Short Supply And High Gold/Silver Premiums, But There Is A Solution…

A huge spike in demand for physical precious metals has decimated available dealer inventories. The vast majority of gold and silver coins, rounds, and bars are either out of stock or come with extended shipping delays.

Premiums are spiking higher. Dealers have raised bid premiums – the amount offered above the spot metal price – dramatically along with ask premiums.

A picture containing drawingDescription automatically generatedThe market is still searching for equilibrium and bids dealers pay may need to go even higher to entice enough sellers to meet demand.

Demand continues to far outstrip available supply of minted items.

The problem is being compounded as mints and refiners close in response to the COVID-19 virus. The Royal Canadian Mint announced it will be closed effective March 20th for at least two weeks. Some speculate that the US Mint facility in West Point, NY may also suspend operations.

The outlook for supply is exceedingly difficult. Pandemic fears first drove unprecedented demand for physical bullion products. Now it may force the relative handful of major producers to suspend operations.

US Mint officials already suspended new orders for gold and silver American Eagle coins. They could also have to suspend all work to clear the backlog. Private mints and refiners are wrestling with the same challenges.

The supply problem, in our view, figures to get worse before it gets better. That means premiums are likely to go even higher from here.

Unfortunately, it may be quite some time before premiums fall. As described, the short-term outlook for fabricators is bleak. And order volume at Money Metals remains 4 times higher than the levels of just three weeks ago. Money Metals Exchange staff are working overtime to secure enough inventory and ship orders, and continue to raise bid prices.

It’s Actually Possible for Retail Investors to Obtain Gold & Silver Near Spot

It’s not surprising there is frustration from investors over current premiums. They want to take advantage of silver spot prices near $13/oz and then find the price of virtually any silver product is much closer to $19 or $20/oz, if not higher.

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