Gold and Silver Prices Fall Despite Bullion Shortages and Rising Premiums

Gold in USD – 15 Years (including the brief Lehman sell off in October 2008)

◆ Gold and particularly silver prices have fallen sharply in recent days due to massive concerted selling in the futures market which is being attributed to margin call selling.

◆ Gold and silver prices are down by 4.5% and 24% respectively in March despite unprecedented demand for gold and silver bullion globally which is leading to a shortage of gold and silver coins and bars, delivery issues and to sharply rising premiums on coins and bars.

◆ The real world forces of limited physical supply of and significant global demand for precious metals versus the selling of electronic futures is resulting in a growing divergence between the spot price and the actual price that coins and bars are sold at. Hence, premiums on gold and particularly silver coins and bars are rising significantly.

◆ Depending on whether it is gold or silver, what type of coin or bar and indeed the weight, there are varying premiums and in recent days due to massive demand and limited finite supply, premiums have increased significantly across the board as the physical market disconnects from the make believe electronic and paper gold and silver markets

◆ Most brokers have been cleaned out of supplies and are desperately trying to source in the secondary market and from clients. With the result that premiums on the sell side are also rising significantly as brokers are willing to pay higher premiums to buy back in stock.

◆ Most refineries and government mints have also seen a massive depletion of their coin and bar inventories and are now working hard to mint and fabricate the next batch or runs of coins and bars.

◆ The U.S. Mint has announced that they effectively sold out of Silver Eagles and their silver bullion coins inventory and are going to have to ship out what can be made in the next fabricating and minting runs. Hence why there are massive delays in delivering and some dealers have suspended deliveries and sales.

◆ We have seen silver bullion coins with premiums as high as 50% to 100% over spot with spot prices at $13/oz and silver bullion coins being sold for over $22/oz.

◆ As an example of this, many of the wholesalers have been cleaned out of all inventories of the popular gold bullion coins. There are limited supplies of certain coins and premiums have gone up very significantly. An example of this is wholesale premiums on Gold Eagles and Gold Buffalo’s have moved up to 4% and Krugerrand’s are at 3% with major dealers.

◆ Due to our extensive network of relationships with government mints and refineries, we are still able to source most gold bullion coins (1 oz) and indeed gold bars in 1 oz, 1 kilo and 400 oz formats. However, demand remains very high and this could change in the coming days.

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Violent price divergences between physical and metal futures prices


17-Mar-20 1472.35 1536.20, 1212.04 1275.66 & 1331.00 1400.40
16-Mar-20 1504.65 1487.70, 1223.28 1210.54 & 1346.36 1338.93
13-Mar-20 1588.15 1562.80, 1258.61 1248.83 & 1422.66 1407.30
12-Mar-20 1636.65 1570.70, 1284.28 1246.35 & 1457.11 1410.96
11-Mar-20 1662.50 1653.75, 1284.78 1279.01 & 1468.65 1462.25
10-Mar-20 1657.40 1655.70, 1269.40 1273.23 & 1460.00 1455.86
09-Mar-20 1676.60 1672.50, 1280.75 1272.94 & 1469.04 1462.10
06-Mar-20 1687.00 1683.65, 1296.80 1290.85 & 1490.13 1484.31
05-Mar-20 1647.45 1659.60, 1274.47 1284.70 & 1474.63 1482.69
04-Mar-20 1644.80 1641.85, 1286.73 1281.63 & 1475.06 1477.83

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Mark O'Byrne
Executive Director


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