Guest Post: Strong Indications of Gold & Silver Shortages

[Joanne98]

Strong Indications of Gold & Silver Shortages

Since reaching new highs at the end of 2010 gold and silver have been sold off, and the selling has been particularly intense in the last few days. The news on the economy is almost exclusively bullish for the precious metals. From the price action one might be falsely led to believe that investment demand for the precious metals is waning. On the contrary the data analysis I will show in this article reveals strong indications of growing shortages and furthermore that the gold and silver markets are approaching “tipping points” that will lead to an acceleration of price appreciation.

We will first consider silver because the data for silver is the most dramatic.

http://www.zerohedge.com/article/guest-post-strong-indications-gold-silver-shortages

I wonder what this will do to the ETF's?

[fascisthunter]

1. with what little money I have, I have been buying silver

I knew just putting money in the bank wasn't enough, so I started buying silver by the oz for approx. $13.50. I'm glad I have been doing so...

[Joanne98]

2. Smart move. I wish I had the money to buy some.

[fascisthunter]

3. Almost every pay check, whatever money I was going to save

I have sunk into silver. Even if I only bought 5 oz's per pay check, it's not much, but over time it has accumulated. It's not a good way to make money fast, but if you are planning on saving money in the bank(saving long-term), it may as well be a precious metal instead of what this country prints. I don't make much, and am struggling with student debt at this time.

PS - I also collect/invest in rare coins. This however takes lots of research.

[Art_from_Ark]

15. You are right about the rare coins

You really have to do a lot of research before you get into that market. But if you know what you're doing, it can pay off. For example, here in Japan I sometimes run into US old gold coins (10s and 20s) that are selling for melt value. But some of those coins are Unc, and some are better dates. Certification can add a couple of hundred bucks to their value right off the bat.

[Paper Roses]

4. Whenever I read postings like this, I realize how dumb I am.

I have no idea about any of this but have been accumulating silver for years. It is all in the form of hollow ware and flatware so I know it is not pure silver. It is already in boxes waiting to be scrapped. Cement removed from some of the items.

My problem is that I need the $$ and cannot really wait for prices to go up, or even if they will go up. I also, like all others, don't want to be left with worthless paper money.

It is not that I have so much but the money would make a difference in paying things like my house taxes. It was never my intention to invest in silver, just to buy things that were enjoyable to me.
I can sell this stuff--about 275 oz troy(postal scale w/ conversion, not accurate) at 85% of market price. Don't know what to do but then again, who does?

This stuff has been with me for years...bought back when times were better. So it goes.

[dixiegrrrrl]

6. can you wait 4-6 months?

the melt value of your silver will be much higher by then, because the silver/gold shortage story is really getting around now.

[Paper Roses]

9. I hope to do just that. It depends on whether I can scrape

together money for house taxes, insurance, heating bills and some medical expenses(and still eat).

If Social Security goes down the tubes and they change Medicare, it will not matter. I, like so many Seniors, will have nothing left and will have to sell everything we own if we can even find a buyer.

Never thought I'd see the day.

[Art_from_Ark]

16. If you must sell your silverware, try to get the best price

Sterling silverware should be able to get you at least $18.50 per ounce (31.1 grams)

[Lasher]

5. SLV is down a little, but still near an all-time high on December 30 last year.

It is generally a bad idea to buy when an equity is high. And when market analysts say we should buy, I have often found that is a good time to sell. When they say sell, I think about buying.

Edit to furnish link to SLV (silver ETF) chart: http://finance.yahoo.com/echarts?s=SLV#chart9:symbol=slv

[dixiegrrrrl]

12. the first ounce of silver I bought was at 7.00.

Then I started buying bits and pieces over the years, junk coins, most of it.

As for timing, depends on who you listen to.
Most of the MSM public experts are not reliable, to me.

[Lasher]

14. Don't trust timing advice from anyone, certainly not an unknown like me on the internet.

Spreading investment over time like that is a great way to minimize risk, particularly with a volatile commodity like silver. I just have a feeling that people will be taking a bath sometime this year if they're holding silver. This is just a guess.

But like I said, don't pay any attention to my advice.

[dixiegrrrrl]

7. Smart people have abandoned ETFs.

I think there will be huge losses in them.
Max Keiser explains that the banks which are supposed hold the silver for the ETFs are:
J.P. Morgan and HSBC.
J.P, which has HUGE short positions in silver.

Keiser has an interesting guerrilla movement going, in encouraging people to buy actual silver.
He says the more we buy, the more the price will go up, which will create HUGE problems for
J.P.Morgan/Chase to cover its short position.
and, seems like Max's plan is working. ( he gets international exposure via his many tv/web appearances)

another way to buy silver, btw, is junk silver coins.
these are coins that are too worn to be of interest to collectors, but contain more silver than their
face value.

This is a good calculator page for figuring out the melt value of junk coins. Even copper pennies are valuable now.
http://www.coinflation.com/coins/silver_coin_calculator.html

[Paper Roses]

10. Saw an add on Craigslist today.

Wanted by the thousands. Pennies.

He says he is a collector of pennies. Can this be right? Thousands?

The poster says at the end of the post,"It is illegal to melt down pennies". What can he do with them?

[Art_from_Ark]

17. There could be any number of reasons for his ad

1) There are valuable errors and varieties that can be found among everyday pennies. For example, certain 1995 pennies can be worth from $10 on up, certain 1992 pennies can be worth a couple of hundred bucks in mint condition. Certain pennies from 1983 and 1984 command high prices. There are also varieties if 1999 pennies that are attracting collector attention.

2) Older pennies with the wheat reverse are all worth more than 1 cent.

3) Most pennies minted before 1982 contain 95% copper, and while the melting of these pennies is currently illegal, there is a good chance that the law will be repealed sometime in the future. The metal value of a copper (technically, bronze) penny currently is more than 2X the face value of the coin.

[Kat45]

19. I didn't know it was illegal to melt pennies.

So does that mean you can't sell old pennies for the metal value? Can other coins be melted?

[Art_from_Ark]

25. It's not illegal to sell pennies for metal value

and I've seen various ads offering 1.5X face for copper/bronze pennies. That's similar to what was happening with silver coins before the government legalized their melting in 1969 (and they're still legal to melt, by the way). Some people are expecting the melting ban on copper pennies to be lifted some time down the road. In the meantime, they can search through the copper pennies for special varieties (1972 Doubled Die, for example), and other coins that might have a collector value above 1.5 cents.

On edit:
For what it's worth, it's also illegal to melt 5-cent coins at the present time. There is no move to melt regular dimes or quarters, however, because their metal value is much lower than their face value.

[cbdo2007]

20. According to the calculator someone posted - $10.00 in pre-1982 pennies is worth $27.00

melt value.

Hmmmm, maybe this is a good idea....though if he's just asking for pennies, I doubt he'll get more than 50% that are pre-1982 in just a random batch from someone, but those are still worth a penny I guess.

[Art_from_Ark]

26. As I mentioned in a previous post, some post-1982 pennies

can also be valuable, including:

1983 Doubled Die reverse
1984 "Doubled Ear" (though I can't tell the difference between that and a regular 1984)
1992 and 1992-D "narrow AM" variety (the A and M in AMERICA are touching each other)
1995 Doubled Die (The word LIBERTY is doubled)
1998, 1999 and 2000 "wide AM" varieties (just the opposite of the 1992 varieties)

Buying pennies from average non-collectors probably raises the chances that the pennies have not been searched for these varieties.

[AnneD]

21. Junk silver coins...

are not only worth more than face value, I can see the day when they will be recirculated for their true value not face value (a pre '65 dime is worth about $12 now). I like the Mercury dimes because they cannot be mistaken for current dimes. They are legal tender and are a great barter chip. I have a few liberty silver dollars (1897) but I can't bear to part with that-they are too pretty. Silly reason to hold on to them I know. You can tell I time the market. :rofl:

[Po_d Mainiac]

22. You may want to check your math

A 90% silver dime has approx. .0715 oz of salvageable silver (if it's not worn too bad) for a melt value of around $1.94 @ Ag spot $27

[AnneD]

23. Opps...

Thanks, PoD. I take your word because I know you are up on that more than I. I must have been think of the total amount of my last purchase. Yeah, I am a big time silver buyer. :rofl:

I do like to save up. Seems like there is no state tax (8%) when you buy at least 1K of precious metals.

[Art_from_Ark]

24. The tax depends on your state

At one time, Washington State had no sales tax on precious metals (maybe that's still the case), and neither did Oregon. California exempted purchases of $1000 or more, but I've heard that that figure has now been raised to $1500. I don't think Texas has a state sales tax, and there are some other states without a state sales tax as well, but other states do charge sales tax on transactions that are physically conducted in their respective jurisdictions. But interstate mail sales are still exempt from sales tax (although California has been trying hard to "un-exempt" them).

[OllieLotte]

8. Perhaps there is something to the silver short.

Butler is convinced that silver prices have been kept low by JPM and others. I like his advice to sell gold and buy silver. My favorite metal is palladium, but that's another topic. He's not backing down, I'll say that for him!

http://www.investmentrarities.com/ted_butler_comentary11-24-10.shtml

[dixiegrrrrl]

11. wonder why palladium is dropping like a rock?

[OllieLotte]

13. I never know.

It's like Mr. Toads Wild Ride. SWC & PAL are the stocks that I own. They are not for the faint of heart.

[Art_from_Ark]

18. Palladium is the "ugly duckling" of precious metals

It doesn't have a tradition of collector interest like gold, silver and platinum. The "spreads" (differences between dealer buy and sell prices) are usually higher for palladium than for the other three PMs, and there aren't so many dealers who handle palladium. The palladium market is very small and is greatly affected by automobile industry news (since its main use is in catalytic converters). So it is more susceptible to market yo-yoing than its more popular cousins.