Reading today in SeekingAlpha.Com we learn that physical Silver shortages are driving prices toward $50 Silver. Shortages are not just a U.S. problem due to unprecedented demand, but the problem has hit foreign markets too.
Inside this article we learn—
“Demand for physical silver has skyrocketed, and physical shortages at coin dealers are acute internationally. New American Silver Eagles from the US Mint are out of stock at even the largest US-based dealers and are only selling in presales at near 50% premiums. ATS Bullion, a London-based precious metals retailer, is completely out of silver coins.”
- Premiums on physical silver coins are at records, and shortages are widespread internationally. This is only possible if silver futures are not priced for a sudden flood of monetary demand.
- Monetary demand tends to feed on itself, as the higher the price goes for a monetary asset like silver, the higher the demand for it goes, risking a dollar run.
- Monetary demand for silver suddenly woke up in early February, causing shortages and rare backwardation in silver that we last saw in March 2020, September 2015, and February 2011.
- After each of those backwardation periods, the paper price of silver skyrocketed within months as arbitrageurs moved in to bridge the physical/paper gap.
- This backwardation is most similar to February 2011, with silver nowhere near lows, and if history rhymes, it suggests we are only months away from $50 silver.
We highly recommend you read the full article at SeekingAlpha.Com to find out more.