Physical Demand for Metals (Kitco)

As is to be expected with the recent drop, physical demand, especially for silver, has exploded over the past week. The market collapse is obviously the recent catalyst but physical demand has been aggressive since November 2012. The North American Mints are on tighter allocation releases as the demand far outstrips the production capability at levels of three shifts working 24/7. Demand from Europe, given the recent concerns on the safety of “guaranteed” bank deposits, has many dealers back-logged as much as one month. The Hong Kong market has joined the demand cycle with popular North American items in low supply or out of stock.

To be clear, this is “NOT” a supply issue but a production back-log. It will contribute to higher physical premium prices. The larger dealers are rationing what supplies they provide to the intermediary dealer market, focusing their efforts and meeting the demands of their individual clients. Production delays are not uncommon and seasoned dealers will provide options to their clients. Remember, as long as it is recognized, an ounce of silver is an ounce of silver. An American Eagle coin has no more intrinsic value than any other one ounce silver bullion coin. Look at your alternatives before you pay an extra 10% premium for an ounce of silver.

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