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no physical silver available for immediate delivery in London.

Discussion in 'Purchasing Precious Metals' started by southfork, Sep 5, 2012.



  1. southfork

    southfork Mother Lode Found Mother Lode

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    http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=25717

    THE SILVER FAIRY IS COMING SOONNNNNNNNNN


    London Squeeze Raises Silver Price
    By Patrick A. Heller
    September 04, 2012
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    The world’s largest venue for trading physical silver is operated by the London Bullion Market Association. It is an over-the-counter market where buyers and sellers negotiate contracts directly with each other.

    Memberships include most major central banks, refiners, bullion banks and their major customers. Contracts are for 1,000-ounce bars refined to a minimum purity of .999 fineness (it was formerly .9999 fineness). Generally, the minimum size contract is for 50,000 ounces.

    This exchange is where heavy-duty buyers and sellers of silver trade. In theory, contracts executed there are for prompt delivery of physical metal.

    When the price of silver topped $30 about 10 days ago, demand on this exchange surged. The best information I have is that at least two purchases were made then, each in the range of 5-10 million ounces of silver. The sellers simply did not have that much physical silver immediately available to fulfill these contracts. However, the LBMA insisted that delivery of physical silver must be made on the exchange rather than by possible chicanery that could happen if the contracts were settled outside of the exchange.




    Investing in Silver Online Seminar
    This seminar is a great source of sound answers to many questions about investing in silver! Get your seminar today!


    The latest reports I have received is that there is basically no physical silver available for immediate delivery in London. In fact, the estimated time for delivery is further into the future than some traders have ever experienced.

    To top this off, I also understand that JPMorgan Chase last week raised the price up to $31 that it was willing to pay to purchase physical silver. JPMorgan Chase is widely presumed to have huge short positions in the physical silver market. If the bank is paying as much as $31 per ounce, this is a sign the bank expects short- to intermediate-term prices to exceed that level.

    So, if there is such a large supply squeeze for physical silver from the major players in the market, why aren’t premiums rising on the bullion-priced coins and bars? That’s an excellent question, but easy to answer.

    Contracts traded under the auspices of the LBMA are priced at a much lower premium than almost any other form of physical silver. Therefore, the demand for immediately available physical silver is for the forms that the refiners can purchase enough below the intrinsic value of the metal that it can profitably be melted, purified and delivered in the form of 1,000-ounce bars to London.

    What that means is that forms of physical silver that trade wholesale at or above the spot price are not wanted. Coins such as the U.S. silver American Eagle, Canada’s silver Maple Leaf, Austria’s silver Philharmonic and others won’t help fill the supply shortages.

    United States 40 percent silver coins, the Kennedy half dollars struck from 1965-1970, do trade wholesale significantly below melt value. However, refiners are less enthusiastic about processing coins of such low purity because their refining capacities are limited. They can only melt so many tons of raw material per day, so the purer the silver content they start with, the greater number of ounces of pure silver they can produce and sell. Processing lower purity silver during a time of peak capacity operation would reduce profits for the refiners, unless they were able to purchase such silver at a significant discount to silver value compared to what they pay for purer forms.

    At present, fabricators are able to keep up with demand for production of 100- ounce and smaller size bars and rounds, for which the manufacturers receive a higher premium than they would be paid for 1,000-ounce bars going to London. So, for the time being, there is no shortage of the smaller bars and rounds.

    The largest marginal impact in the near-term supplies of physical silver comes from the wholesale price of U.S. 90 percent silver coins, the dimes, quarters, and half dollars struck up into 1964. If these coins trade far enough below melt value, refiners can purchase them to melt down to make 1,000-ounce bars. If the wholesale market is paying very close to or even above melt value for these coins, the refiners can no longer profitably tap this huge source of physical silver.

    Late last week, wholesalers raised their buy prices for 90 percent silver coins so high relative to melt value that refiners can no longer afford to purchase this form of silver. In fact, the ask prices of all major wholesalers were above melt value.

    In the short term, there may be slight premium increases in bullion-priced physical silver coins and bars. For a time, supplies will continue to be available with little or no delays. However, the real supply squeeze for 1,000-ounces bars in the London market will divert some physical metal away from the manufacturers of coins and smaller bars and rounds. As time goes on, look for premiums to rise and also for higher spot prices.

    The spot price of silver rose 13 percent during the month of August. In my judgment, we haven’t seen anything yet.



    Patrick A. Heller is the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Coin Week (http://www.coinweek.com and http://www.coininfo.com). He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” (http://www.lansingbusinessmonthly.com/articles/department-columns). His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.
     
  2. Chester-Copperpot

    Chester-Copperpot Gold Member Site Supporter Gold Chaser

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  3. Scorpio

    Scorpio Alpha Centauri Bound Founding Member Board Elder Site Mgr Site Supporter

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    yep Chester,
    that kinda drives 'er home
     
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  4. Gcubed

    Gcubed Banned

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    IF London can't deliver, WHY is Tulving selling the stuff for 49 cents over, DELIVERED? Hell, even APMEX is selling 10's for 99 cents over. Something doesn't pass my smell test. JMHO.
     
  5. southfork

    southfork Mother Lode Found Mother Lode

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    Tulving and Apmex are petty dealers when it comes to the physical London and Crimex are supposed to have. When the shortage hits it will be ballistic and price will jump dollars a day and you wont be able to buy.
     
  6. Gcubed

    Gcubed Banned

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    How do those petty dealers get new fabricated stock? Please explain the supply chain to us as you know so much about it. ;)
     
  7. Rip Van Winkle

    Rip Van Winkle Seeker Seeker

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    Even a broken clock is right twice a day, I've been hearing this since 06' or so. It may happen someday, but sounds like more hype than reality.
     
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  8. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    And to think I was given some silver for free today ! What a country !
     
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  9. southfork

    southfork Mother Lode Found Mother Lode

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    Had you read the article it deals specifically with delivery bars, not one to 10 ouncers, they deal in tens of thousands of ounces, not tens of millions, the end is coming, not if, when.

    http://www.apmex.com/Category/860/Industrial_Silver.aspx 1 1k bar in stock

    http://tulving.com/goldbull.html#More_Items_We_Buy 1k comex delivery bars 0 in stock
     
    Last edited: Sep 5, 2012
  10. southfork

    southfork Mother Lode Found Mother Lode

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    Believe it or not, and the government never lies to it's citizens.
     
  11. Oldmansmith

    Oldmansmith Midas Member Midas Member

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    Yeah, it says his info has at least two purchases in the 5 to 10 million ounce range.

    Hmmm, 5-10 million ounces. Is that a lot?
     
  12. 917601

    917601 Mother Lode Found Mother Lode

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    Talked to a refiner and he mentioned the nitric acid for gold recovery going through the roof.He states he is now taking 20 percent of the refined value. I needled about starting home operations, but just the cost of chemicals and equip, not to mention knowledge, is cost prohibitive. Cost of chemicals cutting into the operation, and he states running at 60 days. That means about 90 to 120 days from when shipped to refiner and receiving pay-out.
     
  13. Fiat Metaler

    Fiat Metaler Gold Member Gold Chaser

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    LBME deals in 1,000 oz bars. you can't deliver 90% or 1 oz rounds on the LBME - they are just not good delivery bars.

    now, a refiner could refine 90%, make a 1,000 oz bar, and deliver it to a designated warehouse, and that could be delivered on the LBME; however, after refining costs its not cost effective to do so.

    basically, there are 2 different markets. the big boy market is mostly paper but has a tiny core of physical, and it sets the price for tulving, apmex, etc.
     
  14. Gcubed

    Gcubed Banned

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    I never knew any of that. Thank you for the education!!


    somebody shoot me!
     
  15. platinumdude

    platinumdude Gold Member Gold Chaser

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    Why don't they just ban physical delivery?
     
    Nickelless and earplugs like this.
  16. Spike

    Spike Gold Member Gold Chaser

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    Plenty of Silver out there.

    When I was fish'n my way across Montana from Idaho on HWY 90 saw a billboard, it read "See 50,000 Silver Coins"...So what da hell I checked it out.

    The pic is just one wall, three other walls were covered with silver coins. I take it they were given to the store, they sold silver coins and if ya wanted to have your name and where you lived they would take your coin you just bought and put it on the wall.

    This was a stand alone R.V. park, store, bar, pretty cool idea I think I'll start one for gold coins. As you can see the count increases every day. Oh and the bar top is covered too.

    P1010001 (4).jpg

    P1010003.jpg ............
     
  17. Malus

    Malus Gold Member Gold Chaser

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    In a world gone mad....
    They will if they need to keep the game going a little longer...........
     
  18. Irons

    Irons Deep Sixed Mother Lode

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    Brings back memories of the days I floated through life in a teddy b haze, staying up late to buy silver off ebay because this time was it.

    $300 an oz, RIFD chips, .gov got no stockpile, china, india, world running out of silver betta get moar now! :afraid:
    Good luck to you silver die hards, I hope you get it this time. :beer1:
     
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  19. Irons

    Irons Deep Sixed Mother Lode

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    Hey do any of you folks know when they stopped putting "sterling" on jewelry and switched to 925?

    I just scooped a big silver turquoise ring marked sterling out of the lake and I think its pretty old, my wife unit does not. Thanks!
     
  20. Master_Ho

    Master_Ho Silver Member Silver Miner

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    It would freak out the market causing a panic - and there are probably laws and rules they would be violating to do so that way.
     
  21. bemac

    bemac Midas Member Midas Member

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    They've done it before. :rolleyes:
     
  22. RichG

    RichG GIM Radio Host Midas Member

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    Here ya go....

    [video=youtube_share;sxVsosT3GAw]http://youtu.be/sxVsosT3GAw[/video]
     
  23. Irons

    Irons Deep Sixed Mother Lode

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    Well ain't she just Bangalicious! :banana:

    No wonder you guys watch those money shows.
     
  24. phideaux

    phideaux Mother Lode Found Mother Lode

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    The more 90% they melt, the better, 'cause that stuff ain't coming back (at least not as 90%).[​IMG]
     
  25. phideaux

    phideaux Mother Lode Found Mother Lode

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    And she actually knows what she's talking about.[​IMG]
     
  26. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    Probably because tulving and apmex have not sold a few hundred paper ounces for every 1 oz they really have in stock, and because they are buying/selling real physical instead of make believe silver.
     
  27. Irons

    Irons Deep Sixed Mother Lode

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    I'll take your word for it, I listen to women with the volume off whenever possible.
     
  28. phideaux

    phideaux Mother Lode Found Mother Lode

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    Tulving raised his minimum buy on 90%. It used to be $500 face, now it's $1,000. Waht do you make fo that, if anything, G-3?
     
  29. phideaux

    phideaux Mother Lode Found Mother Lode

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    LL is nowhere near as whiney and annoying as Maria whazzerbutt.
     
  30. JFN111

    JFN111 Silver Member Silver Miner

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    Irons likes this.
  31. 917601

    917601 Mother Lode Found Mother Lode

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    I can add more, this ethanol craze is effecting all markets. It takes more than 1 and a half oz of Nitric acid to refine 1 oz of silver, by the tried and true acid method. This crazy ethanol market consumes natural gas like a bottomless pit, the increased corn consumes nitric acid by the tons (fertilizer, nitric acid), so yes ethanol production is draining energy dry, and it even effects the cost of refining by higher acid costs, unless they switch to even more expensive methods using electric. Now add to that the number of refiners closing due to environmental issues,(and acid producers closing every day)etc.....so like I said, refiners not able to keep up with demand, sure Mr. XXX or Mr Crimex, need some silver? I will have some of those 1000 oz bars for ya in about 6 -9 months. Silver refiners are maxed out, operating 24/7 ......Gets even better with gold...This part of the reason you and I will not refine even if you wanted to...you can not do it economically unless you buy truckloads of Nitric.....
    .
    AR= Aqua Regia = 1 part 70% Nitric Acid (added in small increments), 3 parts Muriatic Acid (some guys use 4 parts muriatic). Used to dissolve high karat gold, gold powder, gold foils, dissolves Platinum when hot. Excess nitric must be evaporated off or neutralized with Urea to pH 1 +/- 0.4, then drop gold with SMB.
    Hoke states 4 fluid ounces HCl + 1 fluid ounce HNO3 dissolves 1 troy ounce gold. This is equivalent to 3.8 mL HCl + .95 mL HNO3 per gram of gold.
     
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  32. ewells

    ewells Seeker Seeker

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    ditto. I gave the soda machine $2 of paper and it gave me $5 back in a 1944 quarter.
     
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  33. Gcubed

    Gcubed Banned

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    It's too expensive to fart around with small deals.
     
  34. Gcubed

    Gcubed Banned

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    I had a refinery in the 80's. ;)
     
  35. Silver Buck

    Silver Buck Gold Member Gold Chaser

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    Oh FFS people, Do Your Own Damn Due Diligence.

    "...the LBMA insisted that delivery of physical silver must be made on the exchange..."

    The LBMA does NOT deliver metals, it handles contracts. They have a list of companies that will deliver the goods (it's on page 20).

    Wanna study up on how it's done?

    http://www.lbma.org.uk/assets/GD_Rules_81.pdf

    tl/dr version:

    "Hey Overseer Ollie, Buyer Bob wants to stand for delivery, but Seller Sam doesn't have enough held here and wants to sell outside of the LBMA. What do you think?"

    "Tell Seller Sam to go pound sand, but not until after his Silver passes through here."

    The LBMA handles the contracts. The LBMA wants it to be settled through them.

    That is all.

    Sheesh!
     
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  36. hammerhead

    hammerhead Not just a screen name Gold Chaser

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    Not exactly sure Irons, but I think it has to do with country of origin. Both mean the same but 925 being a metric measurement is not used by the US.
     
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  37. ttazzman

    ttazzman Gold Member Gold Chaser

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    ok....when did 925 (92.5%) or (925/1000) become metric? silver marked (sterling)(925)(925/1000) are all US standards for 92.5% silver
     
  38. phideaux

    phideaux Mother Lode Found Mother Lode

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    Must be nice, transactions under about $22,000 ain't worth doin'. [​IMG]
     
  39. ttazzman

    ttazzman Gold Member Gold Chaser

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    yep the margin is so low.......gotta up the transaction volume.....isnt that how Sams club and Costco work
     
  40. hammerhead

    hammerhead Not just a screen name Gold Chaser

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    Ha ha ha. Rightchu are Ken.

    Was thinking that many countries use the fineness number as opposed to the word Sterling.
     

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