Keep in mind also that the coin shops rake in a huge premium on the smaller coins. It would not surprise me at all if they take advantage of a spike in buyer interest by restricting some of the availability and marking up the premiums. I do not know, I am just saying its not out of the reasonable probability for such a scam.

I have seen many examples over the last few years when a shortage developed in various bullion products worldwide. The real evidence of a shortage is that the coin dealers themselves will begin paying above spot to buy coins, so they can mark them up and sell them. In a period of high demand, the dealers want to make money. If the coins are restricted and they cannot sell them, they make no profits either. So that is what I would watch for.

I used to buy silver bullion from a small shop in Spokane, WA. The dealer charged just 25 cents premium over spot, and usually the silver was old and tarnished. It did not matter if there was a shortage from the mint because this guy was sourcing all the bullion he needed by buying it from the public and then reselling it for a small profit. The last time I bought from that guy was in 2005 or so, and I recall he had almost no silver for sale, and what was behind the counter was shiny and new. His premium had gone up, but so too had the price he was willing to pay to buy silver. I think that guy was honest and legitimate, and when he started running thin on bullion it was the first sign to me that the shortage was real.

Now I am hearing stories from various countries worldwide including Switzerland, the UAE, Singapore, and Germany that there is almost nothing left in gold or silver in many shops. So I am not discounting that there in fact is a real shortage. I also tend to doubt the reports from shills that pretend there are billions of ounces of silver above ground. Somewhere in the middle is the truth.

Mine supply is increasing, and there is still a steady source of scrap recycled bullion hitting the market. However demand is also increasing and at peak times, investment demand will swamp all available sources of small bar silver.

My long term prediction is that only a very small majority of people are active buying bullion at all, and that is still enough to dry up supply worldwide during peak buy phases. When the rest of the world wakes up to real shortages of silver and gold, there will not be enough mine supply in the years ahead to meet all of the demand. You will literaly have to be on waiting lists to get physical, or have strong connections in the industry. And I think dealers will pay a huge premium above spot because they know they can mark it up even higher for a quick resale. We are in the early phases of this rapid supply drawdown today.

cheers!

mike