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At some point in the next few years it will become hard or impossible to buy silver or gold in exchange for fiat currencies.
We aren’t at the “impossible” stage yet but there are signs around the world that silver is becoming difficult to buy and if you can find some the premiums over the spot paper price are extraordinary and rising.
Following my own advice here at The Dollar Vigilante, I decided it was time to buy some more silver recently and I went to the normal places I used to go in Acapulco, Mexico, to buy some. You would think with Mexico being the largest producer of silver in the world that it should be plentiful and easy to find.
I went to Azteca bank, which is where I normally buy and they said they had none. Azteca is owned by Grupo Salinas which is effectively owned by Hugo Salinas Price’s family. Hugo, as many might know, is a multi-billionaire and one of the biggest proponents of silver. He has even tried, without luck, to get silver put back into the monetary system in Mexico.
I then went to another bank and they said they had none but I could order some… but they didn’t know how long until it was received. I then sent my driver to every other place that used to sell silver in Acapulco and none was to be found.
Mr. Salinas Price is a good friend and a nearby neighbor in Acapulco, so I sent him an email asking him what was happening.
He allowed me to reprint his response (bolded parts are added by myself):
We have a problem with Banco de Mexico. They say that AGAIN, the Mint has sent them stained one-ounce silver Libertads, and they have returned them to the Mint. The Mint will have to melt down the whole lot of thousands, and re-mint the coins.This is what we are told.
In the meantime, Banco Azteca is selling what coins they have, coming from the public. Banco Azteca is now paying the higher price for the one ounce coins – the price usually paid to Banco de México; since they are absent, the public gets the Banco de Mexico price, for the time being. (when we are in stock, we repurchase from the public at a price slightly lower than Banco de Mexico, our main supplier)
I don’t know when we shall normalize sales through Banco Azteca. Depends on Banco de México and they are in no hurry to satisfy the public. The delay on the part of Banco de Mexico is probably due to the cause given. However, it does seem extraordinary that the Mexican Mint, which has an excellent reputation for quality over many, many years, can be making such grievous errors – now the second time such a defect is attributed to the Mint.
I know Hugo quite well and he clearly has to be careful about what he says given his position but I can tell he thinks something is up.
I had, in the meantime, been talking to TDV reader, and excellent writer and researcher, Mike Cuneo, who told me how premiums for silver have been rising dramatically. He sent me this research:
Let’s take a look at some popular items and their respective premiums. (All premiums according to http://www.comparesilverprices.com and rounded to the nearest %.)
Now: 29% Month Ago: 24% Year Ago: 19%
-Canadian Maple Leafs
Now: 24% Month Ago: 17% Year Ago: 18%
-10 oz Bars
Now: 9% Month Ago: 8% Year Ago: 4%
The real action, however, has occurred in 90% junk silver:
-90% Junk Silver (Pre 1964 US dimes/quarters/half dollars)
($100 Face Value Bag) Now: 40% Month Ago: 33% Year Ago: 5%
You read that right, a 40% premium on junk silver! Up from a 5% premium a year ago. This is indicating a long term, structural supply problem in 90% junk silver. The only way to remedy this situation will be with much higher prices, either through a higher spot silver price, higher premiums, or both. As of now, buyers must pay huge premiums for immediate delivery, or wait for the item to hopefully come back in stock. That is the textbook definition of what happens during a shortage. And yet, paper (ie. not bullion) quoted silver prices continue to fall, not rise.
However, with the premium at 40% instead of 5%, each (silver) ounce of 90% junk silver now costs $20.44. Contrary to media reports, and the depressed paper price, you actually pay just pennies below 52 week highs for 90% junk silver, even as silver has plunged by over 25%! Do not buy into the lies of a “falling” silver price. The downside to silver here is extremely limited, and the upside nearly unlimited. If the price heads any lower, premiums will shoot even higher, or physical metal will simply vanish until prices head higher.
90% junk silver still has a face value that is recognized in the USA, and is easily recognizable and divisible. It is often called “survival money” due to these factors. A 1964 dime is the same size and design as a 2015 dime. The only difference is the silver content. People recognize it and it is nearly impossible to counterfeit. It is ideal for small purchases.
To summarize Peter Schiff from a recent interview: Silver is like a lifeboat. If you’re sure the cruise liner is going down, as many of us are when it comes to the dollar, why wait for the cruise liner to start sinking, before getting on the lifeboat?
Still not a believer in silver scarcity? Well… if you think you can go to the US mint to buy silver, think again. Silver supplies have been increasingly eratic. According to Numismaster.com, “Demand for bullion coins was so high in June and July that the Mint ran out of coins and was forced to suspend sales of silver Eagles in early July and restore its policy of rationing.”
June silver Eagle sales rose 150 percent over May. The July figure was at least double the June level. Sales cooled down in August, but who knows how long that will last? Better to be a few months too early, than even a microsecond too late, when physical silver supplies dry up for real.
And here’s a timely statement from the SilverInstitute.org: “In recent years, fabrication demand has greatly outpaced mine production forcing market participants to use existing stocks to meet demand. As these available sources continue to decline, silver’s fundamental value continues to strengthen.”
In other words, the world is not producing enough silver. Thus, existing stocks are being drawn down.
This is all part of the financial collapse/crisis scenario that I said would start this month… and it has. And it is going to get much worse, very fast from here.
If you don’t own silver now I suggest you get some… if you can find any.