Here are a few things I think are true regarding the current state of the silver market:
- On the commercial side, demand for silver has been outpacing production for several years now.
- On the large investor side, physical silver (in 1000 oz bar form) is hard to come by in places like London, India, and Vietnam, while large amounts of physical silver are sitting in vaults in other places around the world (including New York).
- On the retail side, American refiners are massively backlogged, to the point that some of them have stopped accepting lower grade silver at their facilities until they can catch up.
But the problem is, I don't have any way to confirm whether any of this is true. It's so hard now to determine what's true and what is market manipulation. So I went to the one place I could think of where I could see with my own eyes what the silver market was doing, my LCS.
I did not see lines out the door. I did not see a bunch of people buying silver. I did see a few people selling, but the shop was buying at well under spot (-6.5 on eagles, 34x on 90%), because their cases were absolutely packed with silver. The owner did confirm that the refiner they use has stopped accepting 90%, but the shop is still buying if it comes through the door, and just plans to stockpile it until the refiners get caught up (or of course, sell it if they can), which is why they're paying so much under melt.
So, if there is a shortage of silver and a glut of people buying it, that does not seem to be the case at my local shop. The shop is buying and selling at prices they can afford to, while not exposing themselves to too much risk should the bottom fall out. Just as they have been all along. All of this makes me guess that we haven't quite hit the mania phase of this market yet. If history is any indicator, we need to see "We Buy Gold" shops popping up everywhere, long lines to buy precious metals, and inflation adjusted highs. As far as I can tell, none of those things are true yet. No idea if I'm right, but I'm guessing this whole thing is just getting started.
However, all that being said, I can't go into my LCS and not buy something. As I hinted in my last post, I've switched to buying Mercury dimes, rather than silver bars. I have less disposable income right now than I used to, so while I'm still stacking, I decided to rotate into a lower stakes form of silver.
He sold me these 4 slicks for melt.
These 2 were a little higher grade, so they cost me a little more.
But this is the one that really caught my eye. I love a good dark toner. This one is pretty chocolatey IRL. I lightened the picture a bit to show details.
