Silver demand huge, supply small: Eric Sprott

Then a seller showed up and quietly sold gold down to its low of the day [$1,429.60 spot] at 11:45 a.m. Eastern…but once that seller disappeared, gold inched higher…and finished the New York trading day up about five bucks from Friday’s close. Volume was very light.

Silver jumped up about two bits in Far East trading…before rising another two bits just before London opened. From that point, silver ground slowly higher and finished the New York electronic trading session on its virtual high of the day at $38.59 spot. This is another new record high close for silver in the last 31 years. Volume in silver was light as well.

Here’s the graph of the world’s reserve currency from the Far East open on Monday morning and it’s pretty obvious that the dollar was not a factor in the precious metal markets yesterday, as it traded within about a ten basis point range of 75.85 the entire day.

The gold stocks opened the trading day up about a percent. But, except for a small spike at 10:15 a.m. Eastern time yesterday, it was virtually all down hill from there and the HUI finished virtually on its low of the day. I was more than a bit surprised at this, considering the fact that the gold price spent the entire trading day in the black. The HUI finished down 0.32%. I was underwhelmed.

With the odd exception, the silver stocks were up big across the board and a handful of my stocks were up huge.

Here’s a graph that I thought worthwhile inserting at this point…and it tells all. During the last quarter, gold was up 4.7%…and silver was up 32.6%. Expect this trend to continue.

And another graph. This one of the gold/silver ratio…which set a new low for this move. Expect this trend to continue as well.

And lest I forget Nick Laird’s “Silver 7 Sentiment” graph…which is just an eyelash from breaking out into new high ground. This should come as no surprise to anyone.

The CME’s Daily Delivery Report was another yawner as 79 gold, along with one whole silver contract were posted for delivery tomorrow.

There was no reported change in GLD yesterday but SLV showed an increase of 737,152 troy ounces.

Over at Switzerland’s Zürcher Kantonalbank for the week that was, they reported adding 28,113 ounces of gold to their gold ETF…but their silver ETF remained unchanged. I thank Carl Loeb for those numbers.

The U.S. Mint had a sales report yesterday that was worthy of the name. They reported selling another 7,000 ounces of gold eagles…3,000 one-ounce gold buffaloes and 608,500 silver eagles.

There was very little activity reported at the Comex-approved depositories on Friday. They didn’t receive any silver…and reported shipping out a smallish 67,453 troy ounces of the stuff.

Last week I posted some information on the Perth Mint in this column that surprised some, but not others. Over the years, the Perth Mint [amongst other firms] has had its share of detractors regarding its unallocated precious metals account. I must admit that I was one of them…and I said so in no uncertain terms. But some of the responses I received, especially from the staff at the Perth Mint, suggested that my belief structure could use a tune up.

I spent a lot of time on the weekend on the Perth Mint’s website and fired off an e-mail to John Durham, the manager of Depository Services. The reply from John to that e-mail led me to Bron Sucheckie, the manager of Analysis and Strategy…which led to an hour-long phone call with Bron in the wee hours of Monday morning.

The hour-long telephone conversation [on my nickel] was a delight. It started off with my b.s. meter on the high-gain setting…but it didn’t take much time for me to realize that this was totally unwarranted. Bron is a straight-up guy…and the organization he works for is the same.

I like to believe, that after 62 years on this planet, I’ve become an excellent judge of character. I saw nothing on their website, or anything Bron said, that even hinted at any kind of impropriety.

How wrong I was about my suspicions of this firm…and if the time ever came, I would be delighted to fire off a cheque [that’s check in American] for any amount to either their unallocated or allocated accounts. I feel they are exactly as they advertise themselves to be…and I apologize to them and to some of my readers, who I know had grave concerns about them based on what I [and others before me] had said.

Before I start with my stories for today here’s a paragraph that I stole from silver analyst Ted Butler’s Weekly Review to his paying subscribers on Saturday: “Conditions in the physical silver world still continue to suggest tightness. The frantic pace of movementsinto and out from the COMEX warehouses has continued. SLV silver holdings remain at a record, up for the quarter; while GLD gold holdings are substantially lower year to date. The Central Fund of Canada announced a new offering of shares, for the first time in a year, which will result in more than 4million ounces of silver bullion being taken off the market. Here’s an observation that I can’t help but mention. Whenever the Central Fund makes an announcement of new shares, the very first thing that almost everyone does is to calculate how much silver will be purchased, how long will it take for the silver to arrive and what impact that might have on the silverprice. Even though 50% of the new money is used to purchase gold, I’ve never heard a comment as to what impact the Fund’s purchase might have on gold’s price or when the gold will arrive.”

The Wrap