Silver Shortage – True or False?
It may feel as if there is a silver shortage, but what are the facts?
There is still ample silver available. True. The graph below shows Registered (Read: really there) silver on the COMEX. While it has been in decline for decades, it actually shows a recent blip up in inventory. This increase is largely due to the liquidation of ETF shares such as SLV – where paper shareholders have sold their shares resulting in the underlying silver that has been returned to the COMEX.
There is little to no more silver left to buy. False. Silver is readily available. Silver in the form most desired by the public is not readily available.
Virtually all investment form silver is back-ordered and carrying very high premiums. For instance, the U.S. Mint is still manufacturing Silver Eagles, but they are 8-12 weeks behind, and the premium is over $6.00 per coin, or 25% over spot. Silver Maple Leafs as an alternate? Same story, 8-12 weeks on back-order and 20%+ premiums.
When Silver Eagles or Maples are not available, buyers turn to 1 oz. pure silver round ingots. Guess what? 6-8 weeks delayed and premiums of almost 20%. Pre-1965 90% silver is tighter than tight, delayed 12 plus weeks with premiums approaching 30%. Even 100 oz. silver bar premiums have doubled and are significantly delayed.
So, what should you do? Here is the adage in the industry: “When prices fall, premiums rise. And, when prices rise, premiums fall.” If prices fall further, premiums and scarcity will increase even more. If prices rise, premiums will fall, but silver per ounce will cost more.
In the end, you will still be paying the equivalent of approximately $26.50 to $27.50 for your silver, factoring in the higher premiums.
Solution: Buy in modest amounts, at regular intervals, and don’t watch the price (aka ‘dollar-cost averaging’). That is what successful traditional investors have always done. Do the same thing with your precious metals investing.
