule’s full interview is below: