physical silver and gold Interesting comments tonight on physical gold and silver
Silver:
Hi Bill,
I have been trying to buy gold and silver bullion from my local RBC Branch (Virden, MB). They could not fill my $20,000.00 order for silver bullion. They apparently only keep a certain amount in stock for Manitoba and that stock has been depleted and they will not bring in more!
Interesting eh! Is that even legal? What if I was holding silver certificates and wanted to redeem them for the real thing? What if people were lined up all the way out the door and down the sidewalk to buy the stuff!?
I just thought you would find this interesting.
Sincerely,
SM
Rhody:
Hello Bill:
I wish today's lease rates (or for that matter, the rates for the past several days) could give us some indication of market trends, but they don't. All the metals have fairly static rates. I should point out that the gold lease rates are somewhat elevated, but clearly out of backwardation. The spread in the gold rates is still relatively tight at .05% Silver rates are slightly down, and the spread has widened, suggesting some increase in liquidity. Silver lease rates still have the steepest rate curve of all the precious metals which suggests less tightness in this market.
If that is true, why are prices for futures silver three years out, lower than the near month silver futures prices? That puts the silver futures market in backwardation three and four years out.
If this condition persists, we have yet another silver oxymoron.
Over on COMEX, the silver stockpile data has still not updated from yesterday, but totals stand at 102.4 Moz. This is below the critical 103 Moz threshold. Silver deliveries have reached 4.4 Moz while gold's stand at 3,275,000 for the month.
https://www.kitco.com/market/lfrate.html
Regards, Rhody..
If you read Antal Fekete's latest on the "basis" on Gold-Eagle.com
you will learn that the futures market in gold was first set up in 1974 (in Winnipeg as it turns out) with the unexpressed purpose of suppressing the gold price. It worked fine. Would be gold investors bought paper gold instead of the real stuff and hence the demand and consumption of gold declined. A bonus of the paper gold (futures) market is the ability to naked short the underlying metal for short periods in order to cap gold during periods of financial instability. Unfortunately, the hedge funds found out about this market, and financial instability has been the norm for the past 20 years. So the naked short has grown and become uncoverable. The entities trapped in the short can roll the exposure into later terms, but they cannot buy back their short without sending the futures price for gold to the moon. That's where we are in the gold market, and it's worse in silver.
Five or six years ago, I realized that the futures market in gold and silver was a manipulation. I do not mean that the futures price of gold is manipulated, I am saying that the whole futures pricing mechanism is the manipulation. Then on top of that you have these illegal, unregulated short positions that are pure suppression. You are correct in deducing that the way this will end is with a default, or a change in the rules of operation of the futures "market" that will allow the shorts out of their trap, or extend the life of the warehouse stocks. I expect COMEX to limit silver withdrawals from stockpiles to the mandated 7.5 Moz per month. Lately it has reached 15 Moz. Even this month, which is not a silver delivery month has seen 4.4 Moz pulled out of stocks so far. So COMEX will do everything in its power to keep this sham of a market running, and as long as it does run, precious metals will be vastly under-priced. In my opinion, silver should be $40 right now, just to reach equilibrium, and assuming a normal level of stockpiles. There is nothing normal about either inflation or surface stockpiles of silver right now, so on a spike, double or triple my equilibrium price.
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