Investors are turning to real silver, rather than ETF's. Look for money to flow into the miners in the coming months. Money should begin to trickle out of bonds and back into the market.

Bullion Delays Get Longer

Patrick Heller

January 7, 2013

Since the last time I reported the occurrence of slower deliveries of some bullion-priced gold and silver coins and ingots, supplies have gotten even tighter. As a result, even more premiums are inching upward.

On Monday morning, here is what one major wholesaler was reporting for delayed availability: In gold coins and bars: Half-ounce and tenth-ounce American Eagles, 1-ounce Buffaloes, Canadian Maple Leaves, South African 1 ounce Krugerrands, kilogram-sized gold bars, British sovereigns, Swiss and French 20 francs, Austrian 100 coronas, Mexican 50 pesos and Australian Kangaroos.

In silver coins and bars: U.S. silver American Eagles of all dates, Canadian silver Maple Leaves, 1 ounce Engelhard rounds and rectangles, 10-ounce Engelhard or Johnson Matthey bars, 100- ounce bars of any manufacturer and U.S. 90 percent silver coins.

If you look at the list of what is no longer available for immediate or short-delay delivery against the products that can still be acquired fast, there is one general rule: Products for sale at lower premiums above metal value tend to be in the shortest supply. Higher premium gold coins such as the U.S. gold American Eagles, Austrian Philharmonics and 2013-dated Chinese Pandas are still obtainable with no or minimal delays.

This past week we finally received a multi-hundred coin order of Austrian 100 coronas after a four-week delay. Future orders of this low-premium gold coin will take even longer for delivery.

Perhaps the most notable premium increase is in earlier-dated U.S. silver American Eagles The 1996-dated coins, the lowest mintage year, were already trading at premium prices. Now other dates such as 1986 and 1994-dated coins have developed significant premiums. The primary distributors have apparently already sold out this week’s first release of silver Eagles. Those now wanting to make a purchase may have to wait until the next release to take delivery.

In the first three trading days of 2013, Jan. 2-4, my company’s bullion sales exceeded the company’s total sales for the year 1982. Since gold and silver prices are only three to four times what they were back in 1982, obviously we are selling a far greater quantity of ounces of precious metals. I have heard similar stories of unusually high trading volume from other major bullion retailers.

The last time we saw such a strong surge in demand for physical precious metals was in late 2008. At that time, premiums rose significantly. At the peak, customers were paying 35-45 percent above melt for slightly delayed U.S. 90 percent silver coin because delivery of bars was two to four months delayed. Supplies of bullion-priced gold coins and bars were so tight that buyers jumped to purchase circulated common-date U.S. $10 and $20 gold pieces. It is not out of the question that we could see a return of such frenzied buying within the next few months.