Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Last week the U.S. Mint announced that it had run out of its initial production of 2013 Silver Eagles and that new shipments would not be available until late January.
At that point, sales are expected to be resumed under an allocation process.
The Mint has used an allocation process to ration available supplies amongst their primary distributors in the past, as opposed to allowing the distributors to buy as many as they want or need.
On the first day of availability for 2013-dated Silver Eagles, authorized purchasers had placed orders for 3,937,000 of the one ounce coins. This seemed to mark the highest one-day sales in the entire history of the program.
The strong demand has continued with sales now having reached 6,007,000 according to the latest information posted on the Mint’s website.
The frenzied pace of orders for 2013 Silver Eagles has been driven by the typical rush to acquire the most recently dated coins, as well as pent up demand following three weeks of unavailability.
The US Mint had unexpectedly sold out of the 2012-dated coins on December 17, 2012 with no coins available to order until the launch of the 2013-dated coins.
Confirming this strain on physical silver supplies, just this morning the RCM (Royal Canadian Mint) went on allocation, limiting the quantity of sales of the popular silver maple leaf coin.
So now the silver shortage has spread across the continent. Both dealers and wholesalers are reporting that the supply on maple leaf silver coins is now weeks backlogged.
La Casa de Moneda de México (the oldest mint in the Americas) is the only mint in North America left with full supply of 2013 silver coins as of this point.
Please note that many dealers still have supply, but this recent shift to allocation may signal an imminent shortage similar to the one seen on US Mint Silver Eagles.
There are only a handful of primary distributors and they are seeing less silver inventory available from the Mints, as physical demand has skyrocketed lately.
This has been driven by concerns over the fiscal cliff, debt ceiling, worldwide currency debasement, unprecedented levels of stimulus and money printing and political leaders that are unwilling to slow their appetite for deficit spending.
The paper manipulation game can only carry on for so long before the fundamental law of supply and demand re-asserts itself.
We have seen signs of physical shortages on several occasions in the past, usually preceding a large upside breakout in the silver price.
With all of the fiat paper money and paper silver contracts sloshing around, it only takes a small percentage of buyers to demand physical delivery or redeploy their paper assets into physical bullion before supply shortages manifest, prices rise and the suppression scheme falls apart.
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My preferred bullion dealer is expecting a supply of roughly 10,000 silver eagles in the next few days and may still have some inventory of Canadian Maple Leafs. He offers very reasonable premiums over spot price and has excellent customer service. Check out Cornerstone Bullion, ask for Chad Roach and let him know that Jason Hamlin sent you for a free silver coin with your order.
