1/6Being in the markets since 1992, I have seen a lot. One thing I have learned is that prices can be dictated by events “at the margin” versus overall supply/demand. Large players understand this and use the knowledge to push order flow or price action.
2/6Case in point, the 2008 silver crash. The following article was used to provide this information. seekingalpha.com/article/94767-…
“the 2000 tonne increase in SLV inventory throughout 2008 amounted to about 7 percent of overall annual silver demand”
3/6One would ask how could the price drop from $21 to $12 over this time? The following data shows a flurry of redemptions in August of 2008 in SLV which heavily impacted the price. Other markets reacted similarly.
4/6Prices reacted to conditions at the margin at that moment versus the overall demand for that year. This is how the game is played.
5/6Fast forward to today, players shorting silver via the Comex can be pressed in a similar but opposite manner if buyers decide they see value in taking delivery and moving the metal off the Comex in a collective manner.
6/6Unlike the excitement earlier this year which saw retail premiums skyrocket for smaller coins and bars, this effort is focused more on the industrial bar form of silver which has more influence on the spot price.
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1/ The Silver Exchange for Physical premium has been staying unusually elevated, even as we have seen lighter physical retail volume from June. Signaling tightness in the 1000 oz bar market.The retail premiums have been coming down simply because retail inventory has been rising
2/ As the precious metals market continues to deleverage, these EFP premiums could be a sign of continued rising costs within the industry as investors in physical metal becomes more assertive?
3/ Basically, the cost to carry physical continues to impact larger financial players who traditionally made money off of spreads and financing. This lends credence to my argument, that physical investors (strong hands) can play a more dominant role in impacting
What is unallocated gold or silver?
There is no way to be sure how much available gold or silver there is for one simple reason. The unallocated positions held by account holders are not actual metal but liabilities. Here is the IMF’s understanding of unallocated gold.
“Account providers hold title to a reserve base of physical (allocated) gold and issue claims to account holders denominated in unallocated gold. The account holder does not hold title to physical gold
but instead holds an unsecured claim against the account provider, in effect a deposit with the account provider. The account holder does not have legal ownership of the physical gold but is an unsecured depositor. The account holder is a creditor
This is from the Perth Mint Agreement. Customers agreed to the following. Just because someone can not obtain the metal does not mean Perth Mint is in violation.
2.4 Unallocated Precious Metal shall be stored by Gold Corporation on the following terms: perthmint.com/img/Certificat…
(a) the Client shall own, as an owner in common with other Unallocated Precious Metal (PM)Clients, an
undivided interest in Gold Corporation’s pool of PM Metal maintained in unsegregated storage on a fungible basis without specific identification of the Client’s Unallocated PM;
(b) Gold Corporation may use all or part of the Client’s Unallocated PM solely to fund the
PM needs of Gold Corporations’ operations. Gold Corporation shall not short sell Client
Unallocated Precious Metal nor lend Client Unallocated Precious Metal to third parties where
control
1/For any fiduciary, institutional or individual investor considering precious metals and wants to understand the real structural risks between owning physical metals held directly vs ETFs in a brokerage account, this research is for you.
2/As manager of a physical gold and silver fund and the owner of a large Depository, I understand the nuances between price representation vs actual ownership of precious metals.
3/Although, investors use ETFs for price exposure, they will be shocked to understand that is all they own…the price for that moment.
1/21 I have been asked by many people if there are any LBMA vault custodian or subcustodian concerns. Upon investigation this is what I found. Auditing responsibilities of LBMA vaults in London may surprise you.
2/21 Are audits required by the LBMA for vault custodians or are audits the responsibility of the customer storing the metal? The following information is supported by publicly available documents.
3/21 In a February 3, 2014 letter to the SEC, a law firm representing Brinks discusses custody and transportation services in both the USA and United Kingdom. sec.gov/divisions/inve…